UBS raises palladium forecasts due to global supply and demand balance

Swiss bank UBS has revised its price forecasts for palladium for the end of 2026 and the first half of 2027 upwards, citing tighter-than-expected global supply and robust demand.

Increase in Price Expectations

Swiss bank UBS updated its projections for palladium prices upward in line with developments in global markets. The per-ounce price forecast was raised by $200 for the December 2026 and March 2027 period, and by $100 for June 2027.

Vibrancy on the Demand Side

The slower-than-expected transition from internal combustion engine vehicles to electric vehicles is keeping demand strong for palladium, which is used in catalytic converters. The rising preference for hybrid vehicles, particularly in the US, Brazil, and parts of Asia, supports this trend.

Cost Advantage and Production

The fact that palladium has become a cheaper option compared to platinum is influencing automakers' preferences. On the other hand, global mine production is expected to continue declining in 2026 following the drop in 2025.

Supply Constraints and Outlook

While declining ore grades in Russia negatively impact production, producers in South Africa prefer to keep expenditures under control. Although the increase in recycling volume does not fully offset the losses, limited supply constrains potential price drops.