Exactly one year ago (and before COVID-19’s full impact on the industrial world had manifested itself) we reported that the price of rhodium had reached an all-time high of over $10,000 per ounce, at the time around 6 times the value of gold! Last February, we believed that this was a bit of a one-off, caused by power shortages in South Africa which threatened a reduction in the output from the world’s main producer of mined rhodium (with over 80% market share). In fact, though, its price rose further, to $14,000 in March, before falling back the next month. Since the price has risen steadily and is now trading this year at $24,400 per ounce with no signs of slowing down.

There are a number of factors behind this rise:


The coronavirus pandemic had, of course, a major impact on economies around the world, and the automotive industry was no exception. However, towards the end of last year and in the early months of 2021, the market came back reasonably strongly, particularly in China and, to an extent, the USA and India. However, the PGM supply situation is taking longer to recover; some older, less profitable mines in South Africa remain closed and may never re-open; those that have re-opened, particularly the labor-intensive operations, are working under coronavirus restrictions that are impacting on efficiencies. The impact of this saw a 22% year-on-year supply decline in 2020, leading to demand outstripping supply, with resultant price rises, particularly for rhodium and platinum. (Palladium remains in surplus, primarily due to the decline in diesel-powered vehicles, where the palladium loading is particularly high).

Emission Regulations

As tighter legislation comes into force across the globe, so there is a need for higher levels of PGMs in catalytic converters. During 2020, Europe and India imposed new levels of emission control and China will do likewise this year. This is all particularly significant for rhodium, because it is the most effective PGM for removing noxious NO2 emissions, thus making it difficult to substitute in an autocatalyst.

Rhodium, precious metals in Automotive industry

Decline in Diesel Vehicles

Motivated by these tightening emissions controls, vehicle manufacturers are increasingly moving away from the production of diesel vehicles, reflecting a decline in consumer demand. In Europe, for example, diesel sales fell by 30% in 2020, year on year, compared with an overall industry decline of 14% (due to COVID-19). Rhodium does not feature in diesel catalysts and thus, an increased share of the market for gas-powered vehicles will have a positive impact on rhodium demand

Precious Metal Holdings

Both platinum and palladium have long been regarded as worthwhile investments, similar to gold and silver, and, indeed, holdings for both these PGMs are currently at record levels. As such, this offers a potential source of supply of both if demand outstrips mining and recycling supply. This is much less the scenario for rhodium, and essentially, supply levels are restricted to the two traditional sources of mining and recycling.

So, we have the factors behind rhodium’s recent record performances. The big question for the next few years is - will this continue? Many analysts in the industry predict that, whilst the steep price rises we have seen recently will taper off, the prognosis for the rest of this decade is positive. Auto catalysts will continue to drive PGM demand, as manufacturers emerge from 2020’s problems and as the arrival of vaccines provides additional optimism for economic recovery. Emission legislation will continue to tighten, keeping PGM demand positive, and rhodium’s efficiency in its catalyst role will further boost its importance.

Furthermore, and importantly, recycling is seen to be the main driver of growth, with the supply from mine production expected to continue to be restricted going forward. As a result, recycling is forecast to account for 40% of supply by 2029, from around 30% in 2019. On the face of it, this is excellent news for all involved in the industry; however, this will put pressure on PGM refining capacity, which is already close to full utilization.