Volatility in palladium market influences restorative dentistry

July 1, 1998
Dental laboratories are seeing an increase in prescribed restorations with larger amounts of gold due to the rising cost of palladium.

Dental laboratories are seeing an increase in prescribed restorations with larger amounts of gold due to the rising cost of palladium.

David Kasza

The popularity of alloys containing palladium has been on the rise in dentistry since the 1970s. As documented in Platinum 1997 Interim Review, this popularity escalated when the price of gold topped $850 in 1979. As a result, palladium alloys became a leading alternative to gold in restorative dentistry. Since then, the amount of pure palladium used in North American dentistry has grown, reaching highs in 1997 of over 415,000 troy ounces. This represents approximately 1.3 million dental restorations annually.

With this data in mind, it is no wonder that the dental community has questions and concerns.

Question - What is palladium?

Answer - According to Webster`s New Collegiate Dictionary, palladium is a silver-white ductile, malleable, metallic element of the platinum group that is used especially in electrical contacts, as a catalyst, and in alloys.

Question - Where is it mined?

Answer -- The two major sources of palladium in the world are Russia and South Africa. According to Platinum 1997 Interim Review, Russia leads the world in the export of palladium, representing upwards of 60 percent of the total supply. This factor represents the basis for the current drama.

Question - Why is palladium used in dentistry?

Answer - Palladium is used in dentistry for both metallurgical and economical reasons. Tridib Dasgupta, director of research and development at J. F. Jelenko & Co., notes: "There are three primary metallurgical reasons for using palladium in dental alloys: strength, corrosion resistance, and compatibility with other metals necessary in producing alloys for dentistry. The best example is a gold alloy - with no palladium added - exhibits a wonderful, rich color; however, it lacks the strength necessary to produce bridgework. A gold alloy containing some palladium - about 30 to 40 percent - gives you the benefits of gold, along with the strength necessary to fabricate bridgework."

The weight of palladium is 40 percent less than that of gold. The weight factor, combined with the lower price of palladium vs. gold in the past, made it an economical alternative. However, with the rising cost of palladium, this no longer holds true.

Question - What has caused the dramatic rise in price?

Answer - In January 1997, palladium had been trading at $120 per troy ounce. During that month, the Russian government began to delay shipments of palladium to the world market. These actions led to the price of palladium soaring to a new high by August 1997. The supply of palladium remained stable until January 1998, when the Russian government again delayed the issuance of export licenses for the metal.

Since then, the market has hit a new record high. In May, the price of palladium was over $400 per troy ounce! Put simply, the price of palladium has more than tripled and has now surpassed the price of gold of about $300 per troy ounce in April.

Question - What effect has this had on dentistry?

Answer - The current volatility of palladium has affected those actively involved in restorative dentistry. The area of dentistry directly affected has been the dental laboratories responsible for the manufacturing of dental restorations. The volatility of palladium has manifested itself in the rising cost of palladium containing alloys and, more specifically, Noble, Palladium-Base Alloys (i.e., 60 percent or greater palladium content).

The phenomenon has caused dental laboratories to offer alternative restorations to their dentist-clients. Billy Drake is the owner of Drake Precision Dental Laboratory, a full-service dental laboratory with offices in Charlotte, N.C., and New Port News, Va.

He states: "We have actively communicated the rise in palladium [cost] to our dental clients and have seen a rise in prescribed restorations with larger amounts of gold due to the rising palladium market. The main reason for change has been economics." Drake also says, "The dentists particularly appreciate the larger insurance reimbursement fee received, in most cases, for placing High Noble restorations containing gold."

In addition to the obvious positive economic implications for prescribing High Noble restorations containing gold, other factors have impacted the switch. "The long-term use of gold in dentistry (over 2,000 years) and the longevity of gold restorations definitely has impacted our clients` decisions," Drake noted. "We have seen a dramatic increase in full gold, High Noble posterior restorations replacing porcelain-to- palladium restorations."

The rapid rise in palladium pricing has brought to light other reasons for choosing alternatives.

Gerry Mariacher is vice president of National Dentex Corporation, which has an active customer base of more than 10,000 dentists through 30 dental laboratories located in 20 states. Mariacher points out: "The number of High Noble restorations containing gold, prescribed by our clients, is on the rise. Our clients report that the economic considerations regarding palladium and an increasing awareness by the patient as to the differences among alloy types and contents are responsible for the choice of restorations." Mariacher also says, "Biocompatibility is at the forefront of restorative dentistry."

Volatility in the commodities market does impact the business of restorative dentistry. Dentists have more choices in lab-manufactured restorations than ever before. This makes it essential that a solid partnership with consistent communication exist between the dentist and the dental laboratory. Communication and knowledge will ensure profitability and patient satisfaction.

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