Rhodium beating platinum to palladium on car sales

Global Growth

The International Monetary Fund predicts global growth will climb to 3.5% this year from 3.2% in 2012, even as it sees a second year of contraction in the euro area.

Carmakers will boost rhodium demand by 8.4% to 841,000 ounces this year, rising to 930,000 ounces in 2014, SBG estimates. The metal converts nitrogen oxides, blamed for acid rain, into nitrogen and oxygen. So-called Euro 6 legislation from next year will require even less nitrogen-oxide emissions from some vehicles.

Continued shortages are needed to erode almost 500,000 ounces of above-ground stockpiles that were accumulated from 2008 to 2011, Deutsche Bank said in a Jan. 16 report. The bank expects that overhang to last until 2019.

Baird & Co., a U.K. precious-metals dealer, sold about 10,700 1-ounce rhodium bars since May, or more than 10 times the amount planned when production began in May 2012, Tony Dobra, a director, said in a Feb. 20 interview. The London-based company expanded with bars that weigh 1/10 an ounce to 5 ounces to meet increased demand.

“At the moment we can’t make them quick enough, so we are stepping up production,” Dobra said. “The market is so thin that it just needs a car company to buy a year’s worth of production or a hedge fund to pull out a little bit of loose change. It doesn’t take a lot to create quite sharp price movements.”

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