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(Kitco News) - The global surplus of rhodium narrowed in 2010 to 114,000 ounces from 241,000 the year before, Johnson Matthey said in its “2011 Platinum” report issued Monday.

Mine supply dipped in 2010 while demand rose. Still, the market remained in surplus due to significant recycling.

Global mine supplies of rhodium declined by 19,000 ounces to 751,000, mainly due to a build-up of pipeline stocks in South Africa, Johnson Matthey said. Recycling from spent auto catalysts rose 26% to 236,000.

Meanwhile, demand increased by 22% to 873,000 ounces

“Higher levels of purchasing by the global automotive sector underpinned a rise in gross demand for rhodium,” Johnson Matthey said. “Increased capacity utilization and construction of new plants in the chemical and glass sectors also stimulated purchasing.”

Gross purchases of rhodium for use in auto catalysts rose by 105,000 ounces to 724,000 as worldwide production picked up from the “depressed” levels of 2009, Johnson Matthey said.

“The largest share of demand came from the light-duty gasoline sector, where rhodium is used together with palladium, and to a lesser extent platinum, in three-way catalyst formulations,” the report said. “However, continued thrifting of rhodium in auto catalysts, a knock-on effect from previous high prices, meant that automotive rhodium demand remained below the level of 2008 despite higher levels of vehicle production.”

Demand for rhodium in the glass sector jumped 200% in 2010 to 57,000 ounces, Johnson Matthey reported. This demand had been 19,000 in 2009 and 34,000 in 2008.

“There was strong demand from the TFT-LCD and glass fiber manufacturing sectors as construction of new and replacement capacity took place,” Johnson Matthey said. “The large year-on-year rise, however, was partly a function of depressed demand in 2009 when closure of old facilities returned large amounts of rhodium to the market.”

Some 68,000 ounces of rhodium were used by the chemical sector and another 4,000 for electricity. An additional 20,000 went into “other” uses.

By Allen Sykora of Kitco News; asykora@kitco.com

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