Battery Metals

Gold was long the most valuable of precious metals, until, suddenly, it wasn’t.

Last week, an obscure and far less sexy rival called palladium swung ahead, for the first time in 16 years. Gold briefly retook the lead, but spot palladium prices have beaten out gold prices for the past three days.

Palladium hit a record high on Wednesday before settling in at $1,255.12 an ounce at the market close in London on Thursday, according to data from SP Angel, an investment research firm. Gold was $1,243.02 an ounce.

It is an impressive dethroning aided by economic shifts, antipollution legislation, union campaigns by mine workers and global trade negotiations. Until recently, palladium was perhaps best known for sharing a name with several popular entertainment venues and for powering the fictional arc reactor mechanism hooked up to Iron Man’s heart.

Its primary purpose is far less glamorous: More than 80 percent of the world’s palladium is used in the catalytic converters that help vehicles manage their pollutant output.

Palladium is one of the best-performing commodities of 2018. Its price has surged more than 50 percent in the past four months. Some dealers have sold out of the metal.

For at least the near future, palladium will most likely remain in high demand and short supply, experts said. Here, we explain how a metal usually ignored in favor of gold, silver and platinum has recently eclipsed them all.

What is palladium?

A cousin of platinum and traditionally much less expensive, palladium is part of a family of metals known as the “noble metals” because they resist corrosion and oxidation.

Palladium was discovered in the early 1800s by William Hyde Wollaston, a British scientist. It was named after Pallas, a recently identified asteroid.

Silvery-white and durable, the metal is used in surgical instruments, dental alloys and in cellphones and other electronics. Jewelers like Jenny Windler in Berkeley, Calif., sometimes use it because it is hypoallergenic and “not too fussy to work with,” she said. Palladium was also less expensive than other precious metals like gold or platinum.

In the past few months, palladium men’s rings have been among the most popular search terms on her online store, Ms. Windler said. But she uses the metal in less than 10 percent of her products.

Recently, Ms. Windler was buying platinum online and noticed a price chart that listed palladium as more expensive.

“I thought, ‘that can’t be right; it must be some kind of typo,’” she said.

A price driven up by passenger cars

Increasing efforts to regulate tailpipe emissions in the 1970s paved the way for palladium’s gradual popularity.

The metal, along with platinum and rhodium, helps keep toxic exhaust in check by reacting with carbon monoxide, hydrocarbons and nitrogen oxide to make them less harmful. For decades, palladium has been a major, but largely unseen, component of cars.

A shift away from diesel vehicles, whose catalytic converters rely more heavily on platinum, has intensified the demand for palladium, especially in Europe. Sales of gasoline-fueled cars had surged for several years until this year. Tighter emissions regulations have led automakers to use more palladium.

Demand for the metal for catalysts will reach a record high of 8.5 million ounces this year, according to the consulting firm Metals Focus.

But car sales are beginning to soften. In the United States, drivers are keeping their cars longer and, faced with rising interest rates, are hesitating to replace them. President Trump is pushing ahead with his proposal to significantly roll back emissions rules for cars and light trucks.

In China, demand for palladium could be tempered by worries about the slowing economy, tariffs by the Trump administration and curbs on lending to consumers.

“That’s collectively weighing on demand for new cars,” said Rohit Savant, the director of research at the commodities research firm CPM Group.

Tight supply from Russia and South Africa

Palladium is extremely rare, mostly generated as a byproduct of platinum mined in South Africa and nickel mined in Russia. Palladium’s price spiked in the early 2000s in reaction to disruptions in supply from Russia and increased interest in catalytic converters.

Demand for palladium has steadily increased for eight years and is expected to outstrip supply by 1.2 million ounces in 2018, and Metals Focus has forecast “further, sizable deficits to come.” As supply tightens, palladium’s price has climbed.

In South Africa, contentious wage negotiations with unionized miners and complaints about hazardous working conditions in recent years have resulted in strikes (and occasionally violence) that have sometimes stymied production. Many mining companies are loaded with debt and trying to cut costs, analysts said.

