N e w s

Russia has limited export of palladium, which leads to maintenance of high level of prices on the metal.

Quotas on overseas supplies of palladium and platinum from Russian Gokhran and CBR will not be signed in the nearest future. This means that Russia will not be able yet to regain a reputation of the largest platinum supplier on the world market. Along with this the main depository of Russia cannot state the actual dates of export quotas ratification. "This may take weeks or even more", said to Interfax Head of Gokhran Valery Rudakov.

Interestingly, the problems concerning palladium supplies are occurring for the 4th year running in Russia and each time they are connected with quota ratification.

We remind that palladium is supplied to the world market by three Russian participants: Gokhran, Central Bank and "Norilsk Nickel" Corporation. It has turned out now that "Norilsk Nickel" is the only company that enjoys a privileged position and does not have to get a palladium export quota. The latter became possible last year when the company received a 10-year quota.

At the same time, palladium has reached another price record on the world market - over $600 per troy ounce. Platinum reached the point it held ten years ago. Because of the insufficient supplies of these metals from Russia, which traditionally exports approximately 70% of palladium and 20% -25% of platinum, active buying up is taking place on the world market.The main buyers of palladium on the market are automobile companies which use the metal for production of catalysts. Thus, the delay of Russian supplies that could bring down the world prices must be very unfavourable for the companies, for in this case their expenses on car production grow.

It needs to be noted that Russia itself is very interested in the fullrange export of platinum group metals. The problem was that because of legislative inaccuracies the supplies were cut off in the beginning of 1999. The action was taken in accordance with the law "On Primary Measures in the Area of Budget and Taxation Policy" passed in December 1998, which allows platinum export only for specially appointed state institutions. However, such institution did not and still do not exist. The mistake was marked down only a year later and the deputies made a unanimous decision to correct the "institutions" for "organizations thus lifting the export ban. At the same time, the head of Gokhran said that the renewal of supplies will lead to a "balance", when demand and supply of platimun metals will be approximately the same on the world market.

Most importantly, Russia will be able to reestablish the positions lost during the year, and platinum export will reach the level of the end of last year. However, the current quota situation does not favor this. As to the diamond participants of Russian "precious" market, they have had more luck. V. Rudakov said that the diamond export quotas will be ratified by the acting President of Russia very soon. Thus Alrosa company, which exercises a monopoly right on diamond export, will be able to begin supplies to the largest world diamond intermediary De Beers Corporation. Although, Russian positions on the diamond market are quite stable, and there is no need for active market expansion.

Moreover, this year Alrosa does not intend to increase overseas diamond sales volumes so as not to bring down the world prices.

Source: Izvestia