Rhona O’Connell, StoneX Head of Market Analysis for EMEA & Asia, discusses the changing fundamentals behind palladium and rhodium prices.
Palladium and rhodium are produced as byproducts, primarily in South African platinum and Russian nickel operations. Despite their rarity, their use is highly concentrated. “It’s over 80% for palladium, and it’s over 85% for rhodium” notes O.Connell, largely due to their roles in catalytic converters for gasoline engines.
As nations aim to cut emissions, demand for internal combustion engines is projected to fall. This transition is expected to materialize by 2037 or 2038, even if the net zero goals themselves are delayed.
In addition to falling new demand, scrapped vehicles will bring more palladium and rhodium back into circulation. O'Connell adds, “You're also going to get scrap coming back from old vehicles”, which could compound oversupply concerns, underscoring how this shift will alter the pricing structure of these metals.
O’Connell cites both “political issues at the top and trade tensions” along with consumer resistance as key reasons why net zero targets won’t be met on time. This creates uncertainty for automakers and metal producers alike. “Ford and GM are already considering changing the structure” of their transition plans.
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---- Written by: Gus Farrow
---- Expert: Rhona O'Connell, StoneX Head of Market Analysts, EMEA & Asia
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