Rhodium prices plummeted this week as banks and other financial institutions aggressively lowered their offers to attract industrial buyers, who had largely exited the market.
The Platts New York Dealer rhodium price range fell to $650-$705/oz from $700-$740/oz last week. Rhodium had been holding within the $700-$750/oz range since mid-March.
The decline was caused by major industrial consumers leaving the market after purchasing just above $700/oz in recent weeks, and speculative sellers aggressively lowering their offers in a dwindling market, one physical dealer in the Northeast said.
"These guys had a chance to sell at $715, $720 when I was there, and now they're hitting [offers] at $640, and we're talking hundreds of kilos," the dealer said, putting the range of physical deals at $640-$705/oz.
"A lot of these guys are investment guys who are always looking for that little extra, and they didn't get it," the source added.
A PGM refiner who put physical deals this week at $650-$705/oz agreed. "I know exactly what caused the decline this week. It was investor selling. We definitely saw financial institutions selling their holdings," the refiner said.
Base prices offered by major European PGM refiners reflected the selling. Johnson Matthey of the UK ended Thursday at $675/oz after starting the week at $725/oz.
Engelhard Materials Services, a division of German chemicals company BASF, ended Thursday at $680/oz after also starting the week at $725/oz.
A second refiner agreed that aggressive offers from speculative investors were behind the drop in price, but felt investor selling had been happening for at least two weeks. "It's been pretty consistent everyday," he said, putting this week's range of deals at $650-$710/oz.
A European dealer said he had done a little business earlier in the week at $690/oz, but agreed the market moved lower as the week wore on, though he had not heard any sales below $660/oz.
"I think there were a lot of people who bought material on the way up, and suddenly realized the market was turning and began flooding the market with cheaper offers," he said.
The market will probably stabilize at $650/oz, the dealer said, adding: "But I must admit that when it's in freefall, you never quite know. It's come off a lot in the last five days, and it could go $20-$30 lower no problem. It just depends on the appetite."
