from Bloomberg

Rhodium, the past year’s worst- performing metal, is poised to rebound as record car sales curb a supply glut at a time when producers are idling unprofitable mines and postponing spending on new projects.

The surplus will decline 62 percent to 52,900 ounces this year, the least since 2008, as production contracts, Morgan Stanley estimates. The car industry, which uses rhodium-coated catalytic converters, will consume the most in five years. Prices that slumped 38 percent in the past 12 months will rally 62 percent to $2,000 an ounce by the end of 2013, the median of eight analyst estimates compiled by Bloomberg shows.

The metal, usually found alongside platinum and palladium, fell 88 percent since reaching a record $10,100 in 2008 as carmakers cut the amount used in each autocatalyst and increased recycling to reduce costs. The slump is curbing revenue for mining companies from Johannesburg-based Anglo American Platinum Ltd. (AMS) to Impala Platinum (IMP) Holdings Ltd. and Aquarius Platinum Ltd. (AQP) said June 21 it was suspending the Everest mine inSouth Africa because it is no longer profitable.

“One of the key reasons why the industry at the moment is not making money is because the rhodium price isn’t supporting producers like it used to,” said Justin Froneman, an analyst at SBG Securities (Pty) Ltd. in Johannesburg. “A lot of confidence has been lost just because of how volatile it has been. The price is going to have to tick higher.”

Exchange Traded

Rhodium dropped 12 percent this year to $1,235, the lowest since April 2009, according to London-based Johnson Matthey Plc, the maker of one in three autocatalysts. Platinum advanced 1.8 percent to $1,426.25 an ounce and palladium declined 12 percent to $578.25 an ounce. The Standard & Poor’s GSCI gauge of 24 commodities retreated 5.7 percent and the MSCI All-Country World Index (MXWD) of equities added 2.9 percent. Treasuries returned 2.5 percent, a Bank of America Corp. index shows.

Deutsche Bank AG introduced exchange-traded products backed by rhodium in May 2011 and they now hold 36,900 ounces valued at about $45.6 million, according to data from the Frankfurt-based bank. That compares with the 1.34 million ounces of platinum and 1.94 million ounces of palladium held in ETPs, data compiled by Bloomberg show.

The metal is used with platinum and palladium in canisters with honeycomb-like surfaces that transform emissions. Rhodium converts nitrogen oxides, blamed for acid rain, into nitrogen and oxygen. Global sales of cars and light commercial vehicles will reach a record 79.9 million units this year and 85.3 million in 2013, according to LMC Automotive Ltd., a research company in Oxford, England. Carmakers will use 837,000 ounces of rhodium in 2013, the most since 2007, Morgan Stanley estimates.