World’s priciest precious metal set to blossom as shortage looms
SEE ALSO :Agencies trade blame on factoryStable demand and dwindling supply in a rhodium market dominated by a small number of active players is a recipe for another price explosion, said Gerry Dawson, a consultant who has traded precious metals for two decades since working at refiner Heraeus Metals New York LLC. As platinum miners curb production, rhodium output will drop, causing prices to rally further, Dawson said. That could rekindle visions of the market a decade ago, when rhodium topped $10,000 an ounce after five years of a supply deficit were compounded by South African power shortages that curbed mine output. “There’s a history of big moves here,” Gerry Dawson said. Rhodium, which can resist high temperatures and outperforms other platinum-group metals in removing nitrogen oxides from car exhausts, recently traded at a seven-year high of $2,350 an ounce. It could go to $3,000 an ounce in the near term, said Nikos Kavalis, a founding partner of consultancy Metals Focus. Niche Market
SEE ALSO :Tech trends to look out for in 2019“Rhodium is a very small market, once its fundamentals change, there’s limited above ground stocks to meet demand,” Kavalis said by phone. “The fact that the price once rocketed above $10,000 remains in the back of investors’ minds.” Johnson Matthey Plc expects last year’s small rhodium deficit to become a surplus of 68,000 ounces in 2018. Beyond this year, the outlook for the metal looks fairly strong with auto-industry demand particularly supportive, the refiner said. Still, getting exposure to one of the rarest precious metals isn’t easy. While there are a few exchange-traded funds backed by rhodium, they are small and thinly traded. That leaves retail investors with a limited choice of bars or coins from a handful of dealers, or getting minor exposure to the metal through the shares of South Africa’s platinum miners. Rhodium has held up better than platinum because it’s primarily used in gasoline cars. While it should continue to outperform its sister metals, according to Simona Gambarini, a London-based economist at Capital Economics Ltd., she is less bullish on the price outlook. Gambarini expects slower economic growth in China and weaker sales in other core markets to lower the price of the metal to $1,950 an ounce by the end of the year.