Analysts deliberate whether auto manufacturers can tolerate high rhodium prices

Analysts deliberate whether auto manufacturers can tolerate high rhodium prices
My Private Bullion News
March 23, 2020

 

London — With rhodium base prices continuing high March 12 at around

$25,000/oz – albeit around 15% below their record prices of a week ago – analysts are debating how long auto manufacturers can tolerate the spate of high prices for this metal used in auto catalysts. Alternatives may potentially be available to the auto manufacturers, specifically the option to replace some rhodium with higher loadings of platinum and/or palladium.

CPM Group’s head of precious metals research, Rohit Savant, told S&P Global Platts that auto manufacturers are able to tolerate high rhodium prices for short periods of time. Should prices stay elevated, auto manufacturers may thrift, or reduce on a per unit basis, the rhodium content.

Thrifting is the use of technological advances to reduce the amount of a material that is required for a certain purpose. In auto catalysts, this is where a lower loading of platinum group metals (rhodium, platinum, or palladium) is used in a single auto catalyst to create similar results.

Savant added that auto manufacturers can also use Selective Reduction Catalysts, “which are commercially available and are fitted to many large vehicles already.”

“They have been expensive and cumbersome to fit, but at the high price we have in rhodium more efforts should be expected to fit these catalysts on

more vehicles,” the analyst said.

Different emissions

Savant said platinum and palladium cannot be used as substitutes for rhodium in auto catalysts since the former two platinum group metals target different emissions.

“Rhodium is the only one that can reduce NOx emissions which are an important focus of newer emissions standards,” the analyst said.

Echoing that view was StoneX Group’s head of market analysis for EMEA and Asia regions, Rhona O’Connell, who told Platts: “In principle no, because converting NOx to N2 is a reduction process and platinum and palladium are essentially used as oxidation catalysts in after-treatment systems, but I have seen [South African PGM producer] Sibanye postulating that a palladium substitution might be feasible.”

Henrik Marx, global head of trading at Heraeus Precious Metals, one of the world’s largest platinum group metals refiners, said the topic of substitution has been discussed for decades within R&D groups of auto catalyst
manufacturers.

“Switching one metal with another is probably checked throughout entirely,” Marx said. “I personally doubt such a switch can be done easily and quickly not to mention qualification times for the car manufacturers.”

Trevor Raymond, director of research at World Platinum Investment Council, told Platts that when an auto catalyst is designed it is bespoke-produced and matched to the engine of the auto manufacture vehicle.

Substitution in recent period

In terms of if any platinum, palladium or rhodium substitution has taken place over the recent period, Raymond said automakers didn’t disclose how much platinum group metals they put on any particular vehicle.

“The catalyst manufactures, Johnson Matthey, BASF and Umicore, they are all bound by confidentially to not disclose [this information] because they know to the microgram how much metal is going in vehicles. Nobody is able to confirm the substitution,” Raymond said.

“What we have had in term of news flow is when Sibanye-Stillwater presented their results. They believe that the substitution volume will see an additional
1.5 million oz [of platinum] per annum in 2025. We are starting to get a
material number and there are many more anecdotal points to suggest that it is getting very material, very quickly. There has been some news flow on something that is still confidential.”

In March 2020, chemicals specialist BASF in collaboration with South Africa PGM producers Sibanye-Stillwater and Impala Platinum, launched a new
Tri-Metal Catalyst that enables partial substitution of palladium with platinum in light-duty gasoline vehicles without compromising emissions standards.

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