What Does a Rising Rhodium Price Tell Us About Demand?

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Precious Metals, Supply & Demand

In short, it tells us that any change in automotive demand greatly impacts rhodium prices. On Monday, the Midwest Federal Reserve released some numbers and according to this press release, the Chicago Fed’s Midwest Manufacturing Index fell 0.3% for June despite an improvement in automotive output up 1.4% for June.   In addition, regional car production was still down 42.6% versus June 2008, while auto output nationwide fell 24.5% for the year, and despite these numbers, rhodium managed to increase 5.4% yesterday.

As one can see the price had actually risen higher than its current level back in April but appears to be breaking through its 60-day ceiling. The chart below tracks rhodium for the prior six months:

There are two interesting trends to watch within the Rhodium market. The first, and more obvious one relates to overall automotive demand. Because rhodium is primarily used in catalytic converters to remove NOx gases, with few to no substitutes, when automotive demand picks up, so too does rhodium. And yesterday, the federal government’s Cash for Clunkers program went into effect. We will be reporting on sales over the coming months. Auto output likely increased to support sales as a result of the program. Stimulus programs such as these could most certainly impact rhodium prices. The second trend to watch relates to increased emissions standards for cars and specifically, tailpipe emissions.

Once demand does pick up, we can expect rhodium demand to also increase.

–Lisa Reisman

Comments (5)

  1. zubair says:

    hi i think rhodium will go by 1650 oz to 2600 oz by this year bec the automobile demand will come by end of aug and heavy demand will come from china .1500 oz is bottem price

  2. Anonymous says:

    i said it before that rhodium demand come it is right time to purchage 1925 oz by end off november it will be 2900 oz 2009 26 oct zubair nagauri arts

  3. zubair nagauri arts says:

    i said it before price of rhodium will jump

  4. zubair nagauri arts says:

    this is the right time by 15jan 2010 rhodium will go buy 3450 oz

  5. zubair nagauri arts says:

    jan 2010 rhodium will jump upto 3800 oz

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