Palladium is going to get a big boost in China as Shanghai Gold Exchange is getting ready to launch futures trading in the precious metal.

Shen Xiangrong, chairman of the Shanghai Gold Exchange told reporters that the exchange will soon launch futures trading in palladium. Palladium has a huge market in China as the metal is used in cars and other vehicles as a catalytic converter to reduce toxic emissions from engine exhaust. Palladium is also used as a popular jewellery in China.

Futures trading in commodities in China needs the approval of the central bank-the People's Bank of China. Shanghai Gold Exchange said that it hopes to get the official permission for palladium trading in the next one month.

Futures contracts on palladium are actively traded on the NYMEX Exchange. Palladium is the other major metal of the platinum group. It is mined with platinum, and resembles it in many respects, yet there are important differences between the two metals.

Palladium is also produced as a by-product of nickel mining. Russia supplies about 67% of production, South Africa, 23%; and North America, 8%. Annual production runs approximately 8.1 million ounces.

Automotive catalysts are the largest consuming sector, accounting for 63% of demand. Electronic equipment accounts for 21%; dental alloys, 12%; and jewelry, 4%.

Palladium, along with platinum, rhodium, ruthenium, iridium and osmium form a group of elements referred to as the platinum group metals (PGMs). Platinum group metals share similar chemical properties, but palladium has the lowest melting point and is the least dense of these precious metals.