"Within this year we might well see $4,000," said Mitsubishi analyst Jonathan Butler, adding that rising demand would likely tip the market into deficit. "That's not to say we wouldn't see a pullback potentially to $3,000 - this is a volatile metal - but it does have good long-term prospects," he said.
Rhodium is used alongside its sister metals platinum and palladium in vehicle exhaust systems to neutralise pollutants. But its price has raced ahead of its peers since 2016, when commodities including precious metals hit multi-year lows. This is because rhodium is the most effective at tackling nitrogen oxides (NOx), whose reduction is increasingly demanded by regulators. Auto makers account for around 85% of rhodium demand.
China has accelerated the introduction of emissions standards to enter force between 2019 and 2023, while in Europe, stricter rules are arriving after a diesel emissions scandal increased sales of gasoline-powered cars that use more rhodium. South African miners, who produce 80% of mined rhodium, have been raising output, but they plan to close older shafts and shift activity to ore bodies less rich in rhodium, which would reduce supply.
"You've had better than expected China, and quicker than expected China, and then better than expected Europe," said Emma Townshend, an executive at major South African producer Impala Platinum (Implats). Rhodium's gains have echoed a rally in palladium, whose price has more than tripled since January 2016 and which now trades around $1,550 an ounce.