There’s one metal that’s leaving all commodities—and even Bitcoin—in the dust this year. Say hello to iridium
There’s one metal that’s leaving all commodities—and even Bitcoin—in the dust this year. Say hello to iridium.
Iridium is one of the rarest precious metals and mined as a byproduct of platinum and palladium.
It has surged 131% since the start of January 2021, far beating Bitcoin’s 85% gain. The reasons behind this are supply disruptions in the past year and rising demand for use in electronic screens.
Iridium isn’t traded on a bourse or through exchange-traded funds.
Retail buyers are limited to ingots from a handful of dealers and the few major investors dealing in it go straight to producers.
Iridium, which is also used in spark plugs, has climbed to $6,000 an ounce, more than 3 times more expensive than gold.
Part of iridium’s appeal comes from the limited investment in the production of platinum, which is largely used in autocatalysts to curb emissions because investors are weighing demand shifting to electric vehicles.
Stephen Forrest, research house SFA Oxford’s executive chairman, said that since more people were likely to opt for electric vehicles now, the demand for platinum and palladium would be lower. "Therefore, relative to the overall basket, the minor metals Iridium and ruthenium were likely to outperform price-wise," he said.
Where is iridium used?
John Plassard, an analyst with investment house Mirabaud, told AFP last week that the ultra-rare metal iridium is used in several industries, for it has a high melting point and hardly corrodes. Therefore, iridium becomes particularly significant for mobile phones and hydrogen fuel cells.
Iridium is a critical element in several niche products, including temperature-resistant crucibles used to grow synthetic crystals for electronics and telecommunications systems, such as 5G, high-performance spark plugs, medical devices and iridium-coated electrodes for navel ballast systems.
According to the International Data Corporation (IDC), global smartphone shipments are expected to increase 5.5% year on year in 2021, boosted by a post-COVID recovery in demand and 5G device interest.
Supply disruptions and price-performance
On the supply side, COVID-19 severely disrupted South African supply in 2020. South Africa accounts for 81% of the global iridium mine supply. In 2020, 31% of total Iridium demand came from the electrical sector, 26% from the electrochemical, and 13% from automotive.
The minor platinum group metals (PGMs) ruthenium and iridium, would be the winners in terms of average price performance in 2022.
“I think the average platinum price is going to be $1,200 per ounce. The last thing on people’s minds is buying a new car,” Forrest said.
There was an estimated 1-million-ounce surplus in platinum, including metal held by investors which Forrest includes in his calculations as it was likely to come back into the market over time.
“As people were likely to purchase electric vehicles there would be lower demand for platinum and palladium. Therefore, relative to the overall basket, the minor metals iridium and ruthenium were likely to outperform price-wise.”