The spectacular start of the year of rhodium: the most expensive metal in the world shoots up 30%

1. elEconomista.es

Anyone who is asked on the street if they prefer a kilo of gold or a kilo of rhodium will probably bet vehemently on the first option. However, one ounce of rhodium can buy up to five gold. Rhodium is a relatively unknown metal but it has the honor of being the most expensive in the world. Its demand for catalysts in gasoline cars and for certain processes in jewelry are driving up the prices of this material.

Rhodium is a rare metal. There are no rhodium mines as such, its extraction is achieved as a result of other mining activities. For example, in South Africa, where 80% of rhodium is produced , it is considered a by-product of palladium. However, in Russia, the second largest producer in the world, it is obtained as a by-product of nickel.

It is considered the most expensive metal in the world after reaching $8,000 per ounce this year. Rhodium is the metal that has experienced the greatest increase this beginning of the year, shooting up 30% since the beginning of this 2020.

Rhodium belongs to the platinum family and is very hard to come by. In fact, in recent years, its price has multiplied by 13, raising its price per ounce above the 8,000 dollars mentioned above (ounce of 28 grams), the highest level since 2008.

However, "we must remember that, in the crisis of 2008, the price of rhodium exceeded 10,000 dollars per ounce, to fall eight years later to 640 dollars. Last Tuesday, the ounce of the metal was paid at 7,925 dollars, about 300 dollars below the maximum marked in January, which stood at 8,202 dollars," explains Diego Morín, an analyst at IG Markets.

Like platinum or palladium, rhodium is used in car catalysts, with the aim that cars emit less CO2 into the atmosphere, thanks to the European Union regulations in October 2018. "If the increases in the price of rhodium, the automobile industry could stop buying this metal and continue buying palladium or platinum, just as it happened years ago with prices, when an ounce of rhodium was above 10,000 dollars", states the analyst .

As published by the Bloomberg agency, South Africa produced more than 600,000 ounces of rhodium in 2019, while Russia, the second largest producer in the world, extracted 69,000. The rest of the production takes place in Canada, the US and Zimbabwe, but with much smaller quantities than South Africa and Russia. Likewise, the African country has a great capacity to control the market, therefore, we could see greater price increases in the coming days.

There is no futures market and there is a limited supply of pure rhodium bars. Very few investors participate in this business because there are not enough transactions in the markets, given its scarcity and the use made of it by companies in the automotive industry.

We cannot invest in rhodium as there is no exchange market, let alone a futures market, therefore the price is at the expense of supply and demand from suppliers and the industry.