Daily Market Update

World’s Most Precious Metal Surges Over 30% In 2 Weeks and 12 Fold In 4 Years On Supply Concerns


Rhodium has surged 30% in January to the highest levels since 2008 and has risen more than 12 fold in less than four years from $575 per ounce to nearly $8,000 per ounce

Rhodium is now 5 times more costly than safe haven gold and 440 times more expensive than the industrial and store of value precious metal, silver, making it the world’s most expensive precious metal today

The precious metal used in technology and industry has built on the gains seen in recent years due to a supply crunch. There is significant demands as stricter emissions rules have boosted demand for catalytic conductors in the auto industry and due to the limited supplies from South Africa, Russia and Zimbabwe which are vulnerable and could be cut off

This month’s gains also came after investors turned to precious metals, seeking a haven from Middle East tensions and pushing palladium up about 9% and gold made strong gains prior to correcting lower

Despite already surging more than 12 fold in price in four years, commodity analysts and traders say the metal could top the record nominal high of $10,000 per ounce seen in 2008

The recent surge in rhodium and palladium to multi year highs and all time record highs respectively will likely be seen by platinum, safe haven gold and particularly silver in the coming months

via Bloomberg:
Palladium’s great start to the year pales in comparison to its lesser known, but much more expensive sister metal, rhodium.

Rhodium — mainly used in autocatalysts and five times more costly than gold — surged 31% already this month, touching the highest since 2008. Stricter emissions rules have fueled a multiyear rally and there’s speculation that investors are also jumping in, betting that prices will climb toward a record.

Rhodium rallied 12-fold in the past four years, far outperforming all major commodities, on rising demand from the auto sector. Like palladium, the metal is mined as a byproduct of platinum and nickel, but it is a much smaller market and so is liable to big price moves when supply or demand changes.

“Rhodium is subject to crazy volatility,” said Anton Berlin, head of analysis and market development at Russia’s MMC Norilsk Nickel PJSC, which mines about 10% of all rhodium. Supplies are tight and speculators stepped up buying metal after large industrial users secured volumes late last year, he said.

Price Surge

Rhodium was at $7,925 an ounce by Monday, according to Johnson Matthey Plc. This month’s gain also came after investors turned to precious metals, seeking a haven from Middle East tensions and pushing palladium up about 9%.

Best of the Best

Rhodium outperformed other commodities last year

Source: Bloomberg

“The main driver by the beginning of January was physical demand from Asia, which might be also automotive related,” said Andreas Daniel, a trader at refiner Heraeus Holding GmbH. “Buying triggered more buying and in an unregulated market the effect was massive, with a price move which is only seen maybe every 10 years.”

Demand cooled late last week, according to Daniel. Prices hit $8,200 on Wednesday, before retreating a bit in the following days.

Although pullbacks are possible this year, rhodium could top the record $10,100 set in 2008, according to Afshin Nabavi, head of trading at refiner MKS PAMP Group in Switzerland. Still, those lofty prices a decade ago prompted autocatalyst makers to switch to platinum and palladium, which are also used for cleaning emissions.

Small Market

It’s much harder to invest in rhodium than in other precious metals. It isn’t traded on exchanges, the market for bars or coins is tiny compared with gold or silver and most deals are between suppliers and industrial users. Global production is equal to little more than a 10th of platinum or palladium output.

Tiny Market

Rhodium’s usage is a fraction of demand for other precious metals

Sources: Silver Institute, World Gold Council, Johnson Matthey
NOTE: Figures show 2018 demand

Higher rhodium prices are good news for South African producers, which account for more than 80% of global output. Gains in platinum-group metals and a weak rand helped a stock index for the nation’s miners to triple in the past year, reaching the highest since 2011.

But South Africa’s dominance also means production risks hang over the market. Power shortages last year temporarily interrupted some mining operations and there have been long mine strikes in previous years by workers wanting higher pay.

Risky Reliance

South Africa mines most of the world’s rhodium

Source: Johnson Matthey
NOTE: Figures show primary production in 2019; don’t include recycling



NEWS & COMMENTARY

Gold suffers 4th loss in 5 sessions

Gold dips as trade deal signing nears, palladium hits record high

Wall St pulls back on tariff report

Trade deal could be less than market hopes: ‘Tariffs have now become a roach motel’

NY Fed will continue repo offerings into February, reducing term operations

Europeans to trigger Iran nuclear deal dispute mechanism




GOLD PRICES (USD, GBP & EUR – AM/ PM LBMA Fix)
14-Jan-20 1544.95 1545.10, 1190.69 1188.49 & 1387.83 1389.35
13-Jan-20 1550.35 1549.90, 1194.54 1192.96 & 1394.85 1393.52
10-Jan-20 1548.80 1553.60, 1185.45 1189.28 & 1395.78 1399.64
09-Jan-20 1547.85 1550.75, 1186.89 1188.49 & 1393.99 1396.14
08-Jan-20 1582.85 1571.95, 1206.13 1197.35 & 1421.87 1412.87
07-Jan-20 1566.50 1567.85, 1190.85 1197.05 & 1402.80 1406.52
06-Jan-20 1576.85 1573.10, 1198.09 1197.29 & 1408.44 1406.51
03-Jan-20 1547.40 1548.75, 1182.37 1184.48 & 1389.57 1387.99
02-Jan-20 1520.55 1527.10, 1151.36 1161.51 & 1358.46 1366.91

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Mark O'Byrne
Executive Director

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