The world’s most expensive metal, which until recently was caught in a bottomless bear market, is now enjoying a boom. Rhodium, an ultra-rare element on the planet, accounting for only 0.0000003% of the Earth’s crust, is having a sweet moment. The platinum derivative has already risen more than 25% so far this year, from $4,570 per troy ounce (the unit of measurement for high-value precious metals) to $5,700.
The raw material has experienced unstoppable rises since the beginning of February, which would suggest that it is one of the victims of Trump’s tariffs, but the reality of the silver element is much more complex. To understand what is happening, it is necessary to understand the nature of this raw material, which has achieved these prices not because of high demand, but because of its extreme scarcity.
Annual rhodium production is a mere 30 million tonnes and its use is basically limited to a very specific component in the automotive sector. This metal is mainly used in catalytic converters for petrol-powered cars. These catalytic converters serve to reduce carbon emissions and are a very efficient element for this purpose. It has some other minor uses, such as in certain high-quality electrical components or some specific processes in the chemical industry, but none on a scale similar to car production.
This material experienced a real crisis with a collapse in prices in recent years, as demand for vehicles froze due to the gloomy macroeconomic outlook and, especially, as demand for electric cars that do not require rhodium catalytic converters grew. At the height of the slump, it even lost its crown as the world’s most valuable metal, surpassed by iridium.
The problem with rhodium is that, in any case, almost all of it is produced in South Africa, which accounts for nearly 80% of the world’s supply. There are some deposits in the Urals, in Russia, and in Ontario, Canada, but the reality is that Cape Town controls the market. In this sense, the 25% price increases have more to do with this reality than with anything else. According to the latest data from Metal Focus, the deficit is permanent, but it has been exacerbated by a disruption in supply from this country.
In March this year, prices shot up 20% in a single month after a series of floods across the country blocked the Tumela mine, among others. This has caused a shock in the price of the raw material that is still ongoing. Added to this is a wave of speculation. Many investors have bought the silvery metal to protect themselves from geopolitical winds. It is not as common as gold or even silver, but rhodium is part of the basket of precious metals that investors turn to when geopolitics tightens.
However, leading market analysts have no hope for a prolonged rebound. In fact, they believe that rhodium has only a long decline ahead of it, which could even end up stripping it of its crown once again. ‘While the price could rise, it should be short-lived,’ explained Wilma Swarts, director of PGM (platinum-group metals) at consultancy Metals Focus, adding that long-term weakness was expected due to the rise of electric vehicles.
According to Metals Focus, the global rhodium market deficit is expected to narrow this year to 74,000 ounces from 143,000 ounces in 2024, with demand falling 8% to 1 million ounces and supply declining 2%. In other words, no matter how many problems there are in production, the race is in demand, which will inevitably fade away.
‘The positive impact of tighter climate controls (which pushed rhodium to 27,000 euros per ounce) seems to have finally come to an end.’
Heraeus takes it for granted that the ceiling for the raw material in the coming months is 5,400 dollars per troy ounce, with a floor of 4,400 dollars. In any case, both this firm and Metal Focus foresee a final swan song this year thanks to bottlenecks in South Africa, with an 8% increase over current levels this year. According to their calculations, rhodium stocks will fall by 23% to 349,000 troy ounces in 2025, the lowest level in 40 years.
The decline in rhodium will continue, but only when the problems in South Africa are resolved. ‘Given that inventories are in the production process, rhodium will remain susceptible to any pressure in the physical market,’ Metal Focus said.
In any case, Heraeus is talking about a controlled decline from now on. Although demand will decline, they believe that South Africa itself will adjust production to keep prices high. ‘Producers could act to control costs by reducing production.’ In this regard, they expect that as demand slows, so will production. ‘The positive impact of tighter climate controls (which pushed rhodium to 27,000 euros per ounce) seems to have finally come to an end.’
