Rhodium Prices Explained

Rhodium prices decreased by 0.57% as demand for this commodity from the automotive industry declined due to the influence of adopting Battery Electric Vehicles (BEVs) and thrifting practices. 

Why are rhodium prices fluctuating?

1. Global Production Input

The extensive power outages and rail disruptions across South Africa ( the world’s biggest producer of rhodium and platinum ) affect its mining output and sales by 4.6% and 4.2% respectively. Additionally, the country’s underinvestment in its aging coal power plants which make up 74% of its generating capacity resulted in daily 10-hour power blackouts. Thus, decreasing the country’s PGM ( platinum group metals ) production by 10%.

Furthermore, Russia’s (the second-largest rhodium producer) strengthening trading relations with China and India after walking out from the Black Sea Grain deal makes an uneven supply output in the global inventory, affecting rhodium prices.

2. Uneven Market

The rebounding of mining activities after the pandemic means the recovery of its metal supply. The steady production input from top rhodium-producing countries offset its global demand resulting in the crashing of its prices in the 3rd quarter of 2023.

Additionally, China ( the biggest metal consumer ) lessens its platinum group metals demand by localizing its production and taking advantage of Russia’s discounted metal prices. Thus, this economic power move from China greatly influences the marketability of rhodium prices.

3. Production Input

Rhodium is a byproduct of platinum. Its industrial extraction processing is quite complex and lengthy as it is mixed with other metals such as palladium, silver, platinum, and gold. Thus, the complexity of rhodium processing leads to higher prices as mining companies need to recover their production inputs.

4. Investment Demand

Rhodium’s profitability in the investment sector depends on the industrial need. Just like palladium, rhodium is an important element in making catalytic inverters in the car industry. While its gains are higher than gold, rhodium’s marketability is only functional on short-term goals as its price fluctuations heavily rely on the automotive industry.

For example, the less emission campaign gives bigger leverage to its prices compared to other metals. However, any changes in the automotive trend will eventually affect its prices. Thus, rhodium prices thread among emission standards, the car industry, and geopolitical issues.

Which variables impact the price of rhodium?

• Global Production Input
• Uneven Market
• Production Input
• Investment Demand
• Currency Fluctuation

Where does rhodium come from?

The rarest and most valuable precious metal in the world is highly reflective and resistant to corrosion.  Rhodium extraction is a tedious process as it is produced as a byproduct of platinum mining. This involves several steps.

1. Mining and Milling – Mining and milling are the first steps in extracting rhodium.  The platinum ore is mined and milled into a fine powder. The purpose of this process is to expose the platinum group metals (PGMs) including rhodium to the surface.

2. Smelting – The milled ore is smelted in a furnace. This method melts the ore and separates the PGMs from other minerals. Matte is the molten mixture of PGMs.

3. Refining – To separate the PGMs from each other according to their elements and properties, the molten mixture undergoes another series of sub-processing. These are:

• Precipitation. To precipitate the PGMs from the matte, chemicals such as ammonia formate and polyamines are used to produce concentrated PGMS.
• Leaching. The precipitated PGMs are leached with acids to dissolve them. This process solves PGM salts.
• Ion Exchange. The ion exchange resin filters the solution of PGM salts to selectively absorb them and remove the other ions in the solution.
• Electrowinning. The PGM-rich resin is electrowon by the passing current to produce pure rhodium metal.  This mechanical step causes rhodium to be deposited on an electrode.

The final product of the rhodium extraction process is a pure rhodium metal that is ready for use in industrial and commercial applications.

What are the uses of rhodium?

1. Automotive Industry – The largest consumer of rhodium. Rhodium is important in making converters to reduce harmful emissions from gasoline and diesel engines. It is a key component of catalytic converters as it is effective at converting nitrogen oxides (NOx) into less harmful nitrogen and oxygen.

2. Chemical Industry – Rhodium is also a catalyst in a variety of chemical reactions. For example, rhodium is essential in the production of nitric acid and acetic acid. As a continual process, nitric acid is an important component in making fertilizers, explosives, and plastics.

Additionally, acetic acid is an important element in manufacturing vinegar, plastics, and pharmaceuticals.

3. Electronics Industry – Electronic components such as transistors, capacitors, and integrated circuits depend on rhodium.  Rhodium is a good conductor of electricity and heat. Thus, this application makes rhodium a valuable metal for use in the electronics industry components.

4. Jewelry Industry – Rhodium’s durability and corrosion-resistant properties make it an ideal jewelry plating to give it a bright and white finish.

Nowadays this rare but multi-functional metal directly comes from top producers such as South Africa, Russia, Zimbabwe, Canada, and the United States.

What is the future price of rhodium?

While rhodium prices are bearish in the market, market analysts believe that this metal can make headlines again in the trading hub. This is due to the stricter implementation of emission standards as part of long-term carbon net-zero targets.

Additionally, the commodity’s diverse industrial applications make it desirable beyond automotive industries. For instance, in the chemical industry, it plays a vital role in the production of acetic acid and hydroformylation. Furthermore, it is used in the electronics sector as a critical component in electrical contacts due to its low contact resistance and excellent conductivity.

Thus, rhodium prices will be modest at $6,340 per troy ounce in 2030. Ultimately, its prices will largely depend on the shifting of present and future factors, especially in the car industry.