Platinum and palladium, essential components in catalytic converters utilized by the automotive industry to purify exhaust emissions, are facing a significant structural shift in demand due to the accelerating electric vehicle revolution. Despite the typical market dynamics that would suggest a rebound in prices for these metals following supply deficits and operational challenges in top producer South Africa, the impact of declining demand from the auto sector is evident in the current market trends.
The auto industry traditionally accounts for a substantial portion of platinum demand (40%) and the majority of palladium consumption (80%), alongside close relative rhodium. As consumers increasingly transition to electric vehicles that do not require catalytic converters, the anticipated decline in demand poses a considerable challenge for all three metals.
While analysts foresee a prolonged utilization of platinum group metals (PGMs) in traditional internal combustion engines, the diminishing economic viability of mining operations has helped maintain relatively stable prices. However, the lack of a viable alternative industry to absorb the volumes lost to electric vehicles presents a significant hurdle for palladium and rhodium.
Wilma Swarts, head of PGMs at consultancy Metals Focus, highlighted the impending decline in demand for palladium and rhodium without a substantial alternative sector to offset the loss. Forecasts on the timing of the decline in PGM demand from auto manufacturers vary, contingent upon the future adoption rates of pure internal combustion vehicles versus hybrid or electric vehicles.
According to analysts at Macquarie, the reduction in demand for both platinum and palladium from the auto sector is expected to materialize post-2025, underscoring the enduring impact of the electric vehicle revolution on the PGM market.