Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Demand for rhodium has surged recently citing a possible U.S.-China trade deal ahead this month that can trigger car and autocatalyst demand.
Rhodium, the world’s most precious metal is on an astounding rally since the start of 2020. Under just around 10 days to the start of the year, the rhodium metal price has surged more than 32% so far.
The costliest metal started 2020 with its price around $5500 per ounce. However, in the last days, it has been on a massive price rally. The rhodium price is currently trading around $7900 levels.
Analysts are suggesting that the metal commodities have recently shot due to rising geopolitical tensions in the Middle East. Another popular sentiment is that the U.S.-China trade deal ahead this month will drive the car and autocatalyst demand, industries where rhodium use is prominent. Andreas Daniel, a trader at refiner Heraeus Holding GmbH said:
“The main driver by the beginning of January was physical demand from Asia, which might be also automotive related. Buying triggered more buying and in an unregulated market the effect was massive, with a price move which is only seen maybe every 10 years.”
Speaking to the Mining Weekly, Afriforesight precious metals and related commodities head Jason Welz, said:
“In recent times, rhodium demand has outpaced other PGMs (Platinum Group Metals) as tightening legislation has increasingly focused on reducing nitrogen oxide emissions, for which rhodium is the most effective of the three PGMs used in autocatalysts.”
Rhodium’s Smaller Market and Price Volatility
Stricter emission rules over the last decade have caused the price of rhodium to consistently go northwards. In the last four years, rhodium has outperformed all other major commodities with its price rising by 12x. However, note that this is a much smaller market and the price remains largely volatile due to massive shifts in supply and demand.
Anton Berlin, head of analysis and market development at Russia’s MMC Norilsk Nickel PJSC said that “rhodium is subject to crazy volatility”. The Russian company contributes to mining 10% of all the global rhodium. Anton noted that the supplies are tight and speculators bought it heavily last year seeing industrial volumes growth.
So far, in 2020, rhodium seems to have left behind its peers by a huge margin. Palladium, which is the second-best gainer of 2020, has surged by 9%. Unlike other precious metals like gold and silver, investing in rhodium is difficult as it doesn’t trade on exchanges.
Most of the rhodium deals happen between suppliers and industrial users only. South Africa has dominance in the rhodium market as it alone accounts for 80% of the global rhodium production.