Rhodium – 2015’s biggest loser amongst the precious metals
Ruthenium stable, Iridium with moderate changes
Rhodium was at the bottom of the precious metal league in 2015 – which is a big surprise considering the overall economic situation. In comparison to other precious metals, rhodium has one great advantage: The automotive industry is still extremely de-pendent on it since it requires more metal for the production of automotive catalysts, than the mines annually produce. The large buffer of rhodium stems from recycling, which nowadays accounts for approximately 30% of the metal’s total supply. In the light of this, it is hard to understand why rhodium lost almost 50% of its value in 2015. The highest traded price of 1.250 $/oz was recorded in early January, the lowest at 650 $/oz was reached in late December. Hence, rhodium steadily lost value, apart from a few brief exceptions. The first reason was that rhodium no longer managed to generate great confidence amongst investors and ultimately this fact tipped the scales against its favor. Secondly, the large mines self-marketed the metal on a grand scale and this did not exactly foster trust on the part of the consumers. The 5-year average stands at 1,300 $/oz and thus still above the first traded price of the year.
Looking ahead to the first 6 months of 2016 we envisage a range of between 500 $/oz and 750 $/oz. At the low price level, recycling becomes far less attractive and given lower supply, there is subsequently reduced pressure on the price. A newly launched ETF by a large bank could also provide some level of support. Since we are trading on a 12.5-year-low, it is quite conceivable that investors may benefit from this opportunity to enter the market.
The robust automotive industry and the prevailing strong demand from the chemical and glass industries also lead us to believe that the rhodium price will soon bottom out. The mining industry has certainly experienced one of the most difficult years in its history. Everything possible is being done to prevent the price decline, including measures that are not always pleasant.
Ruthenium was unfortunately yet another metal, which did not experienced its heyday in 2015. Once again, we have a metal that is highly dependent on one particular industry, in this instance the electronics industry. Steadily improving recycling processes have enabled significant yields in this field. But demand also remains very high based on the increasing need for data storage. The requirements from other industrial sectors also using ruthenium, such as the chemical and electrochemical industries, are robust, but regrettably, the volumes are too low to have any major influence on the price. The price curve ran analogous to rhodium: The highest price (60 $/oz) was noted at the beginning of the year and the lowest (42 $/oz) at the end. For the coming months, we foresee only marginal movement and little potential. We expect the prices to range in a narrow band between 32 $/oz and 47 $/oz.
Iridium was the only "minor" PGM with a more volatile price, but in fact, the absolute changes were more moderate. The highest level was reached with 580 $/oz and the lowest with 500 $/oz. Yet the smallest of all precious metals has the widest range of applications: Chemical and electrochemical products, spark plugs, medical technology and crucibles for the semiconductor industry are responsible for a major share of the consumption. We anticipate that demand will remain stable among these consumers. Looking ahead, we envisage a price range of between 490 $/oz and 570 $/oz for the next 6 months.