The Global Missing Core Problem Hit: Platinum Group Metals Prices Were Hit Hard

In addition to downstream manufacturing, such as cars, platinum-group metals such as palladium, rhodium and platinum are among the hardest hit by a global chip shortage.

Palladium, rhodium and platinum prices are expected to remain under pressure in the future as global auto production declines sharply, although palladium is the most likely to rebound if chip supply picks up, according to Citi analysts.

The chip shortage has hurt

Palladium, rhodium and platinum are mainly used in automobile engine exhaust emission control catalysts. Specifically, platinum is mainly used in diesel vehicle exhaust catalyst, while palladium is mainly used in gasoline vehicle exhaust catalyst.

Demand for palladium, rhodium and platinum has picked up over the past few years as China and Europe have imposed stricter vehicle emissions standards, sending prices to new highs this year. However, demand for palladium, rhodium and platinum has fallen sharply in recent months as a chip shortage has forced many carmakers around the world to halt production.

铂金，钯和铑全部从今年早些时候的高度衰减

So far, palladium has fallen to around $2,000 an ounce from a record high of more than $3,000 in May, rhodium to $12,000 from a record high of nearly $30,000 an ounce in March, and platinum to $950 from a seven-year high of $1,336.50 in February.

Among the platinum group metals, palladium and rhodium are the ones that are relatively deeply affected by the reduction of automobile production, while platinum is relatively less affected:

Annual consumption of palladium is about 10 million ounces, of which automobile production accounts for 80%;

每年铑消耗量约为100万盎司，其中汽车生产占90％;

Platinum consumption is about 8m ounces a year, of which automotive production accounts for about 40 per cent.

LMC Automot报告ive, a consultancy, estimates that light vehicle production this year will be about 7m fewer than originally expected.

威尔马·斯普尔的金属焦点，一个国际衍生品思维坦克，估计每1米轻型车辆需要大约100,000-15万盎司的钯，40,000-50,000盎司的铂金和8,000-10,000盎司的铑。

On a rough basis, light vehicle production cuts this year will result in a reduction in demand for about 700, 000 to 1, 05 million ounces of palladium, 280, 000 to 350, 000 ounces of platinum and 56, 000 to 70, 000 ounces of rhodium.

Palladium is the easiest to rebound

分析师表示，在铂族金属中，钯是最有可能反弹的。然而，芯片短缺持续时间越长，对汽车生产的影响越大，未来钯篮板的影响越弱。

Oliver Nugent, analyst at Citi, said platinum group metals could fall further in the near term, but prices could rebound in 2022 and 2023, particularly for palladium. Unlike platinum and rhodium, palladium has been in short supply for years.

For most of the past decade, platinum (light blue) was in oversupply and palladium (dark blue) was in undersupply

To meet current demand, Mr. Nugent said, many automakers have reduced inventories of finished vehicles. And when chip supply picks up in the future, carmakers will need to replenish inventories of finished cars, which means they will have to overproduce.

"The industry will be restocking across the board," he said. If you want to make money from it, palladium is the place to go."

Now, however, carmakers are trying to save money by replacing palladium with cheaper platinum and switching to emissions-free electric cars.

That means the longer it takes to resolve the chip shortage, the less likely palladium and rhodium prices are to return to record levels, said Nicky Shiels of MKS PAMP GROUP, an industrial and trade services company.