By: OrePulse

Rhodium prices are expected to decline over the next two years as slowing demand from automakers pushes the market into its first surplus since 2022, according to a forecast from TD Commodity Strategy, even as unusually thin stockpiles leave the metal exposed to sudden price spikes if supply is disrupted.

TD projects rhodium sliding from roughly $9,000 an ounce currently to $7,600 by 2027 and further to $6,500 by 2028. The bank forecasts a 20,000-ounce surplus for 2027, following four straight years of deficits and a shortfall of about 50,000 ounces expected this year. That rebalancing would have come sooner, TD said, had output at South Africa's Amandelbult platinum-group metals operation not been set back by shaft collapses in 2025.

Even so, the bank cautioned that reserves sitting above ground are set to shrink to barely three months' worth of consumption, giving the market almost no buffer if a major mine or refinery were to go offline unexpectedly.

That fragility is compounded by how long rhodium takes to reach market. Turning mined ore into refined metal runs upward of three months, TD said, versus a little over one month for platinum and palladium. With processors already stretched near capacity, any outage would be hard to offset quickly, raising the odds of sharp rallies even as the overall market drifts toward oversupply.

Production is also concentrated in a narrow geographic band. South Africa produces roughly 85% of the world's primary rhodium, and just five mines there generate about half of global supply. Smaller South African operations, plus mines in Russia and Zimbabwe, make up most of what remains.

Because rhodium is chiefly a byproduct of platinum and palladium mining rather than a standalone target, and accounts for roughly one-quarter of the revenue miners earn from platinum-group metals, its output rarely tracks its own price. Decisions on whether to expand or cut production instead follow the broader economics of platinum and palladium. That leaves an unusual dynamic: a demand slump can still tip the market into surplus without prompting miners to pull back quickly. At the same time, any supply outage can still jolt prices given how little inventory exists to absorb it.

On the consumption side, catalytic converters fitted to gasoline and diesel vehicles remain the dominant use for rhodium. That demand has stopped growing as electric vehicles gain ground in new-car sales, and TD expects continued declines in combustion-engine output to erode consumption in the years ahead further. A slower pace of EV uptake than once anticipated should cushion that drop for now, the bank noted, while vehicles staying on the road longer is delaying when rhodium locked inside older converters comes back through scrap channels.

Scrap volumes should still climb gradually as aging, heavier-loaded vehicles are eventually retired, and elevated prices have already pulled more material into recycling. However, recovery rates and processing capacity in some regions continue to limit how much comes back. Switching to a substitute offers another potential release valve. Still, it is neither quick nor cheap: TD estimates converting to palladium as an alternative takes 18 to 24 months and needs five to eight times the volume of palladium to replace the rhodium removed.

Investor behavior is shifting too. Exchange-traded funds tracking rhodium have taken in fresh money for the first time in over ten years, TD said, as buyers seek exposure to the physical metal, though total holdings remain far short of the peaks set in the early 2010s. Taken together, TD's outlook describes a market squeezed between fading structural demand and a supply base with virtually no room for error — one where prices trend lower over the coming years but stay prone to sudden jumps whenever production stumbles.