Palladium prices fell on Tuesday to 2018 lows amid concerns about the demand-supply balance in the market.

Palladium tumbled 39% in 2023 after strong gains in 2018-2022 due to automotive demand, however it has recently been substituted by the cheaper platinum in the manufacturing of catalytic converters to reduce harmful emissions in cars.

Also as EV cars spread in the market, the prospects for palladium worsened further.

It means that as demand diminishes for the metal, supply remains stable, creating an imbalance.

On the other hand, platinum is on a more favorable ground for its extensive usages outside the automotive sector, including in jewelry.

As for the stable palladium supply argument, it’s because palladium is usually mined in a basket with other metals, which curtails the ability to control the production of the metal.

South Africa and Russia produce 80% of global palladium supplies, with the rest mined in North America.

No announcements of reduced production have been made from Russian or South African major producers so far.

A Reuters source in a major mining company said that South Africa and America won’t pause production or reduce it.

Otherwise, the dollar index rose 0.6% as of 16:22 GMT to 104.7, with a session-high at 104.8, and a low at 103.9.

Palladium March futures tumbled 4.5% as of 16:24 GMT to $856 an ounce, a five-year trough, while platinum slipped 1.9% to $879.9 an ounce.