* Recycled palladium autocatalyst volume flat recently

* Metal loadings in scrapped cars may fall in coming years

* Price rally expected to boost scrap supply in long term

By Frank Tang

NEW YORK, May 22 (Reuters) - U.S. scrap palladium supplies tightened as junkyards, hoping to capitalize on higher prices, held onto used auto catalytic converters, fueling fears about a widening deficit as strikes in major producer South Africa dragged on, recyclers said.

Falling supplies of spent autocatalysts, by far the biggest source of palladium after mine output, come as heightened geopolitical tensions in Russia and South Africa's longest-ever strike reinforce concerns about a widening deficit. The two countries are the world's top two producers.

"At least in the short term, the strikes in South Africa may be prompting some scrap dealers to hold back their shipments of autocats in the belief that higher prices are inevitable," said Greg Roset, manager of smelting and recycling at Stillwater Mining Co SWC.N .

Montana-based Stillwater is the only U.S. miner and a major recycler of platinum group metals (PGMs).

Roset said recent conversations with autocat collectors and other recyclers suggested that collection volumes have been flat, or in some cases, have even dropped off in recent months.

On Thursday, spot palladium XPD= rose for a fifth day to a near three-year high at about $840 an ounce?within striking distance of a 13-year high at $860.

While palladium is widely used to clean tailpipe exhaust fumes in gasoline vehicles, pricier platinum XPT= is often the required autocatalyst fitted in diesel engines.

Thomson Reuters GFMS and Johnson Matthey both expect the palladium market deficit to widen this year. PGM refiner Johnson Matthey pegged it at its highest in more than three decades.

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Last year, one in five ounces of palladium came from spent auto catalytic converters, and nearly 70 percent of all scrapped autocatalysts were sourced from the North America's predominantly gasoline vehicle market, GFMS data shows.

The amount of metal retrieved from older vehicles may also drop as auto makers had dramatically cut their palladium use when prices soared to records of nearly $1,100 an ounce in 2001.

The average age of catalytic converters being recycled today is about 15 years, Stillwater's CFO Gregory Wing said.

Even so, the current squeeze may only be short term.

GFMS expects scrap palladium supplies to hit another record of 1.84 million ounces this year, up from 1.6 million ounces in 2013, as Chinese and American drivers scrap more cars.

Beijing's initiatives to improve air quality will drive recycling of old cars, creating "meaningful" scrap supply in the coming years, Thomson Reuters GFMS said in its latest report.

Bob Hansen, corporate operations manager at New York-based PGM refiner Sabin Metal Corp, said he expects collectors sitting on spent autocatalysts to take advantage of the rally in prices soon, boosting secondary supply.

(Editing by Bernadette Baum)

((Frank.Tang@thomsonreuters.com)(+1 646 223 6126)(Reuters Messaging: frank.tang.thomsonreuters@reuters.net))

Keywords: PALLADIUM AUTOCATALYSTS/SCRAP