Palladium is now the most valuable of the four major precious metals, with an acute shortage driving prices to a record. A key component in pollution-control devices for cars and trucks, the metal’s price doubled in little more than a year, making it more expensive than gold.
What is palladium?
It’s a lustrous white material, one of the six platinum-group metals (along with ruthenium, rhodium, osmium, iridium and platinum itself). About 85% of palladium ends up in the exhaust systems in cars, where it helps turn toxic pollutants into less-harmful carbon dioxide and water vapor. It is also used in electronics, dentistry and jewelry. The metal is mined primarily in Russia and South Africa, and mostly extracted as a secondary product from operations that are focused on other metals, such as platinum or nickel.
What is it used for?
Its key commercial use is as a critical component in catalytic converters - a part of a car's exhaust system that controls emissions - found mainly in petrol and hybrid vehicles.
The vast majority of palladium, more than 80%, is used in these devices that turn toxic gases, such as carbon monoxide, and nitrogen dioxide, into less harmful nitrogen, carbon dioxide, and water vapour.
Why is its price rising?
In short, it is because demand for palladium outstrips supply, and it has done for some time.
The amount of the metal produced in 2019 is forecast to be below global demand for the eighth year in a row.
As a secondary product of platinum and nickel extraction, miners have less flexibility to increase palladium output in response to rising prices.
And that shortfall looks set to continue, with South Africa, which produces around 40% of the world's supply, last week saying its output of platinum group metals, including palladium, fell by 13.5% in November compared to a year earlier.
Meanwhile, demand for palladium from car makers has increased sharply for a number of reasons.
Around the world governments, notably China, are tightening regulations as they attempt to tackle air pollution from petrol vehicles.