ASSIGNMENT 1 – INDIVIDUAL CASE STUDY

ECON1193B – BUSINESS STATISTICS 1

Student Name: Luong Minh Anh

Student Number: s3927404
Location: RMIT SGS
Lecturer: Dai Tran Binh
Word counts: 1393
Pages:
 Table of Contents
INTRODUCTION.....................................................................................................................................................................3
DESCRIPTIVE ANALYSIS...................................................................................................................................................3
LINE CHART............................................................................................................................................................................................. 3
MEASURE OF CENTRAL TENDENCY.....................................................................................................................................4
MEASURES OF VARIATION...........................................................................................................................................................4
HISTOGRAM............................................................................................................................................................................................. 5
BOX AND WHISKER PLOT..............................................................................................................................................................6
CONCLUSION...........................................................................................................................................................................6
RERERENCES:.........................................................................................................................................................................8

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INTRODUCTION
Commodities are essential goods that are exchangeable with other goods through import
and export. According to Nikkei Asia, since 1995, prices of globally traded commodities such as
oil, grains, and metals are rapidly rising, prompting fears regarding political instability in nations
that rely heavily on imports (Hama 2022). Commodity markets have a broad range of prices
based on different product categories. Prices can be positioned either higher or lower depending
on climatic conditions, economic or political events such as the war between Russia and Ukraine,
or the Suez Canal closure. In addition, price changes do not result in variations in the supply or
demand for primary goods. However, in case the price continuously increases, there would be a
decrease in demand and a shift to alternative products. This report will be analyzing the global
commodities price changes annually of Palladium and Platinum from the year 1994 to 2020,
which determine which commodity has undergone more elevated price shifts.

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DESCRIPTIVE ANALYSIS

LINE CHART
The worldwide commodities price variations of Palladium and Platinum annually from
1994 to 2020 are illustrated in the line chart (figure 1) below, with the orange line representing
Palladium and the blue line representing Platinum. These lines indicate the growth and decline of
the 2 commodities counted by the percentage of price changes annually compared to the previous
year. Figure 1 presents that Palladium has consistently higher price changes over the previous
year compared to Platinum, with the highest peak of increase arising from 2009 to 2010. In 2009,
the prices of two commodities fell in comparison to the previous year (2008), with statistics
ranging from -0.84% to -25.09% for Palladium and 20.66% to -23.57% for Platinum. This shows
that the yearly price changes for the two commodities have decreased from the previous year.
However, data from 2010 shows a significant increase in the prices of two commodities,
particularly Palladium, which surged by 99.82% from a low of -25.09%. Palladium also had the
biggest change in the proportion of prices counted annually during the years 1994 to 2020. The
line trends, on the other hand, are inherently, as they fluctuate annually based on the economy
and car manufacturing. According to research, a lack of semiconductors has restricted global car
manufacturing, resulting in a dramatic drop in demand for autocatalysts (Koh 2021).

Global commodities Price Changes of Palladium

and Platinum from 1994 to 2020
Palladium Platinum
95.00
75.00
Price changes in %

55.00
35.00
15.00
-5.00
-25.00
-45.00
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

Years
Figure 1

MEASURE OF CENTRAL TENDENCY

Mean Median Mode

Palladium 16.66 12.59 N/A

Platinum 4.42 1.25 N/A

Table 1

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 The table above shows the measures of central tendency of the 2 commodities: Palladium
and Platinum. In case there are no outliers, the mean is the best measure of central tendency for
describing the data set's center since it takes into account all of the numbers. As a result, the
mean will help in estimating the average yearly percentage price change for both commodities.
According to table 1, Palladium has a mean of 16.66, whereas Platinum has a mean of 4.42,
indicating that Palladium has experienced a higher average price growth than Platinum. In
addition, table 1 shows that the median of Palladium is greater than Platinum and there is no
mode for both commodities since the dataset has no one most commonly occurring value.

MEASURES OF VARIATION

Standard Coefficient
Range IQR Variance
Deviation of Variation

Palladium 144.04 52.48 1304.21 36.114 2.168

Platinum 68.37 17.41 266.298 16.319 3.692

Table 2

Out of the five measures of variation, variance and standard deviation are the two
measures that can be used to identify the price changes of 2 commodies. As labeled in table 2,
the variance of Palladium (1304.21) is higher than the value for Platinum (266.298), indicating
that Palladium has a wider spread between the values in the dataset yearly than Platinum. The
purpose of variance is to evaluate portfolio volatility by evaluating their performance with the
mean. On the other hand, the standard deviation of Palladium (36.114) is also higher than the
value of Platinum (16.319), this demonstrates that the observations in the Palladium dataset are
more unevenly distributed from the mean as it more spread out and less stable than those in the
Platinum dataset. However, SD is the most accurate measure of variance since Palladium has a
larger mean, more spread out price swings than Platinum and unevenly distributed dataset.

HISTOGRAM

Histogram of Palladium Histogram of Platinum

12 16
10 14
12
Frequency

8
Frequency

10
6 8
4 6
4
2 2
0 0
2 1 9 2 1 2 9 1 6 4 1 2
4 .2 .4 .3 2. .0 .0 .8 .2 .4 .1 .8 .8
-4 15 >1
3
->
4
>7
1
=7
1 23 10 >3 >1
7
>3
0
=3
0
<= ->- 0- 8 - > < =- ->- 0- 5- - >
1 .4 .3 .1
9 8 0 .2 4 .1
3
4.
2 5 13 2 .8 -1 3. 7
-4 -1 4 - 23 1

Figure 2

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 Figure 2 shows a symmetrical to negative-skewed distribution, with the majority of the
data in the center and scattered to the right. The bulk of price increases in percentage for
Palladium vary from -15.40 percent to 42.2 percent. In the meantime, the price of platinum
ranges from -10.20 percent to 3.46 percent.

