LONDON: Rhodium prices have surged to record highs on production outages caused by the coronavirus and faster-than-expected demand recovery for the metal used to clean vehicle exhaust fumes.

Prices of rhodium jumped to $14,490 an ounce from around $9,000 in early August, before slipping back to $13,990 on Wednesday.

The rally from below $1,000 an ounce in 2017 was triggered by tightening emissions regulations, which meant auto makers accounting for 85% of demand had to use more rhodium.

Demand is recovering at a faster pace than supply, much of it from South Africa, where coronavirus lockdowns disrupted mining, causing rapid price moves in a small and illiquid market.

“A stronger and quicker rebound of auto demand than previously expected, especially out of China, is driving demand and price,” said Hans Ritter at Heraeus, a precious metals refiner and trader.

Insufficient supplies meant producers short of metal to honour contracts had been buying in the spot market, a rhodium trader said.

A 17% slump in rhodium supply to 945,000 ounces will leave the market with a 55,000-ounce deficit this year, Heraeus and SFA (Oxford), a research house, said in a recent report.

That would be the third consecutive annual shortfall and the biggest since 2014, they said.