Mining more palladium requires more platinum mining. But diesel’s decline, exacerbated by the emissions cheating scandal that engulfed Volkswagen in 2015, has depressed platinum prices.

“The political environment for running platinum mines in South Africa, and the economics, have been getting worse and worse,” said John Meyer, a mining analyst at SP Angel. “Platinum mining has fallen a long way: It’s difficult, it’s dangerous and it’s extremely difficult to run.”

Sibanye-Stillwater, a South African company, runs the only commercial palladium-generating mines in the United States and expects to produce 468,000 ounces this year from its Montana facilities.

A growing percentage of palladium comes from recycling. The metal is usually stripped from old catalytic converters and electronics, smelted and refined for reuse.

Who invests in palladium?

Most palladium is sent straight from the mine into the automotive supply chain. Although the federal government began issuing an official one-ounce palladium coin last year, palladium is “not a big bar-and-coin market,” said Philip Newman, the director of Metals Focus.

Investors are generally involved in palladium futures or exchange-traded funds. The metal, Mr. Newman said, is “a niche.”

What’s next?

Even as the prices for most other metals struggled this year, palladium hit high after high. Experts expect it to stay elevated for at least a few months.

But coming investments by mining companies and shifts in clean-air technology could cause the price to slip.

In Russia, the Norilsk Nickel mining giant indicated this week that it would spend more than $12 billion to raise production over the next five years. The company is the world’s largest producer of palladium.

Investors might move into gold and other safe-haven assets as they digest predictions of slowing global growth, the roiling equities market and the fading effects of last year’s tax cuts in the United States, analysts said.

And the push toward cleaner vehicles could result in more electric cars, which do not require catalytic converters. Electronics and automotive companies, such as Toyota, are developing technologies that use fewer precious metals.

“The last thing any of these companies want is huge swings in prices,” Mr. Savant said.

Gold futures ended lower Thursday, with overall strength in the dollar helping the metal build on its losses for the week, while palladium eased back from the record settlement it scored in the previous session.

Gold for February delivery GCG9, -0.42% lost $2.60, or 0.2%, to settle at $1,247.40 an ounce, giving back nearly all of the $2.80 gain it saw a day earlier. Week to date, it has lost 0.4%. March silver SIH9, -1.11% settled at $14.855 an ounce, up just under half a cent for the session.

March palladium PAH9, -1.47% meanwhile, fell $3.80, or 0.3%, to finish at $1,190.70 an ounce. The contract touched a high of $1,199, according to FactSet, a day after settling at a record $1,194.50 an ounce. Sister metal January platinum PLF9, -0.45% lost $9.60, or 1.2%, to $797.50 an ounce after climbing by 2.8% Wednesday.

Underlying support for palladium came from reports that China was preparing to reduce import tariffs on U.S. cars from 40% to 15%, said analysts at Commerzbank. Palladium is used in catalytic converters, which help to reduce car emissions.

The “prospect of a reduction in global auto tariffs might have fueled both [platinum group metals] markets sharply higher yesterday with the palladium market making a fresh new all-time high” Thursday morning, analysts at Zaner Precious Metals wrote in a daily report. “Removing global tariffs (not a sure thing) could boost global auto sales significantly and therefore expand demand for PGM supplies.”

“However, we think that the historically large differential of $393 between palladium and platinum has to begin to foster talk of potential switching of auto catalyst feed stock use from palladium to platinum,” the Zaner analysts said. They also pointed out that “several weeks ago a key auto manufacturer spokesman suggested that switching was something that could not be quickly executed.”

Gold, meanwhile, has been underpinned by inflows from exchange-traded funds totaling nearly 16 tons since the start of the week, the Commerzbank analysts said. Meanwhile, U.K. Prime Minister Theresa May’s ability to survive a leadership challenge Wednesday may have damped haven-related demand for the yellow metal, they said.

The U.S. dollar was up a bit Thursday as gold futures settled, with the ICE U.S. Dollar Index DXY, +0.54% looking at a week-to-date rise of about 0.6%.

