Market and product
Global rhodium surplus seen falling to 40,000 oz in 2012
The global rhodium surplus should fall to about 40,000 oz this year from96,000 oz in 2011, precious metals analyst Erica Rannestad of the New Yorkresearch firm CPM Group said Tuesday.
The forecast is well below the 63,000 oz surplus CPM estimated earlierin its Platinum Group Metals Yearbook 2012 and is largely the result ofAquarius Platinum's decision to close its Marikana and Everest mines in SouthAfrica, which have a combined annual production of about 150,000 oz of PGMs,Rannestad said in a webcast presentation.
Total rhodium supplies last year rose to about 991,000 oz, up 2.6% fromthe previous year. The supply increase was the slowest among theplatinum-group metals, she said.
Mine supply rose 2.1% to 808,588 oz in 2011 due to a decline in SouthAfrican production, while secondary supply from scrap recovery rose 4.5% to183,000 oz.
But that rate of increase contrasts with the trend in South Africanproduction over the few decades, Rannestad said. "In the past few decadeswe've seen the growth rate in rhodium supply in South Africa rise at a muchmore rapid pace than platinum and palladium," she said.
The production surge was due most to technological advances that allowedeasier rhodium extraction from the ore, resulting in greater recovery rateseach year.
"We believe this is mostly behind the market and that going forwardrhodium supply growth in South Africa will be more in line with platinum andpalladium," she said.
Rhodium fabrication demand rose 1.3% in 2011 to 894,596 oz from 2010 dueto a modest increase in auto sector consumption. The auto sector accounts forabout 80% of rhodium fabrication demand.
This year, overall rhodium fabrication demand is expected to grow 2.8%to 919,000 oz, driven by stronger growth from the auto sector of about 2.7% due to tightening emissions standards in Europe and the continued ramp-up ofvehicle production in Japan.
Rannestad noted that rhodium prices have fallen to about $1,200/oz frommore than $2,400 oz at the beginning of last year.
The price decline was driven by ample rhodium supplies as well as"aggressive thrifting" by manufacturers, who have been reducing the amount ofrhodium used in various applications, including catalytic converters, shesaid.
The forecast is well below the 63,000 oz surplus CPM estimated earlierin its Platinum Group Metals Yearbook 2012 and is largely the result ofAquarius Platinum's decision to close its Marikana and Everest mines in SouthAfrica, which have a combined annual production of about 150,000 oz of PGMs,Rannestad said in a webcast presentation.
Total rhodium supplies last year rose to about 991,000 oz, up 2.6% fromthe previous year. The supply increase was the slowest among theplatinum-group metals, she said.
Mine supply rose 2.1% to 808,588 oz in 2011 due to a decline in SouthAfrican production, while secondary supply from scrap recovery rose 4.5% to183,000 oz.
But that rate of increase contrasts with the trend in South Africanproduction over the few decades, Rannestad said. "In the past few decadeswe've seen the growth rate in rhodium supply in South Africa rise at a muchmore rapid pace than platinum and palladium," she said.
The production surge was due most to technological advances that allowedeasier rhodium extraction from the ore, resulting in greater recovery rateseach year.
"We believe this is mostly behind the market and that going forwardrhodium supply growth in South Africa will be more in line with platinum andpalladium," she said.
Rhodium fabrication demand rose 1.3% in 2011 to 894,596 oz from 2010 dueto a modest increase in auto sector consumption. The auto sector accounts forabout 80% of rhodium fabrication demand.
This year, overall rhodium fabrication demand is expected to grow 2.8%to 919,000 oz, driven by stronger growth from the auto sector of about 2.7% due to tightening emissions standards in Europe and the continued ramp-up ofvehicle production in Japan.
Rannestad noted that rhodium prices have fallen to about $1,200/oz frommore than $2,400 oz at the beginning of last year.
The price decline was driven by ample rhodium supplies as well as"aggressive thrifting" by manufacturers, who have been reducing the amount ofrhodium used in various applications, including catalytic converters, shesaid.
