According to the consultancy Metals Focus, average prices for platinum, palladium, and rhodium are expected to fall in 2024 compared to 2023, despite another year of structural deficits for all three metals in the platinum group (PGMs).
The basket price of PGMs, which are primarily used in vehicle exhaust systems to neutralize harmful engine emissions, slumped in 2023 due to concerns that the rising market share of battery-powered electric vehicles (BEVs) without PGMs would reduce future demand.
Demand for PGMs from the automotive sector increased last year as the 2021-2022 chip crisis had run its course. However, the pace of BEV penetration remained the main challenge for PGM demand, according to Metals Focus. BEVs currently account for 14% of auto production, up from 11% at the beginning of 2023. This impact has been partially offset by a pickup in hybrid vehicles, which require PGMs. Hybrid vehicles now have a 22% share of light-duty vehicles, up from 18% at the start of 2023.
The competition between the metals within the PGM group saw a change in 2023, with the slowing substitution of palladium with platinum as the two approached price parity. Metals Focus expects this substitution to stall going forward.
On the supply side, lower palladium and rhodium prices have squeezed margins, with half of South African mines operating uneconomically on an all-in sustaining cost basis at the end of 2023. Many miners have sought to reduce costs, and this process will keep supply constrained this year, causing another year of structural deficit, which will be covered by existing above-ground stocks.
Metals Focus expects the trading behaviors that dominated 2023 to continue playing a large role in shaping prices in 2024. The consultancy forecasts the average price for platinum to slide by 1% to $960 per troy ounce, for palladium to decline by 23% to $1,030, and for rhodium to fall 28% to $4,750.