Rhodium jumped to a 26-year high on Friday due to endemic supply tightness, and prices look set to exceed 1980’s all-time record of $US7,000 an ounce soon, according to Reuters.
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Traders said an already tight market for rhodium, used in the manufacture of autocatalysts and in glass-making, was being sqeezed further by speculators buying a metal that has jumped 105% this year.
“Definitely it will hit that historic high soon. How high can it go – who knows?” a trader reportedly said.
Spot rhodium was at $6,150/$6,250 an ounce, having sped higher from last week’s $5,300/5,400 without interruption, the news agency said.
Apart from a mid-2000 price peak, rhodium has been in the doldrums for most of the last 25 years, trading as low as $190 in 1997, Reuters noted, adding that demand is growing strongly, with plasma LCD (liquid crystal display) glass-makers the latest boom sector, and supply cannot keep up.
“It is quite simple, demand has been good for the last few years and stocks have been run down,” another trader told the news agency.
Reuters noted that, earlier this week, top refiner Johnson Matthey, in its annual review of platinum metals, said: “With demand for rhodium growing by more than twice the rate of increase in supplies, the market moved to a deficit of 58,000 ounces.”
Traders reportedly said investment fund interest was the latest bullish ingredient, even though rhodium was relatively illiquid and not traded on any futures exchange.
“They (funds) have to find something that gives a bigger return than putting money in a bank or bonds. They are so powerful now and investing (in rhodium) does not take up a big part of their portfolios,” the first trader told Reuters.
“The risk is when they decide to take profits — then it could get messy.”
The report warned that sky-high prices also carry long-term implications for the market’s health.
“It took a long, long time to recover last time after if fell (from $7,000). The producers have lost control of the market now,” the trader told Reuters, adding: “As a producer, you look to the long term – you don’t want to force consumers to look for substitutes.”
