About three years ago, Chinese manufacturers of fibreglass began shifting the metals mix in their product in ways that would have profound implications for platinum group metals producers and, by extension, South Africa’s ailing economy. Rhodium had just scaled record highs of close to $30,000 an ounce, making it the most expensive precious metal in recorded history. For Chinese brands of fibreglass, this rendered its cost radioactive.
PGMs all lie next to each other in groups 8 to 10 on the periodic table of elements. What clearly happened was that Chinese chemists applied their minds and found a way to substitute far cheaper platinum for rhodium in the mix of the alloy used for fibreglass. Platinum has been flatlining since then, roughly between $900 and $1,000 an ounce, and rhodium lost about half of its value from its lofty peaks in April 2021 to November of that year.It then had a dead-cat bounce and reached the bottom of its current cycle in August last year, when it hit about $4,100 an ounce. It’s been flat since.
The price of palladium close to three years ago was also fetching record prices of over $2,900 an ounce, driven by a range of factors, including the switch to petrol from diesel engines in key markets amid concerns about supplies. Palladium is a key catalyst for petrol engines. The PGM market has also been undermined on other fronts, notably the still fragile global economy, high interest rates and the hype about battery electric vehicles – which require other metals such as cobalt and lithium – overtaking the internal combustion engine. The result has been a bloodbath.
Indeed, there is that possibility. And in some lab out there, someone is mixing and matching PGMs, and the results could again shake up the sector, for better or worse.I don’t see a problem, except for DM trying to paint a sinister picture with the choice of headline wording, when there isn’t one.