The impressive start of palladium at the beginning of the year begins to fade in front of the less well-known but much more expensive related metal, rhodium.
Rhodium, also a major use in car catalytic converters, is now up to five times more expensive than gold. This month, metal is up 31%, peaking in 2008. Tighter carbon rules have set off an impressive rally, with speculation that more investors are entering the rally with price expectations rising even further.
Both palladium and rhodium are extracted to replace platinum and nickel, but its market is much smaller, which is susceptible to such large movements in demand and supply changes.
Physical demand for rhodium, mainly in Asia by the automotive industry, shot up the price this month. Reaching $ 8200, demand has dropped. Analysts expect the precious metal to reach and exceed $ 10,000.
It is much harder to invest in rhodium. It is not traded on exchanges. Most transactions are made directly between suppliers and industrial buyers.
However, the high prices of rhodium are welcome for producers in South Africa, responsible for more than 80% of world production. But their dominant position means that potential production risks can weigh heavily on the market.
Source: Bloomberg Finance L.P.
Graphs: Used with permission of Bloomberg Finance L.P.
Trader Martin Nikolov