palladium demand set to strike back!!

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    TOKYO, Jan 9 (Reuters) - Palladium, plagued by dismal demand
    and abysmal liquidity, got a rare boost on Thursday as news of
    production problems at a South African smelter triggered a jump
    in prices.
    Platinum group metals (PGM) miner Lonmin Plc said
    this week an explosion at a furnace at its Western Platinum
    smelter had disrupted output as an investigation into the
    accident and repairs got under way.
    Traders said the impact of the news was exaggerated by the
    market's illiquidity.
    "It was really the first good news in a long time for
    palladium, so that's why traders placed light bids," a precious
    metals trader with a big Japanese trading house said. "And then
    it jumped $10."
    Spot palladium hit a six-week high in Asian trade,
    fetching $255/265 an ounce at 0345 GMT, up around $20 from the
    same time a day earlier.
    Meanwhile, palladium futures <0#JPA:> on the Tokyo Commodity
    Exchange bolted to around one-month highs, brushing daily price
    limits in unusually heavy trade.
    The benchmark December contract on the world's
    biggest PGM futures exchange was up 59 yen at 986 yen per gram in
    the early afternoon, having risen as high as 994 yen.
    February and August both rose by the daily
    price limit of 70 yen.
    Palladium's fortunes have looked pitiful in recent months as
    global automakers wash their hands of a metal used mostly in
    pollution-control systems in cars.
    A reputation for extreme volatility and a history of supply
    problems from Russia, the world's top producer of the metal, have
    also taken their toll, pushing TOCOM futures to around five-year
    lows.
    Spot palladium has lost almost 80 percent since hitting an
    all-time peak of $1,085 an ounce in January 2001 amid erratic
    Russian exports.
    Palladium's jump dragged sister metal platinum higher,
    hoisting the spot price to a new 18-month high in
    extremely thin trade.
    The white metal spent the morning pinned at $613/618 an
    ounce, up from a London afternoon "fixing" price of $607 on
    Wednesday.
    TOCOM's benchmark December 2003 contract was up 30
    yen in the early afternoon at 2,215 yen per gram.
    The metal was not hurt by an ebullient gold price, with spot
    bullion trading just below six-year highs at over $350 an
    ounce, supported by fears of war in Iraq.
 
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