In its latest metals outlook released Tuesday, UBS reiterated a cautious stance on palladium, highlighting the metal’s strong reliance on conventional vehicles.
The investment bank pointed out that over 80% of palladium consumption is linked to catalytic converters in internal combustion engine (ICE) cars, creating a concentrated demand risk for the precious metal.
Although the adoption of electric vehicles outside China has been slower than initially expected, UBS emphasized that the global shift away from ICE-powered vehicles remains firmly underway.
According to the bank’s analysts, this ongoing transition is likely to push the palladium market toward a structural surplus. UBS said this trend is expected to manifest “at some point over the coming years,” without specifying exactly when the market could see this shift.
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