INTERVIEW: Rhodium base price pace slackens: Heraeus

London — The surge in rhodium prices has slowed down in recent sessions, although current rhodium base prices continue to be well supported by fundamentals, Heraeus' global head of trading Henrik Marx told S&P Global Platts.

"In the short-term, there might be some upside potential but what we have seen over the last few days is things are slowing down a little bit, it's not at the pace that it has been in the last 4-6 weeks," Marx said in an interview Jan. 20. "I do see some upside potential in the short-term but we also believe that perhaps the threshold of $22,000/oz, maybe a little more, might trigger some investors to give back some liquidity, and maybe that is happening already and the reason for the slight slow-down."

On Jan. 21, the Johnson Matthey London rhodium base price decreased $400/oz, down 1.8% day on day, and dropped for the first time since Nov. 13, when at the time it stood $14,700/oz.

Rhodium base prices from leading European platinum group metal (PGM) refiners Johnson Matthey (JM) of the UK and Engelhard Materials Services (BASF) of Germany stood at $21,500/oz and $21,900/oz, respectively on Jan. 21.

Heraeus Precious Metals rhodium industrial price stood at $22,150/oz, up 22% YTD, and unchanged from Jan. 20.

Rhodium's robust base prices are as a result of supply tightness, an existing deficit, and strong demand from China for the metal which used in auto catalysts, though Marx approach remains conservative in terms of the next price spike.

"I would not go as far as some have suggested that the next threshold we should look at is perhaps $30,000/oz. I don't see that yet," Marx said. "In terms of the deficit, we believe it is not as large as the price might make it look."

Rhodium is used in catalytic converters to control nitrous oxide emissions and other greenhouse gases. Nearly 80% of the annual demand for rhodium comes from the global automotive industry.

No impact on mines

On the subject of cargo movements and potential logistical bottlenecks, Sibanye-Stillwater senior vice president and head of investor relations, James Wellsted, told Platts that the company was not experiencing issues and "none anticipated", while group executive for corporate relations at Impala Platinum, Johan Theron, said Implats was undergoing "no impact at this time."

This is echoed by Marx who said no impact had been observed in South Africa: "Looking at Northam [Platinum], the shipments are coming in regularly, logistics are back to normal."

"Of course, you never know how the coronavirus will affect [operations] if they [South African mining sector] have another forced shutdown, but what we hear is that the mines are running well," Marx said.

South Africa accounts for around 80% of global, mined rhodium supply.

On Jan. 11, in a televised address to the nation, South African president Cyril Ramaphosa said that the level 3 lockdown, first implement on Dec. 28, would be further extended.

The South African government closed 20 land ports of entry until Feb. 15 for general entry and departure though there are a number of exceptions to the rule which include the transport of fuel, cargo and good.

On the subject of the secondary market, Marx said no dramatic change had been detected.

"We still have stable inflows and the big part of that are the mines with fresh supply, but on the other hand talking with refineries everything appears to be normal with scrap coming from other markets, so also pretty stable," Marx said.