Rhodium vs. Palladium: Experts Predict Which Metal Will Shine in 2025

The platinum group metals (PGMs) market is known for its volatility, and 2025 is shaping up to be another interesting year. Rhodium and palladium, both critical components in automotive catalytic converters, are facing a complex interplay of supply constraints, fluctuating demand, and evolving technological landscapes. With experts divided on which metal will come out on top, investors and industry players alike are keen to understand the key factors that will determine their performance. Will rhodium continue its upward trajectory, or will palladium stage a comeback?

Rhodium’s Ascent: A Story of Scarcity and Emission Control

Rhodium, the rarer of the two metals, has seen dramatic price increases in recent years, driven by its effectiveness in reducing harmful emissions from gasoline engines. As of October 2, 2025, rhodium is trading at $7,100 USD/t oz, which is 50.26% higher than a year ago. This surge can be attributed to several factors:

Supply Constraints: South Africa, which accounts for over 80% of global rhodium production, has faced numerous challenges, including power outages, labor disputes, and weather-related disruptions. These bottlenecks have significantly curtailed production, tightening the market and pushing prices upward. A trade disruption of rhodium from South Africa could cost the U.S. over $64 billion in GDP.
Stringent Emission Regulations: The tightening of emission standards in key markets like China, Europe, and North America has increased the demand for rhodium in catalytic converters. China’s implementation of China VI-b emission standards, in particular, has led to higher PGM loadings in vehicles, further boosting rhodium consumption.
Hybrid Vehicle Demand: Despite the rise of electric vehicles (EVs), hybrid vehicles, which utilize both electric batteries and internal combustion engines, continue to support rhodium demand. These vehicles require catalytic converters to control emissions, ensuring a robust market for the metal.
Investor Speculation: In times of economic uncertainty, commodities like rhodium often attract speculative interest, further driving up prices.

Experts at Metals Focus predict that rhodium prices will outperform platinum and palladium in 2025, with an expected increase of 8%. This is largely due to a projected rhodium market deficit, which will reduce above-ground stocks to their lowest level in at least 40 years. Johnson Matthey’s 2025 PGM report supports this view, highlighting that rhodium is facing its third consecutive year of supply shortfall, with demand consistently outpacing available supply.

Palladium’s Predicament: EV Transition and Substitution Risks

Palladium, while also used in catalytic converters, faces a more uncertain future. As of October 2, 2025, palladium fell to $1,250.50 USD/t.oz. While it is up 25.36% compared to the same time last year, several factors are weighing on its outlook:

Electric Vehicle Adoption: The transition to EVs, which do not require catalytic converters, poses a significant threat to palladium demand. While the pace of EV adoption has slowed somewhat due to market saturation and concerns over charging infrastructure, the long-term trend remains downward for palladium in the automotive sector.
Substitution: The high price of palladium has prompted automakers to substitute it with platinum in catalytic converters, reducing palladium demand.
Supply Surplus: The World Platinum Investment Council predicts that the palladium market will transition to a surplus from 2025, with oversupply forecast to hit 897,000 ounces. This is due to increased recycling supply and a return to historic production levels in Russia and South Africa.

Analysts at CPM Group expect palladium prices to remain rangebound in 2025, with a downward bias due to weakening demand from the auto sector. Heraeus Precious Metals also holds a similar view, forecasting a trading range of $800 to $1,200 per troy ounce based on increasing supply and weak demand.

Factors Influencing Palladium’s Price

Several factors shape the palladium price, each bringing its own set of market risks and opportunities:

Industrial demand: Palladium is mainly used in catalytic converters for petrol (gasoline) vehicles, while platinum is more prevalent in diesel systems, making the automotive sector a key driver of demand.
Supply trends: Global supply is highly concentrated, with Russia and South Africa together accounting for a substantial share of mining output.
Geopolitical risk: Tensions in Russia and South Africa can disrupt supply.
Investment and speculation: Investor sentiment can influence price movements.
Technological change: The development of new technologies, such as electric vehicles, can impact demand for palladium.
Currency movements: Changes in currency values can affect the price of palladium.
Recycling and secondary supply: Recycling of palladium from used catalytic converters can supplement primary supply.

Expert Opinions and Market Forecasts

The outlook for rhodium and palladium in 2025 remains divided, with experts offering contrasting views:

Bullish on Rhodium: Metals Focus and Johnson Matthey predict that rhodium will outperform other PGMs due to supply deficits and strong demand from the automotive sector. They expect prices to continue rising, potentially reaching $8,000/oz by Q4 2025.
Bearish on Palladium: CPM Group and Heraeus Precious Metals anticipate a weaker palladium market in 2025, with prices remaining rangebound or declining due to EV adoption and substitution risks.
Neutral Stance: Other analysts suggest that both metals face risks and opportunities, with the ultimate winner depending on the interplay of supply constraints, demand fluctuations, and technological developments.

Strategic Implications for Investors

Given the uncertainty surrounding the rhodium and palladium markets, investors should carefully consider the following strategies:

Diversification: Diversify your portfolio across different asset classes, including other precious metals like gold and silver, to mitigate risk.
Due Diligence: Conduct thorough research and stay informed about the latest market trends, supply chain developments, and technological advancements.
Risk Management: Implement appropriate risk management strategies, such as setting stop-loss orders, to protect your investments from potential price swings.
Long-Term Perspective: Adopt a long-term investment horizon, as the PGM market is subject to short-term volatility but may offer attractive returns in the long run.

Conclusion

The rhodium and palladium markets are at a critical juncture in 2025. While rhodium benefits from supply constraints and strong emission control demand, palladium faces headwinds from EV adoption and substitution risks. The ultimate winner will depend on a complex interplay of factors, requiring investors to stay informed, adapt to changing market conditions, and implement sound risk management strategies.

Disclaimer: This blog post is for informational purposes only and does not constitute financial advice. Please consult with a qualified financial advisor before making any investment decisions.