LONDON (Reuters) - Rhodium prices are heading higher and will soon spike through $10,000 an ounce because of supply shortfalls from South Africa, the world’s largest producer, Standard Chartered said.

Prices of the minor precious metal, used by car makers in autocatalysts and by the glass making industry, are trading around $9,800 an ounce, a jump of more than 50 percent since the start of 2008.

The trigger for the price surge this year was the power crisis in South Africa, which has hit mining and metal production activity.

“We have raised our forecasts to reflect the latest market developments, particularly the supply problems in South Africa,” Standard Chartered said in a note late on Thursday.

“Problems in South Africa, which produce 85 percent of the world’s rhodium, have been the primary driver of prices.”

Mines in the country were forced to shut down for five days in January due to power blackouts and unreliable supplies.

South Africa’s state power-provider, Eskom, has been struggling to meet rising demand following years of underinvestment. The situation has been exacerbated by low levels of coal stocks.

“At the time it appeared that the crisis would only be short-lived,” Standard Chartered said.

Eskom warned last week that the risk of emergency power cuts had increased significantly as technical problems put a strain on its electricity grid.

Mines are only receiving between 90 and 95 percent supply, resulting in lower output.

“It seems likely that underlying structural problems in South Africa will persist for the time being,” the bank said.

Growing demand for autocatalytic converters because of stricter legislation will compound the problem.

Demand for rhodium, a byproduct of platinum production, from the auto industry last year was 879,000 ounces, but of that 183,000 was recovered from scrap, the world’s largest refiner and distributor of platinum, Johnson Matthey said this week.

Johnson Matthey said total net demand in 2007 was 856,000 ounces. Of that glassmakers accounted for 64,000 ounces.

The company estimated total global rhodium supply at 822,000 ounces in 2007, leaving a deficit of 34,000 ounces.

“We are looking for prices to average $12,000/oz in the fourth quarter of this year and they should remain at very high levels in 2009.”