The price of rhodium surged more than 32% at the onset of 2020, and the price of the world’s most precious metal isn’t about to go down any time soon. The recent demand for rhodium could be due to the rumors of potential trade between the United States and China. If that happens, it will trigger an auto-catalyst and car demand. It took just under 10 days for the price of rhodium to increase to that percentage.
Why Is The Price Of Rhodium Going Up?
At the beginning of 2020, the price of rhodium was approximately $5,500 per ounce. It rallied rather quickly and is currently trading for about $7,900 per ounce. This silver-white metallic element is considered the world’s most precious metal for it is highly resistant to corrosion and very reflective. Rhodium can be found in jewelry and mirror finishes as well as in electric connections. When alloyed with platinum, rhodium can be used in aircraft turbine engines. Add palladium to the mixture, and it can be used for catalyst applications in the automotive industry.
Where Does Rhodium Come From?
Rhodium can be found in South Africa, the major source for the metal, producing close to 80% of the world’s supply. Russia is the second-largest producer of rhodium. However, sales of rhodium out of Russia are volatile at best and constantly subject to political scrutiny and intervention. As a matter of fact, interruption of rhodium supply from Russia in early 1997 helped push the declining price of rhodium back into stronger waters. Increase supply from South Africa in the 1980s caused the price to plummet during the 1990s.
Physical Demand Helping To Increase Price
It is being speculated that geopolitical unrest in the Middle East is causing some of the increases in metal commodities. The potential United States trade deal with China is another, with rhodium being needed for the automotive industry. The main drive in January 2020 was physical demand for the metal coming out of Asia. The buying triggered an increase in price in a market that is unregulated. The current price of rhodium is seen maybe every 10 years.
PGMs (Platinum Group Metals) are used to help reduce nitrogen oxide emissions in vehicles. Rhodium is the most effective of the three (platinum, palladium, and rhodium) when it comes to effectively reducing vehicle emissions. The market for rhodium is a niche market, and this has caused the price of the metal to consistently go higher.
In the last four years alone, the price of rhodium has increased by 12x. The shifts in supply and demand is keeping the price volatile. Supplies are tight, and speculators purchased a lot of rhodium in 2019 after seeing the industrial volume growth.
The Price Of Rhodium Continues To Surge
Rhodium seems to have left its sibling metals, palladium, and platinum, in the dust when it comes to price surges in 2020. Palladium has only seen a surge of about 9% while other precious metals. It is, however, tough to invest in rhodium as it doesn’t trade on the exchange markets like silver and gold. Rhodium deals typically happen between suppliers and their industrial users.