Like its sister metals palladium and platinum, rhodium’s main application is to clean vehicle emissions, and surging demand amid tighter pollution regulation, particularly in Europe and China, and supply shortfalls from top producer South Africa could see the metal rally further.

South African PGM producers extract a mix of metals comprising roughly 60% platinum, 30% palladium and 10% rhodium and supply from the African nation would likely be a fifth below 2019’s total.

Insufficient supplies meant producers short of metal to honour contracts had been buying in the spot market, a rhodium trader told Reuters:

A 17% slump in rhodium supply to 945,000 ounces will leave the market with a 55,000-ounce deficit this year, Heraeus and SFA (Oxford), a research house, said in a recent report.

Heraeus and SFA expect prices to fall back below $10,000 within six months as supplies normalize, but the market could remain volatile.

Rhodium is also alloyed with platinum to make reinforcement fibre for the high-tech glass on consumer electronics, and used as a catalyst to make certain chemicals.

Due to rarity, the small size of the spot market (all of which is over the counter) and concentrated supply, prices are typically volatile.

Rhodium had a stunning run in 2019, rewarding investors with steady gains ending in 150% in annual returns, but there are few commodities as volatile as PGMs.

In 2008, rhodium touched $10,025 an ounce just before the global financial crisis hit, but the metal would drop 90% before the end of that tumultuous year.