Sebastian Hensel, Director of Hensel Recycling (UK) Ltd., specialists in catalytic converter recycling provides an overview of how the last year has affected PGM prices.
Tight supply and high demand have driven the prices for Platinum Group Metals (PGMs) to an all-time high during the last 12 months, a time where the world has been fighting the coronavirus. Mine closures in South Africa due to COVID restrictions and the breakdown of Anglo Platinum’s largest ACP furnace have caused a serious shortage in the delivery of PGMs during the first half of 2020.
During the first wave of the pandemic, the demand from car companies slowed due to closed productions facilities across the globe. Since China delivered a strong rebound of its economy and other countries opened again during the second half of 2020, the prices for PGMs skyrocketed, especially for Rhodium which reached an all-time high of ~ 30,000 USD/troz in March 2021.
The markets for Palladium and Rhodium are currently in a deficit and have been for some years now and will continue to be for a longer period ahead. A turning point will be the bigger market share of electric vehicle production to be expected by 2025. At the same time, OEMs will try to substitute some of the Palladium in catalytic converters with relatively cheaper Platinum. For Rhodium, there is currently no alternative technology. Rhodium is the best metal to reduce NOX emissions from gasoline cars, and emission regulations getting tighter in the future. Last year, China introduced ‘China 6’, which pushed the demand for Rhodium.
The latest news from Norilsk Nickel in February 2021 will again put pressure on the PGM market. Due to water inflow, the largest Palladium producer had to stop production at two large underground mines in Siberia and will therefore lose 20% of its mine output in 2021/2022.
One large area of supply for PGMs is secondary refining from spent catalytic converters. In this market, we can also see some shortfalls in early 2020 due to the pandemic and local lockdowns. In summer 2020, the supply of spent catalyst went back to normal above 2019 levels due to the high metal prices. The high value of catalytic converters now has a substantial impact on the cash flow of recycling companies. They must spend almost twice as much for a catalyst compared to 2019.
Backlogs at many major PGM smelters and refiners and strong recycling numbers will slow down the throughput in the whole supply chain.
Finally, due to high prices, the theft of catalytic converters has increased dramatically in the UK and other parts of the world. Recyclers must introduce strong compliance and KYC (Know Your Customer) regimes to avoid buying stolen converters. Many organisations like the VRA, ISRI, IPMI and ARA have already taken actions to address this issue with their members.
To find out more about Hensel recycling, visit hensel-recycling.com/en