BOX AND WHISKER PLOT

Figure 3

As mean > median, the box and whisker plot for both commodities is slightly positively
skewed (see Figure 3). The IQR or box lengths of both commodities are clearly distinguishable,
with Palladium having a longer range than Platinum. This indicates that the data in Palladium's
box is more distributed than in Platinum's box. Furthermore, there is one outlier in the Platinum
dataset, which appears as a blue dot outside the box plot's whiskers. The occurrence of an outlier
in a dataset typically increases the error in variance and standard deviation of Platinum since the
distribution is pushed in the direction of the outliers, making data analysis difficult.

CONCLUSION
After analyzing the annual price changes of both commodities from 1994 to 2020, it can
be concluded that Palladium has experienced a higher price growth than Platinum, proven by the
line chart, measures of central tendency, and measures of variation. First of all, Palladium has a
greater average yearly price changes than Platinum 12.24. Second, Palladium has a greater
variance value than Platinum, indicating a broader dispersion and volatility between the values in
the dataset on a year-to-year scale. Moreover, a larger standard deviation for Palladium suggests
a less steady pace of price fluctuations and an unevenly distributed dataset as compared to
Platinum, as shown in Figure 1, where the line chart for Palladium shifts swiftly over time.

As stated in the introduction, globally traded commodities have grown, quickly increased,
and subsequently declined over the years for the two commodities. Commodity prices, on the

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other hand, might be positioned as constant, high, or low over time due to a variety of factors
such as weather, client demand, technological costs, and production organization. However, the
major influence on global commodity development is consumers' demand and spending since
rising consumer spending will assist the economy sustain its expansion (Bondarenko n.d).
According to the law of supply and demand, if consumer demand rises but supply stays
unchanged, the price of an item will rise above its previous level, resulting in a higher
equilibrium price (Kramer 2021). As a result, global commodity trade markets will rapidly
change and price adjustment based on consumer spending each year. Moving on to Palladium
and Platinum, they are both known as industrial metals. Therefore, they shared the same factors
that impact the price growth such as labor production, demand, and inflation.

Palladium Platinum
Labor Labor costs, electricity costs, and deep-level mining challenges all rise as a result
production of the COVID-19 pandemic's temporary lockdowns in export nations.These had
an effect on both commodities output and price decreased in 2020 compared to
2019.
Demand Palladium price has risen because of Since of heightened investor demand
strong pent-up consumer demand for for Exchange-Traded Funds, short-
vehicles and investor demand for term demand growth, and more
manufacture. Therefore, the price of limited supply than in the past,
Palladium is still at record levels despite platinum prices have risen (Kitco
the fact there are large products News 2022).
available (Jackson 2021).
Inflation Since the outbreak of the conflict between Russia and Ukraine, Palladium and
Platinum prices have risen to new highs (about 5%-7% price changes), owing to
worries about Russian supply threats (CNBC 2022). To an extent, this has lead to
an inflation in global traded commodities. If the price continues to rise, Western
sanctions will be imposed on Russia, as well as an export restriction on Russia's
metal commodities (palladium, platinum, and so on) in order to prevent inflation
(CNBC 2022).

Annual Inflation Rate of the United States (%)

5.00
4.00
3.00
2.00
1.00
0.00
-1.00994 96 98 00 02 04 06 08 10 12 14 16 18 20
1 19 19 20 20 20 20 20 20 20 20 20 20 20
Figure 4
When comparing annual inflation rate of US to figure 1, both Palladium and Platinum
exhibit a consequence of bigger price increases when the inflation rate rises. This is because
inflation reduces a currency's buying power, causing living costs to rise in tandem with rising

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commodity prices. The price change of two commodities is at a modest cost, as seen in 2009
when inflation was at -0.36.

RERERENCES:
Bondarenko n.d, consumer confidence, Britannica, viewed 17 March 2022,

<https://www.britannica.com/topic/consumer-confidence>.

CNBC 2022, Gold gains as inflation woes persist, palladium extends rally, CNBC, viewed 17

March 2022, <https://www.cnbc.com/2022/01/20/gold-markets-us-fed-treasury-yields-monetary-

policy.html>.

Hama 2022, Global commodity prices soar 50%, fastest pace in 27 years, Nikkei Asia, viewed

17 march 2022, <https://asia.nikkei.com/Business/Markets/Commodities/Global-commodity-

prices-soar-50-fastest-pace-in-27-years>.

Jackson 2021, Platinum, palladium, rhodium fabrication demand to rise in 2021: CPM Group,

S&P Global Commodity Insights, viewed 17 March 2022,

<https://www.spglobal.com/commodity-insights/en/market-insights/latest-news/metals/071321-

platinum-palladium-rhodium-fabrication-demand-to-rise-in-2021-cpm-group>.

Kitco News 2022, How much higher can platinum and palladium go?, News Bites, viewed 17

March 2022, <https://www.kitco.com/news/2022-02-03/How-much-higher-can-platinum-and-

palladium-go.html>.

Koh 2021, Precious metals outlook hinges on pandemic fight and monetary policy direction,

World Bank Blogs, viewed 17 March 2022, <https://blogs.worldbank.org/opendata/precious-

metals-outlook-hinges-pandemic-fight-and-monetary-policy-direction>.

Kramer 2021, How Does the Law of Supply and Demand Affect Prices?, Investopedia, viewed 17

March 2022, <https://www.investopedia.com/ask/answers/033115/how-does-law-supply-and-

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demand-affect-prices.asp#:~:text=The%20same%20inverse%20relationship%20holds,an

%20equilibrium%20price%20is%20reached>.