The months of July and August has witnessed a sharp increase in rhodium prices, from a low of around $1,080 an ounce up to nearly $1,300 per troy ounce. The price boom is not coming as a surprise — many analysts predicted that rhodium prices would bottom out late last year, after which industrial users of the metal would buy up supplies while they are cheap. Indeed, 2014 demand for rhodium is expected to exceed supply by around 78,000 ounces, a disparity that will certainly push the price of rhodium higher as the year goes on.
Investor demand for rhodium has also increased as a consequence of the expected price surge. Investors have been buying rhodium bars online in large numbers, taking advantage of the relative low rhodium prices. Despite the increased bullion investment in rhodium, the industrial buying of rhodium is what is really pushing up prices overall.
The boom in rhodium prices could endure for a long time. Goldman Sachs predicts rhodium price increases until 2017, and the Deutsche Bank released a report in January that points out that the demand for rhodium shall exceed the annual supply until at least 2020. Deutsche Bank also predicts that rhodium production in South Africa (which accounts for 80% of the global annual rhodium output) will fall by nearly 6%. A shrinking supply, coupled with increased demand, will assist in pushing rhodium prices even higher.