In the final trading weeks of May 2026, rhodium experienced a sharp liquidation event that drew attention across the broader commodities sector. Within a mere 10-day window, prices plunged by 10% to $9,000 per troy ounce globally, equivalent to roughly 2,235 yuan per gram on the Shanghai Metals Market (SMM), down from 2,490 yuan just days prior. This was not simply a speculative sell-off. It reflected a deeper shift in market fundamentals: after years of structural deficits, rhodium is now forecast to move into a small physical surplus.
The late-May decline marked a clear change in market sentiment. Rhodium had already weakened from about $10,200 per ounce in early April, then fell sharply to near $9,000. Because the rhodium market is small and illiquid, even minor changes in supply or demand expectations can trigger large price swings. The sell-off showed that traders were no longer pricing rhodium as a metal in chronic shortage. Instead, the market began responding to signs of weaker demand and rising recycled supply.
The core reason for the reversal is the projected change in the physical market balance. Rhodium recorded a deficit of about 9,000 ounces in 2024, which widened to roughly 50,000 ounces in 2025. In 2026, however, the market is forecast to shift into a surplus of about 15,000 ounces. That surplus is small compared with the annual demand of around one million ounces, but it is large enough to change psychology. A market once defined by scarcity is now being viewed as nearly balanced, or slightly oversupplied.
Rhodium is used mainly in gasoline vehicle catalytic converters, where it reduces nitrogen oxide emissions. No other metal fully matches its performance, so complete substitution remains difficult. However, the long-term demand trend is weakening. Battery electric vehicles do not need catalytic converters, and their growing market share is reducing demand for rhodium. Hybrid vehicles still support consumption because they use internal combustion engines, but they cannot fully offset the decline in pure gasoline vehicle production.
A major industrial shift has also reduced rhodium demand. Chinese fiberglass producers, which dominate global fiberglass output, historically used platinum-rhodium alloys in high-temperature manufacturing equipment. The standard alloy was often around 80% platinum and 20% rhodium. When rhodium prices surged to near $30,000 per ounce in 2021, manufacturers redesigned their alloys to use far less rhodium, often with compositions closer to 95% platinum and 5% rhodium. This permanently reduced industrial demand. Some companies were left with excess rhodium inventories and became sellers, adding more metal back into the market.
Primary mine supply remains constrained, especially in South Africa, which produces most of the world’s rhodium. South African mines face deeper ore bodies, rising costs, power shortages, and aging infrastructure. Russian output is also expected to decline.
Normally, a weaker mine supply would support prices. But in 2026, recycling is offsetting that decline. More rhodium is being recovered from spent automotive catalytic converters, helped by vehicle scrappage programs, especially in China. Older vehicles often contain higher PGM loadings, making them valuable sources of recycled rhodium.
Rhodium’s reversal is part of a wider split within the platinum group metals. Platinum remains in deficit, supported by industrial demand, substitution for palladium, and potential uses in the hydrogen economy. Palladium is moving into surplus due to electric-vehicle growth, recycling, and substitution by platinum. Rhodium sits between these two metals. Like palladium, it is exposed to declining demand for gasoline vehicles. But unlike palladium, rhodium is much harder to replace in catalytic converters, which gives it some long-term support.
The price decline is a serious challenge for South African PGM producers. Rhodium often makes up a small share of mined volume but a large share of profits. Lower rhodium prices squeeze margins, threaten marginal shafts, and reduce South Africa’s tax and export revenues.
Miners also face a structural problem: they cannot easily cut rhodium output without cutting platinum production, because the metals are mined together. As platinum remains in demand, producers may continue mining ore that also adds rhodium and palladium to already weakening markets. Analysts remain divided. Bearish forecasts expect rhodium to remain under pressure, possibly trading in a lower range of around $6,000 to $9,000 per ounce as demand weakens and recycling grows. Bullish analysts argue that the projected surplus is very thin, and any disruption in South African supply could quickly push the market back into deficit.
The 2026 rhodium reversal marks a move from acute shortage to fragile surplus. Demand has weakened because of electric vehicles, industrial substitution, and thrifting, while recycling has increased supply. Still, the surplus is small, and the primary supply remains highly concentrated and vulnerable.
Rhodium may no longer carry the extreme scarcity premium of the early 2020s, but it remains one of the most volatile and strategically important metals in the global commodity market.