UBS has become more cautious on the outlook for palladium, lowering its price target after forecasting that the market will move into surplus during the year. The investment bank now expects palladium to trade around $1,100 per ounce.
The bank noted that China’s palladium imports reached record levels during the first six months of the year. However, UBS believes the increase was mainly linked to the launch of a new trading exchange rather than stronger demand from the automotive industry.
Higher Recycling Supply Expected to Outweigh Mine Output Decline
UBS forecasts that the global palladium market will record an oversupply of roughly 200,000 ounces this year.
While mine production is expected to be lower than in 2025, increased recycled metal entering the market, together with softer investment demand and weaker consumption from the autocatalyst sector, is expected to more than compensate for reduced mining output.
The bank believes these supply and demand dynamics will continue to place downward pressure on palladium prices throughout the remainder of the year.
Automotive Sector Continues to Shape Palladium Demand
UBS maintains a negative outlook for palladium, arguing that supply growth and weaker end-market demand leave little scope for a sustained recovery in prices.
Palladium is widely used in catalytic converters for gasoline-powered vehicles, making demand closely linked to trends in global vehicle production and environmental emissions standards.