In other metals trade, March copper HGH9, -1.01% fell by 0.1% to $2.767 a pound.

Medical magnetic resonance imaging, high-power microwave generators, superconducting magnetic energy storage units, and the solenoids in nuclear fusion reactors are very different technologies which all critically rely on the ability of superconducting materials to carry and store large electric currents in a compact space without overheating or dissipating large amounts of energy.

Despite their extraordinary properties, most superconducting materials present their own set of demands, such as the need to cool down to the temperature of liquid helium for medical MRIs. Still, superconductors are so efficient compared to everyday materials like copper that the cost of cooling them down with special cryogenic circuits is negligible compared to the energy saved from being converted — and ultimately wasted — in the form of heat, says Riccardo Comin, an assistant professor of physics.

“When you are trying to run a large current through a conventional circuit like one that’s made of copper, there will be a lot of dissipation into heat because of the finite electrical resistance of the material,” he says. “And that’s energy that just goes lost. Because superconductors can support flow of electrons without dissipation that means that you can run very large currents, known as supercurrents, through a superconductor, without the superconductor heating up to high temperatures.”

“You can inject a current in a superconductor and then just let it flow,” Comin says. “Then, a superconductor can act basically like a battery, but instead of storing energy as a voltage difference, which is what you have in a lithium ion battery, you store energy in the form of a supercurrent. Then you can extract and use that current, and it’s the same as pulling charge from a battery.”

What sets a superconductor apart from a conventional conductor is that, in the latter, you have to apply a potential between two different points to run a current through, but in the former, you can just set in motion the current and then remove the voltage, leave the system as is, and there will be a persistent current flowing through the material.

Comin explains further: “You have initiated a motion, or flow, of electrons, that will persist forever, protected from dissipation by the laws of quantum mechanics. It’s superfluid in the sense that the flow of electrons does not encounter resistance, or friction. Even if you remove the initial source that created that flow, it will continue unabated as in a frictionless electronic fluid.”

This electronic super fluidity is a quantum state of matter, so it behaves in a very exotic way that is different from classical physics, Comin says. It is already being used in many high-power applications requiring large currents or large magnetic fields.

Because superconductors can sustain very large currents, they can store a lot of energy in a relatively small volume. But even superconducting materials cannot sustain limitless electrical currents, and they can lose their special properties above a critical current density, which is in excess of 10 mega-amperes per square centimeter for state-of-the-art superconducting cables. By comparison, copper can carry a maximum current density of 500 amperes per square centimeter, which is same as the current density passed through a 100-watt tungsten wire light bulb.

While these critical currents where superconductivity turns off are known, what happens at the nanoscale inside the material as its approaches that critical condition is still unknown, yet it might hold the key to engineer better superconducting cables and devices, with even higher resilience.

Comin was one of three MIT researchers to win a U.S. Air Force Young Investigator Research Program grant this fall. The three-year, $450,000 award will allow Comin to pursue research into what happens to one particular superconducting material, yttrium barium copper oxide (YBCO) when it is driven at large currents.

“Studying the electrical response of a superconductor as one drives a large current through it is essential for characterizing superconducting circuits, but there is a lot of microscopic information of what’s happening inside the material that’s left to reveal,” he says. “The nanoscale physics of superconductors under operational conditions, namely when large currents are passed through them, is exactly what we’re interested in elucidating.”

“This is in a way a new direction where we’re not just studying the material in its undisturbed state, let’s say, just as a function of temperature, but without applying any sort of perturbation like a current or a field. Now we’re moving into a direction where we’re studying what happens in materials as they are driven at conditions of large currents, which are very close to those one would find inside a device or machine based on these superconducting circuits,” Comin explains.

Unlike niobium-tin alloys that require liquid helium cooling (about 4 kelvins) in MRI machines, YBCO superconducts at the somewhat higher temperature of liquid nitrogen. This is significant because liquid nitrogen (about 77 kelvins, or -320.4 degrees Fahrenheit) is both more abundant and considerably cheaper to use than helium, Comin says.

