Rhodium

Rhodium is the third significant platinum-group metal, and the one this book would leave out if it were being written for tidiness rather than for how markets actually behave. It is far smaller than platinum or palladium, at roughly 24 tonnes a year, or under a million ounces, against the several thousand tonnes of silver and the thousands of tonnes of copper elsewhere in this book. It also has no futures contract anywhere in the world.

The reason it belongs here is that its price behaviour is the most extreme of any commodity on this site. It ran from under $600 an ounce in 2016 to roughly $30,000 in March 2021, collapsed to around $6,500 by 2023, and has since settled into a $8,000 to $9,500 range. Nothing else in these pages moves like that, and understanding why is a lesson that generalises well beyond rhodium.

The cause is supply that cannot respond at all. There is no rhodium mine. Every ounce is a byproduct of mining platinum and palladium, overwhelmingly from the Bushveld Complex in South Africa, which supplies over 80 percent of the world total at roughly 650,000 ounces, with Russia around 9 percent and Zimbabwe about 4. A miner deciding how much rhodium to produce is really deciding how much platinum ore to process, and the rhodium comes out in whatever near-fixed ratio the ore body dictates. Even a fifty-fold price rise cannot summon more, because the metal is not what anybody is digging for. This is the same structure as sulphur and helium elsewhere on this site, but attached to a metal valuable enough for the consequences to be spectacular.

Demand is almost entirely one thing. About 80 percent of rhodium goes into autocatalysts, specifically the three-way catalytic converters that reduce nitrogen oxides in petrol engine exhaust, a job rhodium does better than any substitute. That makes the demand curve a function of emissions regulation rather than of economic growth: when China and Europe tightened NOx limits, the loading of rhodium per vehicle went up, and the market discovered what an inelastic bid meets an inelastic offer looks like. The remainder goes to glass manufacturing, chemical catalysts, and electrical contacts.

The one genuine relief valve is recycling, which now supplies roughly a quarter of the market, mostly from spent autocatalysts recovered when vehicles are scrapped. That gives rhodium something the primary supply lacks, a source that does respond to price, since a high enough rhodium price makes it worth pulling converters out of scrap cars. It is also why converter theft tracks the rhodium price with a lag.

There is no exchange and no public price. Rhodium is quoted by a handful of refiners and traders, with Johnson Matthey and Heraeus publishing the reference assessments the trade uses, and deals are done bilaterally by phone. No futures contract has ever been listed, and the reasons are structural: annual supply worth a few billion dollars at best, three producing countries, a demand side of a few dozen catalyst makers, and price swings so violent that clearing houses would need punishing margins. A producer who wants to hedge rhodium generally cannot, and an industrial buyer who wants price certainty has to negotiate it into a physical contract. The metal is the clearest demonstration in this book of what the absence of a futures market actually costs: not inconvenience, but the loss of any mechanism to move risk from the people who cannot carry it to the people who can.