Nornickel, the world’s largest palladium producer, is developing new technologies, including hydrogen synthesis, to create additional demand for palladium in China. With the global shift toward electric vehicles (EVs) reducing the need for palladium in internal combustion engine (ICE) vehicle production, Nornickel aims to compensate by driving new applications for the metal.
Currently, palladium is predominantly used in ICE vehicles for emission control, making up 80% of global demand. However, Nornickel forecasts that traditional demand from China, the largest palladium consumer, will decrease by 29% to 47 tons by 2030 due to reduced ICE vehicle manufacturing. As a result, the company estimates a market surplus of palladium by 2026, with global prices already dropping by 10% in 2024 following a 39% slump last year.
To address this potential surplus, Nornickel is collaborating with Chinese universities and industrial partners to explore applications of palladium in hydrogen production and water purification. Vitaly Busko, Nornickel’s vice president, emphasized that these innovations could generate an additional 15 tons of long-term palladium demand in China, helping stabilize the market.
China, as the largest global producer of hydrogen, is rapidly advancing its green transition strategy. Hydrogen is crucial for ammonia fertilizer production, methanol manufacturing, and oil refining. Busko highlighted that China is developing these technologies much faster than the rest of the world, creating significant interest in palladium.
In 2023, Nornickel supplied over 40% of the world’s palladium, with China accounting for 22% of global demand. Nornickel is working with at least five Chinese companies on these new technologies and aims to create 40-50 tons of new palladium demand. The company expects the new demand to emerge around 2026-2027.
Nornickel is also expanding its efforts outside China, targeting markets in the Middle East, Brazil, and Malaysia. Despite Western sanctions against Russia, where Nornickel is based, the company has pivoted its logistics and now directs over 52% of its sales to Asia. Additionally, Nornickel plans to supply palladium for domestic projects, such as fibreglass production in Russia and water purification applications.
