Secret champion of precious metals; rhodium!

EVOLUTION SMALL

The investor’s eyes are in gold and silver. Gold prices returned from the peak of 8.5 years this week. On the other hand, silver began to shine again. Platinum and palladium are among the favorite investment tools of this year. But by 2020, there is a hidden return champion of precious metals; rhodium. Rarely found and costly to remove, rhodium is currently the most valuable metal in the world. The price of rhodium, which is among the Platinum group metals and used in many areas of the industry, especially automotive, has increased more than 30 percent from $ 6,000 to $ 8,000 this year.

Increased $ 10,500 in a few months

Looking at the movement in the last 12 months, it is seen that the price of rhodium increased around 145. While redeeming at $ 3,300 last summer, the rhodium, which climbed to $ 13,800 in the spring of this year with a premium of $ 10,500 in a few months, is currently being sold at $ 8,000. Gold prices rose 16 percent in the last 6 months, 25 percent in the last 1 year, reaching $ 1,775 / ounce, and silver is valued at just under $ 18, appreciating 18.2 percent in the last 1 year. Since the beginning of 2020, rhodium has made a premium of approximately 32 percent, or $ 1,950. There is no futures market for rhodium, but there are several exchanges that trade this element, including Johnson Matthey in Hong Kong.

More than 80% are used in automotive

Rhodium, which is also known as the most expensive precious metal, has been on a rapid rise due to the shortage of supply despite the increase in industrial use in recent years. He had a big rally, rising more than 200 percent, especially between August 2016 and August 2018. Rhodium is responsible for the price increase as new automotive emission standards in China and Europe are used in catalytic converters to reduce toxic gas emissions in exhaust systems. More than 80 percent of the use of rhodium is in the automotive sector. Demand for autocatalysts increased significantly, especially from the last 2019 to early 2020. The prices of rhodium, which exceeded 13 thousand dollars in a year, were below 1000 dollars in 2017. However, rhodium; One of the by-products of platinum and palladium, and the relatively low platinum prices slowed mining investments, restricting the supply of rhodium, and played an important role in strengthening prices.

Although demand has been negatively impacted by the COVID-19 pandemic in recent months, analysts say that long-term demand for palladium and rhodium will not change if automakers do not turn to other metals.

“Car manufacturers can start using platinum instead of palladium and rhodium,” says Macquarie Group analyst Marcus Garvey. Automakers like Fiat Chrysler have set up a research team on how to offset the increase in costs due to rising rhodium prices, however there is no clear substitute yet to achieve the same standards.

Neal Brewster, a consulting firm Roskill, says they anticipate an annual increase of 1-2 percent in rhodium production, but wait until the end of 2025 in the rhodium market if there is no shock drop in demand. If prices continue to remain high, rhodium may cease to be a byproduct and become a core business, attracting mining investments, according to Brewster. Rhodium, which is about 10 times more expensive than platinum, is a smaller market than platinum, but its monetary size is larger.

Wide range of use

Stocks recovered sharply. Rhodium; A member of the platinum family. A silver-white metallic element. It is highly resistant to rust and highly reflective. It is used as a coating for jewelry, watches, mirrors and dial lights. It is also frequently used in electrical connections. Platinum alloys are another area of ​​use in the production of aircraft turbine engines. Another use is nitric acid production and hydrogenation of organic compounds. However, the lion’s share in the use of rhodium is in the automotive industry. Automotive catalyst applications where platinum and palladium are used to control exhaust emissions are the most benefited area of ​​rhodium.

Market deficit will continue until mid-2025

According to analysts, the absence of primary rhodium mines will continue to limit supply. Also, platinum mine projects under development or planned to be invested are in regions with relatively low rhodium. Compared with South Africa’s Western Basin, where the ore in mines can contain more than 10 percent rhodium, new projects are mainly located in the northern mine belt of Russia, North America and South Africa, where ore containing 5 percent low rhodium. For this reason, the story open in the market in the near and medium term will often come to the fore. However, with the increase in the orientation towards electric cars towards the 2030s, it can be expected to be given much in the market.

Wide range of use

Stocks recovered sharply. Rhodium; A member of the platinum family. A silver-white metallic element. It is highly resistant to rust and highly reflective. It is used as a coating for jewelry, watches, mirrors and dial lights. It is also frequently used in electrical connections. Platinum alloys are another area of ​​use in the production of aircraft turbine engines. Another use is nitric acid production and hydrogenation of organic compounds. However, the lion’s share in the use of rhodium is in the automotive industry. Automotive catalyst applications where platinum and palladium are used to control exhaust emissions are the most benefited area of ​​rhodium.