Rusty Delroy, a renowned fund manager known for his unconventional investment strategies, has recently made significant moves in the palladium market. Delroy, co-portfolio manager of Nero Resource Fund, has been advocating for a bullish stance on palladium, a precious metal that has seen a tumultuous ride in recent years.

Three years ago, palladium prices soared to unprecedented levels exceeding US$3000 per ounce due to geopolitical tensions impacting the world’s largest palladium producer, Russia. This surge led to a period where palladium surpassed platinum in value for the first time in six years. However, the market dynamics shifted, with palladium trading at US$922/oz and platinum at US$949.40/oz by early 2024.

Delroy’s contrarian approach stems from his belief that the bottom of the platinum group metals market is near. With approximately half of global production facing financial losses and companies resorting to high-grading their reserves to stay afloat, Delroy sees an opportunity for a rebound. He anticipates that producers will likely curtail supply, potentially leading to deficits.

Despite the challenging earnings season for top palladium and platinum producers, including Anglo American Platinum and Impala Platinum, Delroy remains optimistic about the future of these metals. He emphasizes the significance of cost curves in commodity investing and highlights the delicate balance between production costs and market prices.

Looking ahead, Delroy forecasts a base case of US$1300/oz for palladium, with potential for further upside. He challenges prevailing assumptions about the impact of electric vehicle adoption on demand for platinum group metals, citing data from the World Platinum Investment Council to support his views.

In terms of investment opportunities, Delroy is exploring stocks exposed to palladium and platinum, both domestically and internationally. While there are options on the ASX such as Zimplats Holdings, Southern Palladium, and Chalice Mining, Delroy is also eyeing overseas prospects like Tharisa Minerals and Bravo Mining Corp for their promising positions in the market.

As the palladium market continues to evolve amidst supply challenges and shifting demand dynamics, Delroy’s strategic investment approach stands out as a calculated bet on the future of these precious metals. His insights offer a unique perspective on navigating the complexities of the palladium sector and the broader platinum group metals industry.