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Rhodium prices break through $1,000/oz on supply tightness

https://www.chemnet.com   Mar 27,2017 Platts
Rhodium prices rocketed through the $1,000/oz resistance level this week after speculative investors declined to release metal to the market, forcing consumers in need to buy the metal at higher prices.

The Platts New York Dealer rhodium price rose to $945-$1,015/oz from $905-$950/oz last week.

Prices began moving higher on Tuesday as European refiners began lifting their base prices in response to steady demand from industrial consumers.

UK refining majors Johnson Matthey and Engelhard Materials Services, a division of German specialty chemical producer BASF, ended the week at $1,015/oz after closing last week at $960/oz.

Bid/ask spreads varied greatly. Some market sources reported bids as low as $920/oz, while other sources reported sales as high as $1,020/oz.

"I don't know how good industrial demand is right now, but in the past couple of weeks, rhodium has been in backwardation," one PGMs dealer said, referring to a market when metal for nearby delivery is more expensive than metal delivered several months forward.

Backwardated markets tend to develop when current supply begins to fall and/or immediate demand begins to increase.

"It's costing more to borrow rhodium if you can find someone who will lend you some, so you're forced to buy it," he added, putting this week's range of physical deals at $950-$1,020/oz.

A second PGMs dealer who put the range of deals at $970-$1,015/oz said "a couple of the banks were hoarding" and unwilling to release rhodium to the market. Nevertheless, rhodium "is well bid at the moment," he added.

A PGMs refiner/recycler agreed, saying there was "decent, real demand" from industrial consumers, and put this week's range at $945-$1,013/oz.

But a second PGMs refiner pointed to the amount of rhodium held by banks and speculative investors as the primary reason for the price increase. "I don't think there is that much industrial demand to drive these prices that much higher right now," he said, putting this week's range at $925-$1,010/oz.

Rhodium is primarily used in automobile catalytic converters to reduce vehicle emissions, and is alloyed with platinum to create glass reinforcement fiber for digital displays.

Elsewhere, the Platts New York Dealer ruthenium price ticked up to $37-$43/oz from $35-$40/oz after reports of increased buying over the past two weeks.

But not all sources agreed that the buying had lifted prices, arguing they could still buy ruthenium at $40-$41/oz given the abundant supply.

In a report earlier this week, German precious metals recycler/refiner Heraeus said that "for a few days now, there has been some nervous activity in ruthenium. Turnover reached a level we have not seen in a long time."

Heraeus said it appeared traders and smaller investors were trying to position themselves, even though only a few industrial transactions had occurred.

"Even though the price has risen slightly, there is by no means a shortage in the market. It remains to be seen whether the current situation persists and whether prices may after all move a little more," Heraeus analysts said.

Ruthenium is mostly used in electrical contacts and computer hard-disk drive sensors.
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