The palladium price drop was not expected to impact South African platinum producers as only 25percent of the country’s platinum group metals (PGMs) basket comprises palladium. “That basket price has dropped a mere 3percent since the all-time high on March 20,” Hochreiter said.

Anglo American Platinum is the biggest palladium producer after Russia’s Norilsk Nickel.

The world’s biggest palladium producers include Norilsk Nickel, Anglo American Platinum, Impala Platinum, Lonmin, Sibanye-Stillwater and Northam Platinum.

The record palladium and rhodium prices and a weaker rand have lifted the despondency of South Africa’s platinum industry, where palladium is a by-product of platinum mining. Coupled with the lower rand, which helps lower costs, Sibanye-Stillwater, Anglo American Platinum, Lonmin and Impala Platinum all recorded bumper profits in 2018.

Palladium has been a market darling after the price rally since last year as car makers grapple to meet demand.

Seleho Tsatsi, an investment analyst at Anchor Capital, said the car makers were likely to consider substituting palladium with platinum.

“The bigger the gap, the more likely car makers will substitute palladium with platinum. The higher the palladium price, the more incentive for substitution,” said Tsatsi.

The gold price also fell to $1306 an ounce on the stronger dollar on Friday.