Car exhausts: Platinum could be running on fumes again
Could record palladium price see car manufacturers favouring platinum for catalytic converters again?
Will the record-high palladium price finally see car manufacturers switching back to using platinum? Producers think this is likely but that it could take two years for it to happen. Both metals form part of the six platinum group metals (PGMs), all of which are found together in the same mineral deposits.
PGMs are key in the manufacture of catalytic converters which help to reduce toxic emissions from vehicles, as is required in a number of the world’s major economies.
In years gone by platinum was the chosen metal for the job. (It is also the only PGM that can be used in converters for diesel vehicles). But with petrol cars, there is an option to substitute it with other PGMs such as palladium.
The move from platinum started to make sense when, between 2010 and mid-2014, the metal price traded between $1,400 and $1,800 an ounce. At that time palladium traded significantly lower at between $450 and $800 an ounce.
A strong move award from platinum has now inverted that equation. Palladium is at historic highs of over $1,500 an ounce. Platinum has bobbed between $800 and $850 an ounce for six months.
Research from PGM producer, Sibanye-Stillwater, found that there needs to around a $500 price difference between the metals for car makers to talk about substituting one for the other.