The buying surge in rhodium that began two weeks ago during Platinum Week in London ended this week, with would-be buyers heading to the sidelines amid surging prices.
The Platts New York Dealer rhodium price tumbled to $1,070-1,130/oz this week from $1,120-1,180/oz last week.
"The buyers are gone," one physical trader of platinum group metals said Thursday. "When the big buyers leave, we basically go back to where we were. It's definitely well offered above $1,100 at the moment."
Prices began moving sharply higher the week of May 19-23 and eventually reached $1,120-1,180/oz last week on the back of speculative buying in Asia that prompted the return of industrial buyers worried about rising prices.
But the buying only prompted more offers from scrap recyclers, who continued to lower their offers, sources said.
"At first, all those guys were holding onto it, thinking it was going to $1,200, but then they realized it's rhodium," one investment bank trader of PGMs said.
"So the daily guys that come in every day and sell it -- let's say 1,000 oz/day -- start selling, and with prices dipping, everyone is trying to sell," he added. "It's been a bit crazy."
One PGM refiner said Thursday, "It was coming out of the woodwork yesterday; yesterday there were a lot of offers. Things have definitely calmed down today."
The other factor weighing on rhodium is labor negotiations in South Africa, sources said.
"People are taking a more cautious approach now that any day, the discussions in South Africa could resolve themselves," a second PGM refiner said. "The buyers could quickly turn into sellers."
That rhodium prices have not benefited from the strikes in South Africa has been "a bit disappointing," a second physical trader of PGMs said.
Some investment bank analysts believe the strikes have not really affected PGMs due to substantial above-ground stocks, especially rhodium but also platinum.
Rhodium extracted from spent catalytic converters accounts for a substantial portion of global supply.
"And those workers never went on strike," the second PGM trader noted.
