London — Rhodium's fundamental demand story is written in exhaust pipes. Over 80% of the metal's annual consumption goes into three-way catalytic converters, where rhodium performs an irreplaceable function: converting nitrogen oxides (NOx) into harmless nitrogen and oxygen under the extreme heat of gasoline engine exhaust. No other commercially viable metal matches its efficiency for this specific role.
But that structural advantage is eroding. The global automotive industry is at an inflection point. While internal combustion engine (ICE) vehicle production has proven more resilient than many anticipated — still dominating the global fleet through at least 2027 — the direction of travel is unmistakable. Johnson Matthey's May 2026 report forecasts lower global output of ICE vehicles in 2026, directly hitting automotive PGM use across all three autocatalyst metals.
Perhaps more insidious than the BEV transition is the quiet but accelerating substitution of platinum for rhodium in catalytic converter formulations. For years, automakers and catalyst manufacturers have worked to reduce rhodium loadings per converter, driven by the metal's extreme price volatility — from nearly $30,000/oz in 2021 to $6,500/oz in 2023, and back above $11,500/oz in early 2026.
Platinum, currently trading around $1,300–$1,800/oz (per Heraeus's 2026 forecast range), offers a more stable and cost-effective alternative for certain NOx reduction functions. While platinum cannot fully replace rhodium — particularly in meeting the most stringent Euro 7 and EPA emissions standards — the "thrifting" trend has been persistent. Johnson Matthey notes that metal substitution, along with thrifting and model mix impacts, has already been eroding rhodium demand even as ICE production remained resilient.
Automotive Catalysts: ~80% — Three-way catalytic converters (NOx reduction in gasoline engines)
Chemical Manufacturing: ~8% — Catalyst in acetic acid production and other industrial processes
Glass & Electronics: ~7% — Crucibles, thermocouples, electrical contacts
Jewelry & Other: ~5% — Rhodium plating and specialty applications
Sources: BusinessResearchInsights, GoldSilver.ai, Mordor Intelligence
Battery electric vehicles (BEVs) need no catalytic converters, and their rising market share represents an existential long-term threat to all three autocatalyst PGMs — platinum, palladium, and rhodium. However, the timeline matters. Metals Focus expects ICE vehicle production to peak around 2027, meaning the absolute volume of rhodium-consuming vehicles will remain substantial for several more years.
Higher oil prices linked to geopolitical tensions — including the ongoing Middle East conflict — could paradoxically accelerate EV adoption over time, reducing long-term demand for palladium and rhodium used in ICE catalysts, according to Metals Focus. The Iran conflict has already weighed on investment sentiment across commodities, and any sustained energy price shock would further incentivize consumers to shift toward electrified powertrains.
Heraeus Precious Metals' 2026 forecast crystallizes the dual nature of the rhodium market's challenge. On one hand, the firm projects a transition from deficit to surplus driven explicitly by "declining production of ICE vehicles and higher recycling rates." On the other, the same report acknowledges that rhodium's unique catalytic properties mean it will not disappear from automotive supply chains overnight.
"The surplus stems from the declining production of internal combustion engine vehicles and higher recycling rates," Heraeus stated in its 2026 forecast. But the firm also noted that the expected surplus is "small" — 15,000 oz per Johnson Matthey — and could be easily absorbed or reversed by the supply-side dynamics that define rhodium's uniquely fragile market structure.
Several factors could slow the pace of demand erosion. First, the global fleet of ICE vehicles — already on the road or in production — will require replacement catalytic converters for years. Second, hybrid vehicles, which combine an ICE with an electric powertrain, still require rhodium-loaded catalysts and are expected to remain a significant portion of new vehicle sales for at least a decade. Third, tightening emissions standards in major markets — particularly China, India, and the European Union — could actually increase rhodium loadings per converter, offsetting some of the volume decline from fewer ICE vehicles.
Global rhodium demand is projected to grow from approximately 33 tonnes in 2024 to 34.6 tonnes in 2025 and 43.6 tonnes by 2030, according to Mordor Intelligence — a CAGR of 4.7%. These figures suggest that while the automotive share may shrink, absolute demand may remain supported for several more years.
• Autocatalyst share of demand: ~80% — extreme concentration on one end-use sector
• Johnson Matthey 2026 auto demand forecast: contracting across all PGMs except iridium
• Platinum substitution: ongoing — thrifting programs have been active since the 2021 price spike
• ICE production peak: forecast around 2027 (Metals Focus, Accio)
• BEV headwind: real but gradual — hybrids provide partial buffer
• Global demand volume: forecast to reach 43.6 t by 2030 (Mordor Intelligence)
• Emission regulation: tightening standards (Euro 7, EPA) may increase per-converter loadings
RZZRO Market News is for informational purposes only and does not constitute investment advice. Data sourced from publicly available reports and market data providers.