The palladium price, after reaching a yearly low of around $890 per ounce in early April, has risen markedly and soared to $1,330 by late July, following the platinum rally with some lag. The significant price growth has made reference to price forecasts made at the beginning of the year largely pointless (for example, the LBMA’s palladium consensus forecast for 2025 was estimated $991.45 per ounce), but the fundamental problems related to palladium with its price increase by over 35% from the beginning of the year have persisted.
The adoption of light battery electric vehicles (BEVs) and the replacement of some palladium in autocatalysts for gasoline engines by platinum have led to a supply surplus on the market. The US tariffs on imported cars add to the uncertainty: although lower sales of new light vehicles will likely result in a decline in spent catalyst recycling volumes, as fewer old vehicles will be scrapped, the negative effect on palladium demand will outweigh this, according to the SFA (Oxford) report forecasting an average palladium price of $935.
According to Heraeus, the rally in platinum prices, followed by palladium, is not yet supported by data on the metal demand growth in China that is usually inversely proportional to the price level. If the metal demand responds to the price and declines, and supplies from South Africa normalize and remove the liquidity deficit, the price for metal may adjust. It is even more difficult to explain the surge in price for palladium, because - unlike platinum - it is of no interest to jewelry manufacturers, Heraeus notes.
Disputes about balance
The palladium market is expected to be balanced in 2025 and 2026, Norilsk Nickel believes. The total demand for palladium in 2025 will fall by 5% (by 500 thousand ounces), while metal supply will decrease by 2% (by 200 thousand ounces). Next year, palladium consumption is expected to grow, according to Nornickel’s estimations, by 2% to 7.7 mn ounces, with metal supplies growing by 1%.
Johnson Mattey (JM) also expects the palladium market to be close to balance this year, but a shift to a significant supply surplus is not excluded, given the increase in tariffs on vehicle imports into the United States.
SFA (Oxford) believes the palladium market will be in surplus by 245 thousand ounces in 2025 after a small surplus in 2024, but there is a risk of a larger surplus due to a decline in light-vehicle sales as the prices in the USA rise following the imposition of a 25% tariff on imported vehicles and automotive spare parts.
The World Platinum Investment Council (WPIC) forecasts the palladium deficit to slump in 2025 (from 624 thousand ounces in 2024 to 120 thousand ounces) and that palladium will be in surplus in 2026 and reach 689 thousand ounces by 2029.
Palladium Market Balance Forecast through 2029:
Source: WPIC Platinum Essentials June 2025
Decline in demand for PGMs in the auto industry
The automotive industry accounts for about 84% of demand for palladium. The main reason for the decline in overall demand is weak dynamics in the vehicle manufacturing industry, according to the Nornickel’s report. Although global light-vehicle production is expected to grow by 1% in 2025 (to 91.7 mn cars), the number of internal combustion engine (ICE) vehicles with catalysts containing platinum group metals (PGMs) will gradually decrease, from almost 79 mn vehicles last year to 76 mn ones this year.
SFA (Oxford) expects a 5% decline in palladium demand in the automotive industry in 2025 (to 7.08 mn ounces) amid the wider use of trimetallic catalysts in gasoline vehicles, where platinum partially replaces palladium. The continued decline in global production of ICE and hybrid vehicles amid rising output of electric vehicles - to 14.1 mn units compared to 11.5 mn units in 2024 - is also of importance. There is also a risk of the market deterioration, as tariffs increase the cost of vehicles in the USA and, therefore, reduce vehicle sales, according to the SFA (Oxford) report.
Change in demand for PGMs in the auto industry from 2023 to 2025:
Source: SFA (Oxford) Platinum Standard 2025
According to WPIC, demand for palladium in the automotive industry will decline annually by an average of 1.3% from 2024 to 2029. The pace of decline in demand for platinum will be more significant, which WPIC attributes to the reverse substitution of palladium for platinum.
Forecast for the decline in demand for platinum and palladium in the automotive industry through 2029:
Source: WPIC Platinum Essentials June 2025
Impact of tariffs
The auto market can lose about 1.3 mn light vehicles in 2025 due the US tariffs, and about 200,000 to 250,000 ounces of PGMs (or about 2% of the industry’s consumption) will be at risk, according to JM.
Even without the recent changes in the US trade policy, the use of palladium in autocatalysts was expected to decline this year, warns JM. Based on data available at the end of the first quarter that does not fully account for the potential impact of the trade war, JM expects palladium consumption in autocatalysts to decline by 5% year-on-year in 2025, or by just over 600 thousand ounces. Much of the decline is due to the reduced share of ICE light vehicles in Europe and China, but consumption in other major auto markets will also decrease. Gasoline vehicles continue losing their market share to BEVs, particularly in China.
