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Will rhodium become the biggest black horse in the metal market?
Update Time : 2020-12-16 View : 4000

Novel coronavirus pneumonia has been volatile this year, rising from a $6050 ounce ounce at the beginning of the year to a record high of $13800 / ounce. With the spread of the new crown pneumonia epidemic, the price of RH fell to 7800 US dollars in the end of March. However, the price of rhodium has recovered to 12200 US dollars / ounce.
Over the past 40 years, the price of rhodium has been like a roller coaster. Since the beginning of 2016, the price of rhodium has increased by more than 20 times. The rhodium market is in deficit due to the concentration of resource supply and the increasing demand driven by the stricter emission policy. As a less noticeable minority metal, is rhodium likely to become the biggest black horse in the metal market this year, or even the best metal in the next 10 years?
Global rhodium resources are highly concentrated and supply is extremely limited
Rhodium and platinum, palladium, osmium, iridium and ruthenium belong to platinum group metals, and have similar physical and chemical properties. The global PGM reserves and reserves base are 71000 tons and 80000 tons respectively, which are mainly distributed in South Africa, Russia, Zimbabwe, the United States and Canada. Platinum group metals are mainly produced in the bushveld complex in South Africa and Norilsk ultrabasic rock body in Russia.
Regional proportion of global rhodium production
Source: Indigo precise Metals Group
Platinum group metal resources are relatively poor in China, with a proven reserve of about 339.6 tons. The types of deposits are complex. The platinum group metal deposits associated with copper nickel sulfide deposits are the main ones, and more than 95% of platinum group metals are recycled as copper and nickel by-products.
Generally, only about 10 nickel and rhodium mines in the world can produce rhodium. Nearly 80% of the rhodium is produced in the UG2 ore body, mainly in the bushwell complex in South Africa.
Automobile exhaust emission standards are getting stricter, and the demand continues to increase
In the amount of rhodium, 80% is used for automobile exhaust catalytic converter, 8% for chemical products, 3% for high-tech glass reinforced fiber, 0.5% for electrical industry and about 9% for other industries.
Like palladium and platinum, the main use of rhodium is automotive exhaust catalytic converters. Platinum is mainly used for diesel vehicle exhaust catalysis, a small amount is used for gasoline vehicle exhaust catalysis, and platinum is used for hydrogen energy vehicle catalyst; palladium is mainly used for gasoline vehicle exhaust catalysis, and a small amount is used for diesel vehicle exhaust catalysis; rhodium is mainly used for gasoline vehicle exhaust catalysis. The properties of platinum and palladium are similar. In history, the price difference between platinum and palladium was too large, which led to the substitution of platinum and palladium. Among the three elements, rhodium has the best catalytic effect, and the substitution rate of palladium and rhodium is between 4:1 and 5:1. The demand for rhodium is driven by automotive exhaust catalysis, especially considering the role of rhodium in reducing NOx emissions, and there is a lack of substitutes in the field of catalyst chemistry.
Rhodium also forms an alloy with platinum and is used to make high-tech glass reinforced fibers in consumer electronics and as a catalyst for the manufacture of certain chemicals.
Distribution of rhodium consumption
Source: Indigo precise Metals Group
In recent years, many countries in the world have raised the emission standards of automobile exhaust. After China's "national 6 standard" was issued, the average rhodium content of each vehicle increased by 30%. At the same time, Europe issued "Euro 6" emission standards, India issued "Bharat 6" emission standards, and the United States also further tightened emission regulations. Thanks to the increase of catalyst load of gasoline vehicles in the world, the demand for rhodium is increasing rapidly.
Nitrous oxide is the main component of urban smog. This kind of smoke is not only a very serious greenhouse gas, but also can cause health problems. At present, governments all over the world are in a very urgent position to formulate and implement more stringent laws and regulations. The focus of this legislation is nitrogen oxides. In terms of its performance in this reaction, rhodium will be the preferred metal to control nitrogen oxides.
Paul Dunn, chief executive officer of Northam Platinum Limited, said recently that rhodium will continue to be the only viable solution to control nitrogen oxides due to its strong demand and insufficient supply.
"A cleaner, greener world needs PGMs. We need PGMs, and rhodium in particular has the most powerful fundamentals. " Dunn said he expected sales of about 72 million light vehicles using rhodium and other platinum group metals this year, slightly more optimistic than in May and June, but down from 90 million before the outbreak, which is expected to be 82 million in 2021.
In 2019, rhodium consumption by automakers increased by 14% to 1 million ounces, resulting in a supply gap of 26000 ounces, which is the first shortage in the global rhodium market since 2014.
Five years ago, the rhodium load per light vehicle was about 0.3 grams. Paul Dunn believes that in the next five years, that will rise to 0.45g per vehicle. This means that rhodium loading will increase from the past five years to five percent. Based on the huge consumption, the cumulative demand for rhodium in the next five years will be close to 1.4 million ounces, or even higher.
Given this prospect and the fact that automotive demand is the most important part of PGM demand, there will be a serious deficit in the rhodium market in the future.
Supply and demand deficit is increasing, rhodium price still has room to rise
Novel coronavirus pneumonia has been volatile this year. It has surged from 6050 US dollars in early 2020 to a record high of 13800 US dollars / ounce in March 10th. With the spread of the new crown pneumonia epidemic worldwide, the price of RH dropped to 7800 US dollars / ounce before the end of March.
However, the quotation from Johnson Matthey, the world's largest auto catalyst manufacturer, showed that most of the fall in rhodium prices caused by the outbreak had been offset, and the price was currently trading at $12200 / oz.
Price trend of rhodium in Europe from August 27, 2003 to August 27, 2020
Data source: Wande company
Over the past 40 years, rhodium prices have been on a roller coaster, at highs and lows

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