But there is another price to pay. Compared to a conventional metal or conductor like copper, which is ductile and easily shaped, YBCO is a brittle ceramic that has to be cast in two-dimensional layers on a base similar to old-fashioned cassette recording tapes.

“It has a layered structure, so it forms two-dimensional atomic sheets that are weakly coupled between them, and it’s very different from what a conventional metal would look like,” Comin says. Comin will study the material in his lab at MIT as well as at National Laboratories while high current is applied to it around or even below liquid nitrogen temperatures.

Although superconductivity takes over at liquid nitrogen temperature, as the material is subjected to larger and larger electric fields, other electronic states, or phases, such as a charge density wave, begin to compete with superconductivity before it ceases.

“When you start to weaken superconductivity, other electronic phases start to wake up and they compete to take control over the material,” he says. He plans to explore how the balance shifts between the superconducting phase and these other parasitic phases, as superconductivity weakens at high currents.

“Do these (other phases) start to take over or do they remain dormant?” Comin asks. “In one case, electrons want to flow without dissipation, and in the other case, they are stuck in place and cannot move around, like a car in a traffic jam.”

Instead of being able to freely move like they do in a superconductor, without any dissipation, electrons in a charge density wave tend to sit in some regions and stay there.

“There are some regions that have more electrons, some other regions that have fewer electrons, so if you try to visualize the spatial organization of these electrons, you see that it sort of wiggles as a wave,” Comin explains. “You can imagine a landscape of sand ripples on a dune. What drives the electrons to organize into a superfluid state rather than forming these static, wave-like patterns is not really known and it’s what we hope to discover under those critical conditions where the superconductor starts to yield to these other competing tendencies.”

The ultimate goal of this research effort is to elucidate how a persistent current, or supercurrent, flows around non-superconducting regions hosting competing phases, when the latter start to proliferate near critical conditions.

“In this project, supported by the Air Force Office for Scientific Research, we hope to gain new insights on the nanoscale physics of these superconducting devices, insights that could be transferred onto future superconductor technologies,” Comin says.

Gold prices slipped on Thursday as the dollar steadied and equities climbed on signs of easing trade tensions between the United States and China, while palladium rose to a record high, trading at a premium to the bullion.

Spot gold was down 0.2 percent at $1,243.91 per ounce, as of 0415 GMT, while U.S. gold futures were 0.1 percent lower at $1,249.3 per ounce.

“Market sentiment is neutral today… We’ve got a little more positive sentiment than we anticipated from U.S.-China trade tensions, which is weighing on the topside,” said Stephen Innes, APAC trading head at OANDA in Singapore.

“Dollar hasn’t made much moves and that’s the real signpost for gold as they are still highly correlated.”

The dollar index, which measures the greenback against six major rivals, was steady at 97.069, after retreating from a near one-month high overnight.

Meanwhile, Asian shares advanced on signs of easing trade tensions between the world’s top two economies, and expectations that China will step up efforts soon to support its cooling economy.

China appears to be easing its high-tech industrial development push, dubbed “Made in China 2025,” which has long irked the United States, while it also made its first major U.S. soybean purchases in more than six months on Wednesday.

Investors seem more interested in equity at this point of time than in gold, said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

However, analysts see uncertainties around the Brexit deal and expectations of the U.S. Federal Reserve’s dovish tone at its meeting next week, supporting the yellow metal.

“We are still gonna have a lot of noise coming out of Brexit and that should definitely keep gold bid for a while,” Innes said.

Markets are not expecting more than one rate hike from the U.S. central bank next year, after a likely interest rate increase at the Federal Open Market Committee (FOMC) meeting on Dec. 18-19.

Spot gold looks neutral in a range of $1,240-$1,253 per ounce, and an escape could suggest a direction, said Reuters technical analyst Wang Tao.

Among other precious metals, spot palladium was down 0.2 percent at $1,258.90 per ounce, having touched a record high of $1,264.25 earlier in the session.

