How platinoids help implement climate strategy
Platinoids are gaining in popularity among investors. Despite the name, this category includes several precious metals – palladium, rhodium and platinum. Moreover, the latter is not the most expensive, platinum is valued below gold and other metals that are included in this group. Over the past 5 years, platinoids have increased in value 5-15 times. What causes such a demand for the metal – an opinion of Dmitry Glushakov, an expert of VTB-Capital.
It should be noted that rhodium and palladium, though considered precious, have now moved into the category of industrial metals. The automotive industry accounts for 85% of the total consumption. Such a change in demand has occurred in the last 10 years as a result of the fact that the material has become in demand for the production of catalytic converters. The latter are used for the exhaust system of cars. Almost every car now has some amount of rhodium and palladium in its construction. These metals are used for the purpose of capturing the exhaust that comes out of the engine during operation. The relevance of platinoids is particularly increasing due to the implementation of the climate strategy. For many countries, the problem of reducing carbon dioxide emissions is a priority, so they are trying as soon as possible to switch to more gentle modes of transport or at least minimize the damage from existing ones. Every year the authorities introduce new requirements that regulate the amount of emissions that cars emit. For example, standards for cars, such as Euro-6 and China-5, and others have appeared. To follow the regulations, automakers have to use more and more palladium and rhodium, which affects their costs. And it should be noted that these metals are hardly ever used in other segments. As for platinum production, it has remained flat in recent years and the inventories held by large miners have started to decline. This caused the metals to rise in price on the market.
However, investing in palladium has its risks. First of all, it concerns regulators who control the processes related to climate change. According to the global environmental strategy, all countries must reduce the amount of carbon dioxide emissions, and the main source of them is cars with internal combustion engines. To solve this problem, it is necessary to replace this type of transport with electric vehicles. To this end, regulators are trying to make electric cars affordable, but internal combustion engine vehicles, on the other hand, are increasing in price. As a result, the increase in electric vehicles comes at the expense of reducing traditional vehicles, which is not to the liking of all manufacturers.