Unpacking the PGM Market: A Deep Dive into Precious Metal Market Prices and 2024 Forecasts

If you've traded in platinum, palladium, and rhodium lately, you might be wondering why their market prices are so volatile. Understanding these rapid market changes can be confusing and hard to keep up with. That’s why we created a comprehensive guide to help you navigate this market, revealing the factors influencing PGM prices and offering insights into market forecasts for 2024.

So, if you’re ready to get all the answers, watch our video below or keep reading.

What Is a Catalytic Converter and Why Is It Valuable?

Without a converter, your car emits nitrogen oxides, carbon monoxide, and hydrocarbons. These emissions are harmful pollutants that contribute to greenhouse gases, global warming, and the depletion of natural resources. To combat toxic gas emissions, the government requires that all automakers install catalytic converters in gasoline, diesel, and hybrid vehicles.

These devices transform damaging emissions into less toxic gases, like water vapor and carbon dioxide. This process is called oxidation, and it’s only possible thanks to the platinum, palladium, and rhodium core inside the converter.

Because they contain valuable precious metals, converters hold significant value to scrap metal and automotive recyclers. These recyclers collect spent converters and ship them to processors who then extract PGMs from their cores. The recovered precious metals are then sold on the market for a price per troy ounce, providing a return on investment for converter recyclers. But how are market prices determined, and how often do they vary?

Like every other commodity in the world, precious metal prices vary according to supply and demand, economic realities, and more. These factors influence the prices of platinum, palladium, and rhodium, causing their values to change on a daily and even minute-by-minute basis.

Factors Impacting PGM Market Prices in 2023

For most of the year, market prices for platinum, palladium, and rhodium fell. Various factors contributed to this decline, including disruptions in the supply chain and industry, as well as fluctuations in supply and demand. Let's explore how these factors impacted the market prices for each metal.

Platinum

The demand for platinum continued to rise in 2023. As semiconductor chip shortages began to wane, automakers ramped up production. They also began substituting palladium with platinum to reduce costs, further boosting global demand for platinum.

Increased demand was also observed in the chemical application industry, where platinum catalysts are essential for fiber and plastics production. The glass industry also witnessed a surge in demand due to its crucial role in production.

Despite the heightened demand, platinum supply faced challenges in 2023. Electricity shortages, floods, and worldwide sanctions kept platinum mines from meeting demand. Recycled platinum supply decreased by 12% since 2022 and has yet to recover.

So what do high demand and low supply mean for platinum market prices?

Platinum Prices in 2023's Low-Supply Market

With the platinum supply low, prices surged at the beginning of the year. According to Kitco, platinum began 2023 at an average price of $1,053.52 per troy ounce. However, by the time June rolled in, platinum was fluctuating between $900 and $800. Kitco puts platinum’s average price for June at $970, more than $100 less than in January.

But by November, prices had dropped to the mid-$800s, almost $100 less than in June and more than $200 less than in January. Prices slowly started to pick back up by the end of November, grazing $900.

The sudden price drop and subsequent rise were attributed to rising inflation and high interest rates, leading to a slow economic growth in 2023. Despite increased automotive production, decreased consumer vehicle purchases meant lower new vehicle sales and production rates, impacting platinum demand in Q2 and Q3.

Palladium

More than 50% of palladium’s supply is used in the automotive sector for catalytic converter manufacturing. Although automotive production increased in 2023, carmakers started substituting palladium with platinum to cut costs. This substitution led to a decline in demand, influencing the palladium's price.

At the same time, the primary palladium supply dropped because of floods and electricity shortages in South African mines. The combination of dropping supply and reduced demand had repercussions on palladium market prices in 2023.

Palladium Market Prices: Unravelling the Drop

Kitco reported that palladium had an average price of $1,732.33 by the end of January 2023. Prices dropped to an average of $1,348 in June and $1,264.48 in July. In early November, prices fell below the $1,000 mark but rebounded, averaging around $1,078 and $1,048 by the end of the month.

Experts attribute this drop in palladium prices to prevailing economic conditions and trends in the automotive industry, such as palladium substitution. High interest rates and inflation caused consumers to save their money and forgo buying new cars, leading to a drop in new vehicle sales and palladium demand.

Rhodium

Demand for rhodium has been on the rise since 2022, thanks to the recovery in automotive production and industrial sectors. However, despite the increasing demand, mines struggle to keep up, and recycling isn't meeting demand either. This is attributed to a slowdown in car scrapping, stemming from low new vehicle production and sales. Consumers are keeping their older vehicles longer, and this is reflected in the price of rhodium.

Recycled catalytic converters represent 1/3rd of all rhodium supply, and with low converter volumes, less rhodium enters the recycling stream and returns to the global supply chain.

This means that there was a deficit of rhodium in 2023, which is expected to last until 2029. Let’s explore how these market dynamics affected rhodium’s market price.

Does a Rhodium Deficit Mean Rising Prices?

Rhodium started the year with a monthly average price of $10,977, but that quickly dropped to $4,652 by June and $3,305 in July. By the end of November, Kitco put rhodium at an average price of $3,981.

Certain countries have been selling their rhodium stocks at a discount to China, which might be weakening overall demand from China. Experts say this might be the reason why rhodium’s value dropped so suddenly throughout the year despite a lack of supply.

Looking Ahead to 2024: The Outlook for Platinum, Palladium, and Rhodium

Market analysts and experts anticipate a positive market outlook for PGMs in 2024 and well into the future. PGMs play a crucial role in over 20 industries worldwide, including hydrogen fuel cells, the pharmaceutical and medical sectors, hybrid vehicle production, electronics, and more.

Demand for platinum and rhodium is expected to exceed supply until 2027 and 2029, respectively, pointing to a rise in market prices. Platinum market prices are projected to hit an average of $1,000 by 2024 and $1,700 by 2030. Rhodium is expected to reach averages of $6,000 in 2024 and $7,500 by 2025.

On the other hand, there is predicted to be a surplus of palladium in 2024, resulting in average market prices of $1,800 in 2024 and $1,400 by 2025.

Impact on Your Catalytic Converter Recycling Business

Upcoming market changes have the potential to benefit your business. The rebound in car sales and automotive production is driving demand for PGMs. With expectations of more favorable inflation and interest rates, consumers are likely to purchase new vehicles and dispose of their old cars. For automotive and scrap recyclers, this translates into an increase in available scrap to recycle, including catalytic converters.

For more information, visit PMR’s Resource Center.