Image by Erman Gunes, Shuttlestock
The six Platinum Group Metals (PGMs) represent a diverse set of metals. They share many chemical and physical properties, including being noble metals resistant to being corrupted by common acids. They are quite different one from the other, however, in terms of their industrial applications and usefulness, their volumes of production, their per unit and total market values, and other non-physical properties.
Broadly they may be separated into two groups for the purpose of scrutinizing their markets. One consists of platinum, palladium, and rhodium, traditionally the most economically important metals. The other would consist of iridium, ruthenium, and osmium.
Platinum, Palladium, and Rhodium
Over the past half century the use of these metals has grown sharply, dominated by automotive catalyst use.
For the next half century the platinum, palladium, and rhodium markets will be dominated by a steady reduction in automotive use of these metals beyond 2030.
There is a generational change in these metals’ markets. CPM Group takes its supply, demand, and price projections for these three metals out 27 years to 2050 at present, but it is clear that the trends imbedded in our PGM Long-Term Outlook report will continue far beyond the next quarter century.
The rise of platinum, palladium, and rhodium use in auto catalysts began in the early 1970s. Already in the late 1960s there was a flurry of research and development efforts seeking effective ways to reduce and oxidize harmless emissions from petroleum-based fuels used in motive power and stationary applications. Catalytic converters using these PGMs were found to be the best available technology for achieving cleaner auto exhaust.
Automotive catalytic converters first began using platinum and palladium for U.S. model year 1974 vehicles, in 1973. Rhodium began being used in the United States around 1979 to reduce nitric and nitrous oxide emissions. Other countries followed over ensuing decades, from Japan in the late 1970s to Europe in the late 1980s, and other countries later.
The rise of automotive use of these three PGMs since the 1970s led to enormous increases in fabrication requirements for these metals, sharply higher prices, the emergence of a vibrant international secondary recovery industry recycling spent catalysts, and dramatic changes across these markets.
Platinum use, for example, rose from less than 2.5 million ounces in 1976 (the first year for which such data are available) to a peak around 7.7 million ounces in 2006. Demand has declined to around 6.6 million ounces by 2023.
In recent years public health, environmental, and climate change concerns have begun a shift away from petroleum-based fuels to electric and hybrid vehicles. This is reducing the use of PGMs in catalysts used to oxidize and reduce harmful emissions.
This trend is projected to continue, albeit probably not as rapidly as some forecasts by various groups (other than CPM) have had it. The shift faces massive technical, financial, industrial, social, and other headwinds. The trend away from petroleum based fuels will continue, but it will be slower than some had expected. As a result, the International Energy Agency projects that by 2050 petroleum still will be the major source of energy for humankind.
CPM’s projections are that perhaps 40% of the light duty vehicles being produced and sold in 2050 will burn petroleum and use PGM-based catalytic converters to scrub their exhaust.
Automotive industry PGM demand is not going away, but it is contracting and is most likely to continue to contract for decades to come.
That is not quite as bleak for these three metals as might seem the case at first glance. Lower prices for each of these metals will make them more competitive and attractive to other uses. Each of them have seen their non-automotive applications and use under pressure over the past five decades due to auto industry demand for them and consequently higher prices. Some old applications are likely to experience a renaissance of demand for these metals, while many new applications will find them affordable to use in commercial volumes.
There will be major consequences throughout the PGM industries and markets due to this generational shift away from automotive use dominating these metals markets. Mine production will come under pressure to become more cost effective, with declines in production and closures of some mines likely. The refining industry will need to adjust.
Large above ground inventories of platinum and palladium, much of which are held by investors, are likely to be sold off at times, adding to downward price pressures.
Iridium, Ruthenium, and Osmium
The opposite market conditions have emerged in the markets for iridium and ruthenium, and appear most likely to continue for decades to come. The story in the osmium market is somewhat different from those of iridium and ruthenium, as will be explained later.
Complicating understanding these metals’ markets is the fact that none of them are traded on public exchanges. They are small, illiquid markets with few users, fewer producers and refiners, and even fewer companies trading these metals.
These three metals, sometimes called the minor PGMs, have long been less scrutinized than platinum, palladium, and rhodium. They are smaller markets, with far less metal being mined. Demand has been even smaller than supply historically – until 2006 for ruthenium and 2010 for iridium. As a result some producers did not take their refining process all the way through, but stored surplus iridium, ruthenium, and osmium in semi-refined tank house slimes against the time when they were wanted by fabricators.
That time has arrived, as just mentioned.
Over the past two decades the relatively lower prices (initially for iridium) and available supply has helped boost the use of these metals in a range of new technological products. It must be noted that these metals’ chemical, electrical, and physical properties played more important roles in the choice to use these metals than the prices of these metals.
During the 1970s through the 1990s there have been numerous applications developed using one or the other of these two metals, but manufacturers have avoided using them out of concerns that there was insufficient metal to meet their specific new uses, which would lead to high prices, high manufacturing costs, and – even worse – production disruptions due to lack of supply.
Beginning in the last 1990s and accelerating over the past quarter century, new uses have come into commercial application, boosting the demand for these metals and consequently their prices. Producers have broken into those long-held barrels of tank house slimes and refined metal to meet this demand. It now appears that supplies are insufficient to meet fabricator demand levels, even using these semi-refined inventories from the past. Furthermore, if CPM Group’s expectation of lower mine supply in the future materializes the supply situation for these metals will worsen.
As a result of the current supply shortfall, prices of these metals have risen sharply, and there now is substitution away from iridium to ruthenium, palladium, rhodium, and platinum.
In short, iridium and ruthenium have come into their own, even as their ‘senior’ siblings of platinum, palladium, and rhodium are experiencing loss of their major end-use market.
And then there is osmium. Osmium is a special case.
There are very few uses for this metal. As a result the price has been unchanged between $350 and $400 per troy ounce for nearly 34 years, since April 1990.
That said there have arisen a handful of companies trying to convince investors to “invest” in osmium based on baseless claims of booming demand. One company offers to buy and store ‘crystalline osmium for investors, an obscure form that is probably not sellable, in a pool account somewhere in Europe. It is quoting 2,500 euros per gram (around $73,310 per ounce) for this metal. Its marketing is supported by information about demand foe osmium from “The Osmium Institute,” which is owned and operated by the same company.
By Jeffrey M. Christian
About the authors
Jeffrey M. Christian is the founder and Managing Partner of CPM Group. He has been analyzing precious metals and commodities markets since the 1970s, and wrote a newsletter and book on electric vehicles in the 1970s. He published the first market review on platinum group metals in 1981.
CPM Group is an independent commodities research, consulting, and investment banking advisory company headquartered in New York. The company is considered the foremost authority on markets for precious metals, along with manganese and molybdenum.
Visit www.cpmgroup.com to learn more about its research and consulting services.
