Palladium market outlook for 2025: UBS

Investing.com — UBS analysts forecast a difficult 12 months forward for palladium, with the metallic anticipated to “lag different treasured metals.” 

The funding financial institution’s analysts anticipate a deficit of round 300,000 ounces, or 3% of demand, in 2025, noting that palladium’s fundamentals have “weakened significantly over the previous few years.”

The analysts predict “decrease mine provide to be offset by greater scrap provide,” sustaining total stability in complete provide. 

Nonetheless, they spotlight the numerous dependence of palladium on autocatalyst demand. With the rising pattern of substituting palladium with platinum and the rising adoption of electrical automobiles, the outlook for palladium stays dim. 

“The longer term stays bleak for palladium,” UBS states, on account of these shifts in demand.

A vital issue that would influence costs is the geopolitical panorama. “The most important upside worth threat is for worldwide sanctions to focus on Russian mine provide,” the analysts observe. 

Whereas there was a redirection of flows from Russia to China, UBS notes that no sanctions on mine provide have been imposed but.

Regardless of the softening fundamentals, UBS maintains a “reasonably constructive worth outlook,” pushed partly by potential enhancements in auto manufacturing. 

They imagine decrease rates of interest might enhance auto affordability, which could result in elevated demand for autocatalysts. 

Nonetheless, palladium’s dependency on the automotive sector, significantly in a transitioning trade, leaves it weak, in keeping with the financial institution.

“Solely traders with a excessive threat tolerance ought to take into account buying and selling in palladium given its low buying and selling volumes and restricted market measurement,” concludes UBS.