Buying from a speculative investor working with an investment bank broker earlier in the week helped drive rhodium prices sharply higher, though the buying stopped midweek, market sources said.
The Platts New York Dealer rhodium price rose to $770-$820/oz this week from $700-$770/oz last week on speculative investment buying that began late last week and continued early this week, market sources said.
"From my understanding, it was a major bank buying it last week and the beginning of this week," one US PGMs dealer said Thursday, putting this week's range of physical deals at $760-$815/oz.
"But it seemed to be a spec/hedge-fund sort of trade rather than industrial demand. And I think that was the case because [the market] is softening again," the dealer said.
Unlike the much larger platinum and palladium markets, rhodium is not traded on major exchanges and appeals mostly to industrial producers of automobile catalytic converters, glass reinforcement fiber and specialty chemicals.
Those buying rhodium for investment purposes must be willing to hold the metal for weeks, even months, until prices begin rising, according to market sources.
That buying often occurs when commercial customers and/or speculative investors re-enter the market following a period of strong gains in NYMEX platinum and palladium. Rhodium prices stalled in midweek after the large buyer headed for the sidelines. "The big buyer that I had seen just stopped," one PGMs recycler/refiner said, putting the range this week at $775-$820/oz.
"He spooked some commercial [buyers]; they paid toward the top as well. But without that buying present, [the market] keeled over," he said.
Base prices of major European refiners reflected that trend. Germany-based Engelhard Materials Services (BASF) and UK-based Johnson Matthey lifted their base prices to $815/oz by Tuesday from $800/oz and $780/oz, respectively, at the end of last week.
Though Engelhard raised its base price to $825/oz on Thursday, it lowered the price back to $815/oz on Friday. Both refiners ended the week at $815/oz.
"There was a little bit of broker [buying], but it seemed to run out of steam and come back down a little bit," a PGMs dealer/recycler said, putting this week's range of deals at $770-$815/oz.
A physical PGMs dealer in Europe said much of the buying this week occurred at the $790-$800/oz range. "I think rhodium is hanging around that $800 level," he said, putting this week's range at $775-$810/oz.