Vehicle electrification
In China, the share of vehicles using new energy sources, including battery electric vehicles (BEVs), plug-in hybrid electric vehicle (PHEVs) and fuel cell electric vehicles (FCEVs), reached 50% by mid-2024, Nornickel notes. Vehicle electrification in China is expected to continue developing rapidly. Nevertheless, ICE vehicles will retain their role, especially in rural areas and in export markets that are becoming increasingly important for China’s automotive industry. In 2025, light-vehicle production in China is expected to reach 31 mn vehicles, up 2% from 2024. However, production of ICE vehicles is forecast to decline by 4% to 22 mn vehicles, while electric vehicle production is expected to grow by almost 20% to 9 mn vehicles.
The impact on demand for PGMs will be exacerbated by a slight decline in the average PGM content in gasoline vehicles produced in China: vehicles made by China’s manufacturers generally have a lower PGM content than those manufactured by international joint ventures in China, the JM report says.
European authorities (especially in Germany and France) have to reconsider their programs offering tax incentives for purchasing the electric vehicles amid difficult budgetary situation, inflation and rising costs. EU’s plans to phase out internal combustion engine vehicles from 2035 are currently under revision. Nornickel notes that the US automakers, such as Ford and GM, are reconsidering their vehicle electrification targets against this backdrop.
The reduction in the output of ICE vehicles is partially offset by the growing production of Western-style parallel hybrids that require a higher PGM loading, according to the Nornickel’s report. At the same time, the popularity of so-called consecutive hybrids with the internal combustion engine used exclusively as a generator and their movement enabled by an electric engine only, is growing in China. This factor puts additional pressure on demand, Nornickel notes.
On the contrary, electrification in the USA has faced obstacles since the accession of the Trump administration to power. Although the USA’s imposition of a 25% import duty on vehicles remains a key risk to the growth of the automotive industry (the USA imports about 7 mn vehicles annually), this could be counterbalanced by the Trump administration’s removal of environmental standards, Nornickel notes. Trump initiated a large-scale revision of the emission regulations introduced under Obama and Biden to accelerate the shift to zero-emission vehicles. Now, it is expected that support for the introduction of EVs will be canceled, emission standards will be eased, and the establishing of EV charging station networks will be slowed down, which will create more favorable conditions for ICD vehicles in the near future, Nornickel believes.
The deteriorated situation with adoption of EVs may be an additional factor in favor of the growing demand for PGMs in the auto industry, according to the JM report. In Europe, automakers are allowed to average out their CO2 emissions from 2025 through 2027, giving them additional flexibility on the timing of launching and ramping-up new EV models. In the USA, the political climate becomes increasingly unfavorable to EVs, especially imported vehicle models. “We therefore expect further downgrades to the near-term BEV outlook this year, with some resulting upside for gasoline vehicle share,” JM says.
WPIC estimates that despite continued growth in the BEVs’ market share (reaching 28% by 2030), ICE vehicles and hybrids will dominate the vehicle output by 2040.
Forecast for the changing structure of the auto market:
Source: WPIC Platinum Essentials June 2025
Substitution
Despite the decreased production of ICE vehicles, demand for palladium, according to Nornickel’s forecasts, will benefit from a reduced use of platinum (from 2.7 mn ounces to 2.6 mn ounces), which is associated with the replacement of more expensive platinum in autocatalysts.
“The rise in platinum prices is actually positive for palladium because it opens a window of opportunity. The value in their use is approximately comparable,” says Anton Berlin, Vice President and Head of Sales Division of Norilsk Nickel. “When there was a large price imbalance, with palladium twice as expensive as platinum, catalyst manufacturers did their best to use less palladium and more platinum. If platinum prices are even higher [by the end of July, the gap has decreased to $85], this will push autocatalyst manufacturers to reduce the share of platinum and increase palladium loadings,” he explained.
The World Platinum Investment Council estimates that the replacement of palladium in autocatalysts - a major driver of platinum’s advantage - will peak in 2025 at 877 thousand ounces (previous estimate was over 1 mn ounces); then the process seems to taper off, and a reversed substitution will start. This is expected to result in increasing the palladium demand by about 366 thousand ounces by 2027.
Supply
If the US tariffs result in a loss of production of about 1.3 mn light vehicles, demand for auto recycling will also reduce, particularly in the USA, which accounts for more than 40% of global recovery of PGMs from spent autocatalysts, JM said. “The size of the impact is hard to predict, but for indicative purposes, if scrap volumes outside China fell by 2-3%, this would remove around 100,000 oz of PGM supply,” the JM report said.
Secondary supply is slowly recovering after a decline in 2020 to 2024, according to the Nornickel’s report. Nornickel expects the secondary palladium supplies to grow by 4% this year to 3 mn ounces. The reasons for the lagging of autocatalyst recycling behind the pre-pandemic levels are the increased service life of vehicles, as well as the reduced profitability of autocatalyst recycling and the reluctance of autocatalyst recyclers to recycle metal-containing materials amid low prices for platinum group metals, according to the Nornickel’s report.
