China’s palladium imports surge as local futures lure inflows

China imported a record amount of palladium last month, as local prices that have raced ahead of global ones lured inflows.

Palladium shipments into China jumped to 8.6 tons in April, almost triple the seasonal average, customs data released on Wednesday show.

Investors were capturing the spread between the contracts on the Guangzhou Futures Exchange, which were launched in late November, and global spot prices, said Wang Yanhui, general manager at Shenzhen Yuexin Precious Metals Co. Ltd., a major refiner. They “are taking delivery to lock in profits,” he said, adding that industrial demand had been flat.

Global palladium prices are down by around a third from this year’s peak in late January, more than gold or platinum.

Palladium inventories have been increasing in warehouses linked to the Guangzhou exchange, as the nearest-dated June futures are close to expiry. There was around 2.8 tons of stockpiles on warrants as of Tuesday, data from the exchange shows, more than a third of the volumes of palladium in warehouses linked to the New York Mercantile Exchange.

Palladium’s main source of industrial use is from catalytic converters in combustion engines. A lack of demand for conventional vehicles is likely to help push consumption down by 9% this year, according to a report from refiner Johnson Matthey Plc. Investment demand for palladium remains a key swing factor, with the potential to influence the market, it said.

(By Yihui Xie)