The price of rhodium has more than doubled this year, adding $1,000 an ounce since hitting 12-year lows mid-2016.
Like its sister metals, rhodium’s main application is to clean vehicle emissions and the price quoted by Johnson Matthey, the world’s number one manufacturer of autocatalysts, on Wednesday hit $1,650 an ounce, a six year high.
Due to rarity, the small size of the market and concentrated supply – South Africa alone produces roughly 80% of the world’s rhodium – prices are typically volatile.
Rhodium (and sister metal ruthenium) stands out when it comes to price swings – rhodium touched $10,025 an ounce just before the 2008 financial crisis hit, but would drop 90% before the end of that tumultuous year.
“The South African producers bled their stocks dry to achieve a balance (in the market) last year,” Johnson Matthey’s Rupen Raithatha told Reuters on Wednesday.
Robust car sales in China and the US, where gasoline vehicles dominate, coupled with rising emissions standards worldwide has been a boost for the metal.
Rhodium and palladium finds application in gasoline vehicles while diesel-powered mostly use platinum for autocatalysts. Platinum at $925 an ounce is trading flat in 2017, while palladium has surged more than 40%, breaching $1,000 last week for the first time since 2001.
Platts News reports most of the recent buying of rhodium has come from the automotive sector, but companies in other industrial sectors were also picking up metal.
Rhodium is also alloyed with platinum to make reinforcement fibre for the high-tech glass on consumer electronics, and used as a catalyst to make certain chemicals.
Rhodium has also benefitted from speculative demand. Deutsche Bank launched a rhodium exchange traded fund as far back as 2011 while South Africa’s Standard Bank listed its own physically-backed rhodium ETF at the end of 2015.
South African PGM producers extract a mix of metals comprising roughly 60% platinum, 30% palladium and 10% rhodium.
Ruthenium prices have also been moving with the metal trading at $100 this week after languishing in double digits since end-2012. Ruthenium, used in the aerospace industry thanks to a very high melting point and in distinctive jet black jewellery, peaked in 2007 shy of $900 an ounce.