The platinum group metal rhodium has risen in price by over 30 % in just a few days. According to TRADIUM precious metals expert Philipp Götzl-Mamba, there are several reasons for the rise in the price of the raw material, which is essential in automotive catalytic converters. In this interview, he analyses the current situation.
Rhodium madness, they say in your column, which appeared on the industry portal Rohstoff.net on 16 October. What is happening in this commodities market right now?
Philipp Götzl-Mamba: The price for Rhodium has seen little movement over the past three months. We saw the last significant price change at the end of July. Since the second week of October, the price has skyrocketed from 130 euros/gram to more than 175 euros/gram in a very short space of time. That is over 30 per cent. Historically speaking, the price is still at a low level. In spring 2021, peak prices of over 800 euros/gram were recorded.
Why is the price of the platinum group metal so volatile?
Philipp Götzl-Mamba: Rhodium is an illiquid market: there are few market participants, only mines, producers, some traders and industrial consumers. In addition, the annual trading volume is low at only around one million ounces, equivalent to around 30 tonnes. This interaction favours dynamic price developments. The scarce material is used almost entirely by the automotive industry for exhaust catalytic converters in combustion engines. The second most important customer is the glass industry, which requires the metal for the production of television screens, for example. In the past, it has been possible to cover peaks in demand by recycling catalytic converters. However, in times of high inflation and economic uncertainty, cars are being driven for longer than usual instead of being scrapped. This means that the recycling cycle is missing an important source of raw materials.
What reasons do you see for the current price rally?
Philipp Götzl-Mamba: Production planning for the coming year is in full swing in the automotive industry. The resulting demand for raw materials, such as rhodium, must be covered. This is why there is a certain amount of purchasing activity in every fourth quarter. That is normal. What we are currently seeing is the opposite of normal. The still low price of 130 euros/gram offers purchasing good conditions for sufficient stockpiling.
There are also many indications of rising demand: In the USA, the number of new registrations of combustion vehicles has increased compared to the previous year. Even more rhodium will be needed, if, as in the USA, stricter emission standards apply to various vehicle types. The implementation of the new limit values requires improved catalytic converters. The more rhodium and other platinum group metals are used in the filter, the more efficiently they work.
In your column, you link the possible economic stimulus package for the Chinese economy with the price trend for rhodium? How are the two connected?
Philipp Götzl-Mamba: China is one of the largest economies in the world, but is drifting towards stagnation. Domestic car manufacturing and the glass industry are strong economic sectors that could be supported by subsidies from an economic stimulus package. If China's economy grows again, the demand for raw materials will also increase. China is also endeavouring to reduce the high levels of air pollution in its own country, for example by Strict emission standards for motor vehicles to get a grip on it.
What outlook do you dare to take?
Philipp Götzl-Mamba: In view of the economic data, it remains exciting to see how the price will develop. We will see whether rhodium will ever reach the high of 800 euros/gram again.
Vita
Philipp Götzl-Mamba has been in charge of international trading in precious metals at the raw materials supplier TRADIUM in Frankfurt/Main (Germany) since 2021. In addition to industrial customers, his expertise also makes him a sought-after contact for private customers who can purchase strategic metals and precious metals as alternative tangible assets from TRADIUM. Before joining TRADIUM, he gained in-depth product and market knowledge in various positions at Heraeus Metals Germany in precious metals trading.
Philipp Götzl-Mamba publishes with "PGM - Precious metals in focus" has written his own commodities column for the industry service Rohstoff.net. In addition to gold, this column focuses on the much-discussed but rarely analysed platinum group metals (PGMs): The focus is on the industrial applications of the metals as well as their potential as a tangible asset.
