One of the metals used to make catalytic converters is getting more expensive by the day, which may add up to a bigger bill the next time you take your vehicle in for repairs. Palladium, one of several metals that vehicles make use of to contain engine emissions, is becoming outrageously expensive as global demand quickly grows, particularly in China.
The jump in demand is due to new regulations in China that will require at least 30 percent more palladium per vehicle, according to Reuters. This adds extra weight to the already strong global demand that is expected to hit 10 million ounces this year and next. Supply is projected to fall 10 percent short of that number, as one of the world’s largest suppliers of palladium cuts back on output. South Africa produces roughly 40 percent of the world’s palladium supply and is reportedly reducing output by 13.5 percent.
When demand outpaces supply, prices tend to jump, which is exactly what we’re seeing here. Four years ago, an ounce of palladium cost about $500. Today, manufacturers have to shell out roughly five times that for the same amount. Prices have grown 25 percent in the last two weeks alone.
Replacing a catalytic converter was already a painful financial experience and the jump in palladium pricing is likely to make visits to the shop even more traumatic. Adding insult to injury for some vehicle owners is the fact that some people love to steal catalytic converters for their scrap values, an act that is made all the more tempting by the sky high prices of palladium and other metals.
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