Palladium rose strongly on the news that China would be reducing tariffs on U.S. imported autos, raising hopes that the sector would be boosted by additional demand, analysts at ANZ said in a note.

Silver was up 0.1 percent at $14.75 per ounce, while platinum climbed 0.3 percent to $800.49.

Copper slipped on Wednesday as investors shrugged off upbeat comments from U.S. President Donald Trump about a potential trade deal with China, while the dollar hovered near a one-month peak against its peers.

Trump said he would intervene in the Justice Department’s case against a top executive at China’s Huawei Technologies if doing so would help close a trade deal. “Even when you get a glimmer of good news it can easily be reversed by a tweet. Until a trade deal is signed, markets are going to be ‘glass half empty’. Also some economic data is beginning to look a bit tired,” said William Adams, head of research at Fastmarkets.

“That said, underlying (supply) fundamentals for copper are strong and going to improve next year,” he added.

China, the world’s second-largest economy and consumer of nearly half of global copper supply, has agreed to cut tariffs on U.S.-built cars and auto parts to 15 percent from 40 percent currently. The dollar steadied near a month high, with the Federal Reserve widely expected to raise interest rates at its upcoming meeting. U.S. rates may be nearing a peak, but relative rate differentials still offer some support for the dollar. A stronger dollar makes dollar-priced metals more expensive to import for countries using other currencies.

* COPPER: Three-month copper on the London Metal Exchange (LME) dipped 0.5 percent to $6,134.50 a tonne by 1125 GMT, heading for falls of around 15 percent this year despite stocks at LME-registered warehouses at decade lows.

* COPPER SHORT POSITIONS: Copper exhibits a marginal net speculative short or sell position of 1.2 percent of open interest, according to estimates from broker Marex Spectron.

* CHINA LOANS: China’s banks extended more new loans than expected in November after a sharp drop the previous month, in a sign that recent government pressure on lenders to help struggling smaller firms may be starting to bear fruit.

* STEEL: Chinese steel prices ended three days of losses to edge higher, with top steelmaking city Tangshan planning further production cuts this month as it races to meet its air quality target this year.

* LEAD: Fitch revised down its LME lead forecast for 2019 to $2,350 a tonne from $2,450 as prices have underperformed in the second half of 2018, with long-term prices to fall on weaker global demand and surpluses.

“It surprises me that people are still interested in graphene,” Kostya Novoselov told attendees at the launch of the second world class graphene centre in Manchester, UK. Novoselov was awarded the 2010 Nobel laureate for his work isolating the material alongside Andre Geim at the University of Manchester. His remark highlights how unusual it is for an area of research to be simultaneously prolific in both fundamental discovery while finding its foothold in industry. That two institutes dedicated to both diverging aspects of the same material have found room to coexist in one city speaks volumes about the continued perceived potential of research in graphene and related materials, as well as the investment they still manage to attract. Can it outlive the hype? The level-headed engineers and partners at the Graphene Engineering and Innovation Centre (GEIC) put a forward a convincing case that it can.

Launched on Tuesday 11th December 2018, the GEIC aspires to provide a space that helps bridge the notorious gap between academic innovation and real-world take up within industry. The phrase “fail fast” recurs throughout the launch, suggesting an Edison-like ethos embracing not just successful commercialization of new technologies but also the many inevitable and informative failures along the way. The $60million Masdar Building housing the GEIC provides a space where industry large and small can pursue projects that might be too risky or even expensive for their own facilities. As well as both industry-standard and bespoke graphene equipment the centre is staffed with engineers with extensive industry and commercial experience, as well as expertise in graphene.

On brand, the staff and engineers all hot-footed around the centre in flashy green graphene trainers. Products have incorporated graphene for a while but largely as a gimmick for marketing. In contrast these trainers genuinely exploit the thermal and mechanical properties of graphene to enhance their durability.