JM has a similar estimate (3.06 mn ounces). Autocatalyst recycling accounts for about 32% of the total palladium supply. The growth in autocatalyst recycling will be almost exclusively in China, where the government’s program to stimulate the exchange of old vehicles has been extended for at least another year and expanded to include vehicles registered before June 2012 and meeting China IV Emission Standards or earlier. Outside of China, there is little evidence of improvement in the auto scrap market, which means that vehicle lifespans continue to increase and ‘retirement’ dates remain unpredictable, JM said. It should be noted that this forecast is also based on the situation before the price surge started in May.
Primary palladium supply remains generally stable in the main producing regions. Nornickel maintains its stable production levels in Russia in 2025, with moderate growth expected in the country in 2026 after launching the Chernogorskoye deposit.
Norilsk Nickel may have some palladium inventories accumulated due to the sanctions imposed in 2022, JM reminds. “This metal could be sold if market conditions permit, but this may ultimately depend on demand in Russia’s two key palladium markets, the USA and China. Since Russian PGM no longer qualifies for ‘good delivery’ status, and cannot be delivered into market clearing locations, sales are heavily dependent on purchasing activity by PGM consumers in China and (for palladium) the USA.” JM says in its report. Current trade tension can reduce consumption of PGMs in key applications and negatively affect the sales of palladium of Russian origin, as well as stimulate protective strategies, including building up inventories by consumers, producers, investors, and other market players, JM believes.
The decline in palladium supply can be due to high production costs at palladium-rich mines in North America that is the only region where palladium production can be significantly reduced because the country’s existing projects are unprofitable at low prices for the metal, Nornickel says in its report. JM also expects the palladium supply from North America to decline due to maximization of efficiency and productivity at its Sibanye-Stillwater operations in Montana, where output is set to fall by around a third this year, and a gradual reduction in the metal production at Impala Canada’s Lac des Iles mine as it approaches the end of its life.
SFA (Oxford) forecasts primary metal supply to decline by 5% to 6.16 mn ounces this year due to falling production in North America and South Africa.
Industrial demand
Industrial demand for palladium is likely to be better than demand for this metal for automotive industry, JM notes. Total industrial consumption of platinum group metals in this sector is expected to grow by 4% this year (to about 1.47 mn ounces), based on the commissioning of new facilities and general market trends existing at the end of the first quarter. These estimates do not yet take into account the potential impact of tariffs on imports of some PGM products and compounds into the United States, as well as the wider economic impacts of the trade conflict. But since industrial demand accounts for just about 15% of the total PGM consumption, any changes are expected to have a limited effect on the market balance, JM says in its report.
Nornickel expects a 2% growth in industrial use of palladium in 2025, to 1.5 mn ounces. The growth in the use of palladium continues in key end-use sectors such as electronics, chemicals, petrochemicals, and healthcare, driven by the adoption of artificial intelligence (AI), expanding infrastructure in emerging markets, and demographic change, the company notes. In particular, demand for the metal will grow by 2% to 0.5 mn ounces in electronics, where palladium is in demand in the manufacturing of multilayer ceramic capacitors (MLCCs), high-reliability semiconductors, connectors, and soldering components, used especially in aerospace, defense industry, and medical devices.
In 2026, Nornickel expects the total palladium demand for industrial use (excluding the automotive and jewelry sectors) to grow by 5% to 1.6 mn ounces. The palladium demand growth reflects ongoing technological innovations, investments in infrastructure and changing demographics, with China remaining the main growth driver in many sectors.
Defense-related driver of demand
Recent changes in the USA’s foreign policy offer opportunities for potential growth in demand for platinum group metals, JM notes in its report, without providing specific estimates. In particular, increased defense-related spending by Europe and other Western allies, coupled with the expansion of some weapons manufacturing capacity, could have a positive effect on the demand in some applications of PGMs and in certain regions. These metals are found in components used in manufacturing the aircraft and other defense equipment, and are also used in defense-related manufacturing processes.
PGMs’ application in defense and aerospace industries:
Источник: Johnson Matthey PGM market report May 2025
Wider scope of PGMs’ application
In the long term, demand for platinum group metals will be supported not only by traditional industries such as the automotive industry, jewelry manufacturing and chemical production, but also by a growing number of new applications, Nornickel expects. These include hydrogen-related technologies (fuel cells and electrolyzers), as well as advanced catalytic systems based on non-ferrous metals alloyed with PGMs. Additional expansion of the use of PGMs is expected in the glass-making industry, particularly in the production of fiberglass, and in the electronics sector.
According to Norilsk Nickel’s Palladium Technology Center, new long-term demand for palladium in these existing markets can reach 0.5 mn to 0.6 mn ounces, in addition to 1.7 mn ounces of demand in one-off applications in the short term. New scope of applications for palladium, including the hydrogen energy generation, ‘green’ technologies, and OLED display manufacturing, can increase long-term demand by 0.9 mn to 1 mn ounces annually.
Sergey Bondarenko for Rough&Polished
