UBS has revised its outlook for palladium prices, warning that growing supply and softer demand are likely to keep the market under pressure. The investment bank now expects the precious metal to decline to $1,100 per ounce.
According to UBS, China’s palladium imports reached record highs during the first half of the year. The bank believes the increase was largely driven by the launch of a new exchange rather than stronger demand from the automotive catalyst sector.
Rising Supply Expected to Create Market Surplus
UBS estimates the global palladium market will record a surplus of approximately 200,000 ounces this year.
Although mine production is projected to decline compared with 2025 levels, the bank expects increased recycling supply, combined with weaker investment demand and softer consumption from the autocatalyst industry, to more than offset the reduction in primary output.
As a result, the market is expected to remain in surplus, placing continued downward pressure on palladium prices over the coming months.
Automotive Demand Remains Under Pressure
UBS continues to hold a cautious view on palladium for the rest of the year, arguing that the imbalance between supply and demand is likely to weigh on price performance.
Palladium is used predominantly in catalytic converters fitted to gasoline-powered vehicles, where it helps reduce harmful exhaust emissions. As a result, changes in vehicle production and environmental regulations remain key drivers of demand for the metal.