UBS has increased its palladium price forecasts for late 2026 and early 2027, citing tighter physical market conditions and more resilient demand than previously anticipated.
The bank raised its price projections for December 2026 and March 2027 by $200 per ounce each, while increasing its June 2027 forecast by $100 per ounce. The revised absolute price targets were not provided.
Despite the upgrades, UBS maintained a cautious assessment of palladium’s longer-term prospects, reflecting the expected impact of vehicle electrification on demand.
Automotive Demand Proves More Resilient Than Expected
Palladium prices have performed better than UBS anticipated, supported by a slower decline in demand and constraints on global supply.
Worldwide palladium consumption fell only modestly in 2025 and is expected to remain broadly stable in 2026.
The transition away from internal combustion engines has progressed more slowly than previously expected, helping sustain demand for palladium in automotive catalytic converters.
Hybrid vehicle adoption in markets with substantial gasoline-powered vehicle fleets, including the United States, Brazil and parts of Asia, has also supported consumption.
Palladium is used in autocatalysts to reduce harmful exhaust emissions from gasoline-powered vehicles, including many hybrid models.
Its growing price discount relative to platinum has improved the economic case for manufacturers to substitute palladium for platinum in certain catalytic converter applications.
However, UBS continues to expect longer-term demand to weaken as electric vehicle adoption increases and production of internal combustion-engine vehicles declines.
Mine Production Expected to Contract Again
Supply constraints are another factor behind the bank’s revised forecasts.
Global palladium mine production declined in 2025 and is expected to fall again in 2026.
Russian output has been affected by declining ore grades, while producers in South Africa have continued to prioritise capital discipline rather than expanding production volumes.
Although recycling activity is improving, UBS expects the additional recovered metal to compensate for only part of the decline in mined supply.
The combination of relatively stable near-term demand and reduced primary production has contributed to tighter physical market conditions.
UBS expects these supply constraints to limit the potential for further palladium price declines during 2026, even as the bank maintains its cautious longer-term demand outlook.