While platinum and palladium may not have the same allure as gold or silver, they play a crucial role in the global economy.
These metals possess exceptional resistance to wear and tarnish, making them well-suited for various applications, including jewelry. Their stable electrical properties have made them an essential material for electrical capacitors and semiconductors, which are vital components of our electronic devices.
However, the most significant use of platinum and palladium lies in their role as chemical catalysts.
Platinum and palladium have remarkable abilities to absorb hydrogen like a sponge. This makes them critical components in automobile catalytic converters, which are responsible for converting harmful gases from hydrocarbon emissions, such as carbon monoxide and nitrogen dioxide, into less harmful substances.
Every vehicle that burns hydrocarbon fuel requires a catalytic converter — including plug-in hybrid electric vehicles (PHEVs) that use gasoline or diesel.
Despite the growing popularity of electric vehicles, the majority of vehicles sold globally in the coming years will still rely on catalytic converters with palladium or platinum. While battery electric vehicles (BEVs) do not require catalytic converters, their market share is not expected to exceed 10% until at least 2030. This indicates that there will still be a significant demand for these metals in the automotive sector — at least in the shorter term.
Nevertheless, it is important to consider the potential impact electric vehicles will have on the long-term demand for these metals.
As the automotive industry transitions to electric vehicles, the demand for catalytic converters is likely to decline, and this shift could have implications for the overall demand for platinum and palladium. The BEV market has been growing rapidly, but it still holds a small market share. While the demand for these metals may evolve, it is uncertain how significantly it will be affected by the rise of electric vehicles.
Another important factor to consider is the supply dynamics of platinum and palladium. Both metals face challenges in mining production and are subject to geopolitical factors that can impact availability and prices. Additionally, market sentiment and economic trends play a crucial role in determining the investment potential of platinum and palladium.
Despite the potential challenges and uncertainties, platinum and palladium still offer unique investment opportunities. Their scarcity and indispensable applications in various industries make them valuable commodities. The limited supply of these metals, combined with their diverse industrial uses, can contribute to their investment potential.
