Platinum and Palladium
Platinum and palladium are rare metals used mainly in car catalytic converters. Learn their concentrated supply, demand drivers, futures and big price swings.
Platinum and palladium are two of the platinum group metals (PGMs), rare elements prized for their resistance to corrosion and their ability to speed up chemical reactions. Their biggest use is in catalytic converters, which clean car exhaust. Because supply is concentrated in a few countries and demand depends heavily on the auto industry and emissions rules, their prices can swing dramatically. Palladium rose from below $500 an ounce in 2016 to above $3,000 in 2022, then fell back below $1,000, while platinum spent much of that period trading below palladium for the first time in decades.
How they are traded#
| Instrument | Platinum | Palladium |
|---|---|---|
| NYMEX futures | PL: 50 troy ounces | PA: 100 troy ounces |
| London and Zurich OTC market | LPPM platinum price | LPPM palladium price |
| Physically backed ETFs | Available | Available |
| Coins and bars | Available | Available |
Supply: highly concentrated#
| Metal | Leading producers |
|---|---|
| Platinum | South Africa (around 70% of mine supply), Russia, Zimbabwe |
| Palladium | Russia (around 40%), South Africa, Canada, US |
South African mining faces power shortages, deep and costly mines, and labour disputes. Russian supply, mostly from Nornickel, raised concerns about sanctions after the 2022 invasion of Ukraine. Recycling of old catalytic converters is a significant secondary source.
Demand#
| Use | Platinum | Palladium |
|---|---|---|
| Autocatalysts | Diesel vehicles and some gasoline | Mainly gasoline vehicles (the dominant use) |
| Jewellery | Significant, especially in China and Japan | Small |
| Industrial | Chemicals, glass, petroleum refining, medical | Electronics, dentistry |
| Investment | Bars, coins, ETFs | Smaller |
| Hydrogen economy | Fuel cells and electrolysers (potential growth) | Limited |
The great switch#
For decades, platinum traded well above palladium. Then several shifts reversed the relationship.
What drives PGM prices#
| Driver | Effect |
|---|---|
| Car production | Higher production raises catalyst demand |
| Emissions regulations | Stricter rules increase metal per vehicle |
| Electric vehicle adoption | Reduces long term autocatalyst demand |
| Substitution | Car makers switch to the cheaper metal |
| South African and Russian supply | Disruptions lift prices |
| Investment flows | ETFs and speculators amplify moves |
| Hydrogen technology | Potential new demand for platinum |
Trading the spread#
Traders often trade platinum against palladium, betting on substitution and supply shifts. Because NYMEX contract sizes differ (50 ounces vs 100 ounces), spread positions need careful sizing in dollar terms. See Futures Spreads Explained.
Risks#
- Extreme volatility: palladium has had daily moves of 10% or more.
- Thin markets: smaller than gold and silver, so liquidity can dry up.
- Concentrated supply risk in two countries.
- Structural demand risk from electric vehicles.
- Squeezes in physical markets, as lease rates can spike when metal is scarce.
Frequently asked questions#
What are platinum and palladium used for?#
Mainly in catalytic converters that reduce car emissions, plus jewellery, chemicals, electronics, dentistry and investment.
Why did palladium become more expensive than platinum?#
Diesel car sales fell after the Volkswagen scandal, reducing platinum demand, while stricter emissions rules raised palladium use in gasoline cars.
Where do platinum and palladium come from?#
Most platinum comes from South Africa, and the largest share of palladium comes from Russia, with South Africa, Canada and the US also producing.
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