TD Commodity Strategy projects rhodium will swing into surplus next year, ending a four-year run of market deficits, as softening demand for automotive catalysts weighs on the metal. While rhodium prices are set to trend lower over the medium term, extremely lean inventories leave the market exposed to sharp price spikes triggered by supply disruptions.
The bank forecasts rhodium will decline from roughly $9,000 per ounce to $7,600 in 2027 and $6,500 in 2028. Following an estimated 50,000-ounce deficit this year, the market is expected to post a 20,000-ounce surplus in 2026, marking its first oversupply since 2022. TD noted the supply-demand turning point would have arrived sooner had shaft collapses in 2025 not curbed output at South Africa’s Amandelbult platinum-group metals mine.
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The bearish long-term outlook carries a key caveat. Above-ground rhodium stockpiles are on track to shrink to just over three months of demand, offering little buffer against unexpected outages at major mines or refineries. The metal’s lengthy processing cycle amplifies risks: refining ore into finished rhodium takes more than three months, longer than platinum and palladium. Operating near full capacity, producers cannot rapidly replace lost volumes, opening the door to abrupt price surges.
Global rhodium output is heavily concentrated geographically. South Africa supplies around 85% of primary rhodium, with five domestic platinum-group mines accounting for roughly half of worldwide production. Rhodium is mostly a byproduct of platinum and palladium mining and contributes only about one-quarter of PGM mining revenue, so operational decisions hinge on the broader PGM basket economics. As a result, miners may not cut output quickly even as rhodium demand weakens, while any supply disruption can trigger outsized price swings amid thin inventories.
Demand pressure stems mainly from autocatalysts, rhodium’s dominant end-use tied closely to internal combustion vehicle manufacturing. Rising electric vehicle penetration has flattened autocatalyst consumption, and falling ICE sales will continue to weigh on rhodium demand. Slower-than-expected EV adoption will moderate near-term demand declines and reduce the risk of a severe price collapse. Recycled rhodium supply will gradually rise as older vehicles with high rhodium-loaded catalytic converters retire, though recovery rates and limited processing equipment constrain scrap output. Palladium can serve as a substitute, yet implementation takes 18 to 24 months and requires five to eight times more palladium than the rhodium it replaces.
Investors have returned to the asset class. Rhodium ETFs registered positive inflows for the first time in more than a decade as retail and institutional investors seek exposure to physical precious metals, though holdings remain far below levels seen in the early 2010s. The market faces a tug-of-war between structural demand deterioration and a fragile supply chain, meaning rhodium will likely trend lower over the coming years with intermittent sharp rallies when production is disrupted.