BAC exhibited the BAC-MONO, a car that uses a graphene composite as part of the body work, exploiting graphene’s strength to reduce the mass of that part by 20%. The next step is to replace the rest of the body work. From aerospace, University of Lancashire Juno team brought a demonstration drone, again leveraging mass reductions but also using the material’s conductivity for protection from lightning strikes.

Also exhibited at the launch was the ability to alter the thermal emissivity of graphene devices with an applied field, enabling thermal cloaking from an infrared camera. Other partners have used capacitance changes with applied pressure for applications ranging from sensing and diagnostic contact lenses to robotics and a talking Tshirt.

One area the GEIC does not aim to cover is the role of graphene in life sciences, since the specific facility needs for this sector are already catered for in University of Manchester. Nonetheless there were demos of how the large surface area and low cytotoxicity of graphene-related materials can lend them to functionalization with radioactive labels for medical imaging.

Big companies hate risk, which makes their uptake of graphene particularly significant. Speaking to delegates about the uptake of graphene by companies like Ford who have used it in their engine bay, Graphene@Manchester CEO James Baker suggested that commercialization of graphene was teetering at a tipping point where it could really take off.

“I think graphene is already out there in products,” added Ian Kinloch, Director of Materials at University of Manchester’s School of Materials, suggesting that Ford as an example didn’t shout about the use of graphene in their cars because the material’s properties gave them a competitive advantage and they didn’t think consumer knowledge of the graphene contribution would sell more cars. “I think the applications are already out there and it will only leak out gradually over time that those products are using graphene, so I think the tipping point is already here.”

The raw materials

Travelling from across Europe and Canada to attend the GEIC launch, suppliers expressed their interest in droves. Stephen Hutchins, Technical Sales Director from Talga Technologies Limited – the product research and development strand of a company that owns natural mineral reserves in Sweden –told Physics World that their company had originally focused on mining. However finding themselves in possession of the Nunasvaara graphite deposit, which claims to be the highest grade JORC/NI 43-101 graphite mineral resource in the world, they decided to try moving up the supply chain and engage with producing graphene themselves.

Zen Graphene Solutions in Ontario is also looking to capitalize on their 1.4 million tonne graphite resources, which they describe as the largest and only high purity hydrothermal graphite mineralization being developed in the world. A shortage of carbon has never really been the limiting factor in getting graphene to market but as their Head of Sales Phil Chataigneau explains, the flash precipitation of methane and carbon dioxide that produced the graphite affected the spacing between the carbon layers, facilitating production of high quality graphene.

One of the stumbling blocks for industry has been the abundance of different types of graphene with varying purity, crystal quality and numbers of graphene layers, which all affect what sort of applications it will be suited to. The National Physical Laboratory (NPL), which led on the development of the ISO Graphene Standard and the the Graphene Service, is a Foundation partner with the GEIC. Its aims are to support the creation of a graphene community and and ecosystem within the GEIC to encourage early stage development and collaborations. Together with the National Graphene Institute, NPL has produced a guide for good practice and definitive terminology for graphene.

The graphene sell

Graphene was once talked about as the new gold. At the time it was isolated mechanically by exfoliation, a production approach that is only viable at small scales so that a kilogram would cost hundreds of thousands of dollars. Engineers and manufacturers working with ultrasonic and chemical exfoliation and chemical vapour deposition have pushed this price point down below $50 dollars a kilogram, so now the cost of graphene is not the issue. Even BAC’s graphene-enhanced sports car, with a maximum speed of 170 mph, an acceleration of 0-60mph in 2.8 seconds and only 30 units of that model in the world demands a comparatively modest price of £140,000.

Graphene may be cheap but it still attracts big money. The graphene sell was so attractive to energy giant Masdar that they provided 50% of the funding for the GEIC as well as their name. (The building housing the GEIC is named the Masdar Building.) The rest of the money came from the UK and Europe. Dispelling concerns over the effect of the UK’s withdrawal from the EU on the centre, Baker suggests the GEIC could help graphene “de-risk Brexit”. He adds that as for future extensions of the centre, he hopes to draw primarily on commercial investors anyway.

The GEIC opens for business in January 2019.