Last we reported about a year ago about rhodium. At that time, the precious metal recorded a sharp rise in price. How is the metal doing today? What are the current challenges facing the market and why is palladium currently experiencing a much more dynamic development?
In 2021, at the height of the coronavirus pandemic, the price of rhodium peaked at almost USD 30,000 per ounce. Since then, things have quietened down for this important raw material. Around 80 per cent of demand for this precious metal comes from the automotive industry, where rhodium is used to coat catalytic converters. Rhodium converts combustion pollutants in vehicle exhaust into non-toxic substances. The European Union's decision to phase out combustion engines in 2035 caused the price to plummet within a very short space of time. There was a countermovement in October 2023, which stabilised the price of rhodium and has now remained more or less at this level for a year.
However, the discussions about overturning the ban on combustion engines are far from over, with BMW CEO Oliver Zipse and Porsche Vice Chairman of the Board of Management Lutz Meschke recently criticising the EU decision. If this is revised, the impact on the rhodium market could be drastic, as supply is very limited. According to industry experts, the major platinum producers in South Africa, the most important country of origin for this precious metal group, are also in the process of reducing operating costs and taking further steps to optimise costs. This could ultimately also have an impact on supply, they add. For the current year, a deficit of 65,000 ounces is expected on the market, after 125,000 in the previous year.
Basically, it can be said that in the comparatively small markets for platinum group metals, even small changes in demand lead to strong price fluctuations. This applies not only to the precious metal rhodium, but also to Ruthenium and can now be seen in palladium.
Significantly more dynamic: a look at the palladium market
Background for the current Price increase for palladium are possible sanctions against the important producer Russia. According to media reports, the USA recently asked the Group of Seven (G7 countries) to consider such steps for Russian palladium and titanium. The background to this is Russia's attack on Ukraine. The sanctions are intended to weaken Moscow's war economy.
According to the U.S. Geological Survey, Russia is the most important producer of palladium, ahead of South Africa, which, like rhodium, is mainly used to coat exhaust catalytic converters in vehicle construction.
You can find out more about large price fluctuations in comparatively small commodity markets in our Contribution to volatility.
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