LONDON, Oct 25 (Reuters) - Rhodium prices hit their highest in nearly six years this week on the back of strong demand from industrial users, which has helped push prices up more than 40 percent so far this month.
Rhodium, one the platinum group metals, is primarily consumed by automakers for use in catalytic converters, but is also used in glassmaking, and in the chemical sector.
Prices <RHOD-LON> hit $1,640 an ounce on Wednesday, their strongest level since September 2011, up from $1,165 at the end of September.
Strong demand from the industrial sector has been behind the move, Johnson Matthey's Rupen Raithatha said.
"It's a small market," he said. "If large purchases all come together that can have a significant impact on pricing."
"The South African producers bled their stocks dry to achieve a balance (in the market) last year," he added. "They have not had much metal to cope with current demand, which has seen something of a surge."
Johnson Matthey forecast earlier this year that demand would rise nearly 2 percent in 2017, while mine supply from South African and Zimbabwe was expected to post a small decline.
In the longer term, rhodium prices could take support from growing demand from the automotive sector, Liberum Capital said in a note, which is responsible for four out of five ounces of demand for the metal.
"Beyond 2020, European diesel cars could become an interesting new source of demand for rhodium, despite the fact that their base is in decline, becuase of a further tightening of emission tests in Europe," it said.
(Reporting by Jan Harvey; Editing by Adrian Croft)