UBS lowered its palladium price forecast to $1,400 per ounce from $1,600 across all tenors, citing expectations of a market surplus in 2026 after 14 consecutive years of deficits.
Johnson Matthey’s recent report indicates the palladium market was undersupplied by 416,000 ounces in 2025, representing about 4.1% of total demand.
The 2024 deficit was revised down from 501,000 ounces to 218,000 ounces.
Strong investment demand of 382,000 ounces in 2025 helped sustain shortages.
Total palladium demand in 2025 was slightly higher than in 2024, while autocatalyst demand fell 1.2% year‑on‑year.
Lower mine supply contributed to undersupply, a trend UBS expects to continue into 2026.
UBS anticipates palladium moving into surplus in 2026 as investment demand is expected to turn negative; ETF holdings have already declined in 2026.
Scrap supply is projected to rise further in 2026, aided by the renewal of a vehicle trade‑in incentive scheme in China, according to Johnson Matthey.
Autocatalyst demand is likely to decline further due to reduced production of internal combustion engine vehicles.
UBS reduced its forecasts amid ongoing concerns over economic growth and deteriorating fundamentals.
