Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Investing.com – UBS analysts predict a tough year ahead for palladium, with the metal expected to “remain another precious metal.”
Analysts at the investment bank expect a shortfall of about 300,000 ounces, or 3% of demand, by 2025, noting that palladium bases have “declined significantly over the past few years.”
Analysts predict “low mining supply will be offset by high scrap supply,” maintaining overall stability in the supply chain.
However, they highlight palladium’s heavy dependence on the need for an autocatalyst. With the growing trend of replacing palladium with platinum and the increasing popularity of electric vehicles, the outlook for palladium remains bleak.
“The future remains bleak for palladium,” UBS says, due to these changes in demand.
An important factor that can affect prices is the political situation. “The biggest price risk is international sanctions targeting Russian mining supplies,” analysts note.
Despite the transfer of flows from Russia to China, UBS notes that no sanctions on mining supply have been imposed.
Despite the softening fundamentals, UBS maintains a “positive price outlook,” driven by a potential improvement in auto production.
They believe that lower interest rates may increase the price of cars, which may lead to an increase in demand for autocatalysts.
However, palladium’s reliance on the automotive sector, particularly in the transition industry, leaves it vulnerable, according to the bank.
“Only investors with a high risk tolerance should consider trading palladium given the low trading costs and limited market size,” concluded UBS.
