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Rhodium Demand Will Remain Strong - Johnson Matthey

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(Kitco News) - ? Investors should not expect to see any drop in rhodium demand any time soon with increased emission regulation and no real substitute technology, according to Stewart Brown, principal analyst at Johnson Matthey.

Stewart Brown, left, talks to Kitco's Michael McCrae

Brown spoke Wednesday at the International Precious Metal Institute's Auto Catalyst and Fuel Seminar in Atlanta, Georgia.

Rhodium, used in catalytic converters to reduce nitrous oxide emissions, is on a tear rising 48% over the past 12 months to US$1,279 oz.

"Rhodium is incredibly good at doing nitrous oxide conversion," Brown said.  "Original equipment manufacturers will use thrift where they can, but there is no substitution."

Palladium is also up substantially, but there are more options for palladium and platinum substitution.

In the past 12 months, palladium is up 40% to $1,333 oz.

Brown said the run-up in palladium prices was forecast, but original equipment manufacturers need to see sustained, elevated prices before acting.

Substitution is being studied but devoting resources is difficult since OEMs are busy trying to develop catalytic converters that will meet future regulatory requirements.

Demand for platinum group metals should not let up in the long run, even with more battery electric vehicles taking more market share.

According to Bloomberg, electric-vehicle sales could reach 55% of all vehicle sales by 2040.

Absolute sales of electric vehicles will still grow since the overall demand for automobiles will increase worldwide. Brown also said that emission regulation will become stricter requiring evermore platinum group metals.  

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.