Platinum group metals are still stabilizing after last year's supply and demand side shocks from, for example, mine flooding in Russia, plant maintenance in South Africa, and lower automotive production from chip shortages. The Corona pandemic remains a factor. However, the impact should begin to fade. After all, vaccines are widely available. In addition, the new covid variants appear to be less dangerous. This should allow a gradual return to normalcy.
The industrial platinum market (excluding investment) remains significantly oversupplied. When the price declined last year, ETF investments fell. Without renewed buying interest from investors, it is difficult to imagine a price increase, according to precious metals experts at Heraeus. Platinum, which is used primarily in diesel exhaust catalytic converters, is still favorably valued compared to gold and palladium. However, a high inflation rate could make tangible assets such as platinum attractive to investors again. The broad industrial use of platinum and its partial substitution in the automotive industry will make the metal more interesting again in the long term. According to Heraeus, the range is between $850 and $1300 per troy ounce.
The palladium market will settle at a lower level after a historic high price last year. Supply will also recover here after the disruptions. Heraeus expects a minimal supply surplus. Palladium demand in the automotive industry is expected to reach a record 8.5 million ounces this year. The industry is the strongest consumer, accounting for around 90 percent - palladium is used in exhaust catalytic converters for gasoline engines. However, industrial demand (outside the automotive sector) is expected to fall by six percent this year, cushioning the price pressure from high demand from the automotive industry. Heraeus puts the range at $1400 to $2250 per troy ounce.
Rhodium, which is also very dependent on demand from the automotive industry, could be characterized by high price fluctuations. Heraeus assumes a balanced market. Even small shifts in supply or demand can strongly influence the price. Supply risks could arise from insufficient recycling volumes or from strike risks, as the three largest South African PGM mining companies are facing wage negotiations with the mining unions this year. The rhodium price is expected to return to a high range of between $7500 and $22,000 per troy ounce in 2022.
For ruthenium, the return to lower price levels is likely to continue. The metal, which is used primarily in the electronics industry, is expected to show a surplus this year. Supply is expected to increase by about two percent as production problems in Russia and disruptions due to maintenance work in South Africa have been overcome. At the same time, additional stockpiles are being processed in South Africa, which can cover the growth in demand. Heraeus experts see a price range for ruthenium between $250 and $600 per troy ounce.
A larger supply should calm the iridium market. Last year, the price had reached an extraordinary record high as processing problems in South Africa, which provides about 80 percent of the world's iridium supply, limited metal availability. Once these were resolved and market liquidity improved, the price began to fall again. Although a market surplus is expected this year, the iridium price is likely to return to a high level between $2500 and $5000 per troy ounce.
