Profit is the return received on a business enterprise after all operating expenses have been met. Palladium was cheaper than platinum and since it does a better job cleaning up auto emissions than platinum, automobile manufactures use palladium instead of platinum as they chose tighter pollution emission standards. But, since early 1998, Russian exports of palladium have been erratic and declining in availability. In consequence, the world price of palladium has escalated from a historic plateau of $200 to a high of over $700 and palladium continues to be the number one component in autocatalytic worldwide with no significant substitution on the horizon. Therefore, the costs of car making have been raised, which means the profit would be decreased.
Demand refers to people's willingness to own a good also it is the amount of a good that consumers are willing and able to buy at a given price. In this article, the main consumer is the auto manufacture. Supply is the amount of a good producer is willing and able to sell at a given price. Here the biggest producer is Russia. The relationship between demand and supply is that an increase in the sale price will result in a decrease in the quantity demanded. The higher the price, the less quantity demanded, and conversely, the lower the price, the more quantity demanded. Supply is just the opposite side of demand. There are some factors that have influenced the demand for and supply of palladium. First, the price fluctuation is the main element that affected both demand for and supply of palladium. Second, palladium is not only used in automobile catalytic converters but also used in cell phone, fax machines and dental bridges. It is a big demand, which can cause the shortage of supply of palladium. Third, the supply of palladium is extremely limited. Sources of palladium production are quite scarce. In fact, more than 90% of world palladium production is concentrated in just two countries: the Russian Federation and South Africa.