Johnson Matthey: Rhodium demand is exceeding supply

By Tom Stundza -- Purchasing, 5/21/2008 10:40:00 AM

Newly mined and processed rhodium will fell short of year for the second straight year in 2008, suggests the Johnson Matthey Platinum 2008 report released this week. Demand by the automotive industry for rhodium used in catalytic converter exceeded mine production from Western sources and Russian sales combined in 2008. And that didn’t account for other industrial and jewelry uses.

To cover the deficit, the marketplace relied on recycled material and inventoried metal. The same scenario is projected for 2008, since the deficit may grow if South African mining woes continue and reduce the amount of new rhodium supply.

Total rhodium supply rose to 822,000 troy ounces in 2007 (with mine production
from South Africa accounting for 696,000 oz) from 802,000 oz in 2006 (with South Africa contributing 666,000 oz). Russian sales declined to 90,000 oz last year from 100,000 oz the previous year. Total demand for rhodium rose for the sixth consecutive year to reach 856,000 oz in 2007 from 838.000 oz in 2006, with autocatalysts accounting for 679,000 oz last year from 663,000 oz the previous year. Metal reclaimed by recycling rose to 183,000 oz last year from 171,000 oz the previous year.

The average price of rhodium soared to $6,061/oz in the U.S. last year from $4,498 in 2006. This year, the five-month price already is $8,164. This has set in motion research aimed at reducing the amount of metal used in various applications. “Sustained high priced did have an effect on consumers,” says the Johnson Matthey report, which cites reduced use of the metal in some applications this year and eliminated use in others.