This year’s Annual Report from Stillwater Mining Co (SMC) includes the company’s 2009 Annual Report on Form 10-K, along with comments on 2009 performance from the company’s Chairman, Frank McAllister, and four stand-alone reports addressing distinct areas of strategic importance to the company. Among these reports is one titled, The Case for Palladium. IM has previously reported on SMC’s January comments on the state of the markets for palladium and platinum. Then the company highlighted some underlying changes that have emerged recently in these markets and announced that the company had commissioned an independent study of these nascent market dynamics to validate its views.

In brief, The Case for Palladium concludes that, “a fundamental palladium market deficit potentially lies directly ahead which will leave incremental palladium supply reliant on existing stocks, recycling supply… and still [will fall] short of meeting demand.” Among the factors cited in support of that view are the following: 

• Platinum and palladium remain scarce commodities with very limited prospects for supply growth
• South African production, key to global supply, faces impending severe operating and growth constraints
• Car build and PGM catalyst loadings are both now growing again after a steep downturn in 2009
• New palladium and platinum Exchange Traded Funds have increased retail demand for PGMs
• Russian state inventories of palladium that historically have overhung the market now appear to be fully depleted or nearly so
• Interchangeability of platinum and palladium in catalytic converters favours palladium at current prices

PGM recycling volumes, although growing, are insufficient to offset supply shortages. The Case for Palladium is available on the company’s website at web address http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9Mzk5Nzd8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1 as well as in the company’s 2009 Annual Report.