The 90-percent surge in palladium prices over the past 12 months has been driven by trade barriers that forced to hold local stockpiles as a defensive measure, as well as by a general rise in prices for precious metals, with gold and silver as leading ones. Fundamental factors affecting the palladium market remain mixed. The demand in the automotive industry - the prevailing sector in the end-use of palladium - continues to experience structural pressure due to the accelerated adoption of battery electric vehicles (BEVs), although stringent emission standards and reverse substitution in gasoline autocatalysts give a partial support. Primary palladium supply shows a slight decline, but secondary palladium supply has the potential for a significant growth due to increased recycling volumes. Some experts believe that after the final settlement of the U.S. tariff issue (Section 232) and the completion of the antidumping investigation against Russian-origin palladium, the liquidity in the palladium market will normalize, which could put pressure on the prices for the metal.
LBMA price consensus
The consensus forecast of analysts surveyed by the LBMA for its regular Precious Metals Forecast Survey estimates the average palladium price in 2026 at $1,740.25 per ounce, up 51 percent compared to an actual average price in 2025 ($1,150.29).
The majority of analysts (18 out of 21) see the potential for palladium to rise to highs of $2,000 and beyond, with one particularly bold forecaster believing a high of $2,900 can be achieved as early as this year.
Keisuke Bill Okui of Sumitomo Corporation is the most optimistic analyst about the prices in 2026, with his average forecast of $2,300, double the last year’s actual average price. He forecasts a low of $1,100 and a high of $2,900, respectively. The most pessimistic 2026 forecast for palladium comes from Jacob Smith of Mitsubishi Corporation, with an average price of $1,400. Interestingly, he also estimates the lowest price at $1,100, but the highest one is estimated much closer - at $2,100.
The ‘bulls’ point to tightening market conditions in the near term as the adoption of hybrid electric vehicles (HEVs), higher metal loadings in catalysts, the resumption of the palladium-for-platinum reverse substitution, as well as political tensions such as U.S. tariffs according to Section 232 and the U.S. antidumping investigation - all of these factors risk to limit supply and trigger price spikes. Geopolitical tensions, tariff-induced disruptions, and limited investment in mining further support the arguments for continued high prices.
“The emergence of hybrid vehicles as a viable option to EVs, at a time of reduced government subsidies and less popular interest in environmental issues and tighter environment standards, have once again convinced markets that autocatalyst demand will increase over the next two years. This, along with depressed mining supply growth due to issues ranging from mine closures in South Africa, to a weak nickel market, to sanctions directed against Moscow, points to a primary deficit into 2027,” according to Bart Melek of TD Securities.
Palladium could gain a moderate support in 2026 from palladium-for-platinum reverse substitution, as a renewed price advantage encourages some automakers to return to using high-content palladium catalysts, according to Kirill Kirilenko of CRU.
However, ‘bears’ see a different picture. Growing adoption of battery electric vehicles (BEVs), persistent thrifting, increased refining volumes, stabilizing the production in Russia and South Africa, and the weakening demand from the auto industry - all these factors point to a return to structural oversupply. Investors also show fragile enthusiasm as fundamental factors come into play.
According to Wilma Swarts of Metals Focus, a significant palladium price correction is possible in the second half of the year when the U.S. tariff and antidumping issues are resolved, and prices will potentially decline to a low of $1,090 by year-end. “Investors will likely focus on the far superior fundamentals or safe-haven attributes of other precious metals,” she says, adding that the consensus on the long-term demand outlook for palladium remains bearish.
Bart Melek also believes that palladium prices should decline from their late-2025 highs as available stockpiles are sufficient to fill the gap between primary supply and demand.
Relatively stable primary palladium production and abundant secondary palladium supply explain why the palladium price range is approximately $500 lower than the platinum price range, according to Okui of Sumitomo. Risks for a price decline include a slowdown in global economic growth, a potential ETF asset redistribution, and the accelerated adoption of electric vehicles in countries such as India.
Demand in the automotive industry
According to Nornickel’s estimate, the palladium market returned to balance in 2025 after a surplus (of approximately 500,000 ounces in 2024) thanks to growing demand from the automotive sector and reduced palladium production in North America and South Africa. One of the key drivers of a price growth has been investors’ desire to diversify their investments switching from dollar-denominated assets and gold into platinum group metals (PGMs), Nornickel notes.
Industrial demand for palladium (excluding investments) increased by 1 percent in 2025, to 9.1 mn ounces. The main driver was the expansion of internal combustion engine (ICE) vehicle production to 80 mn units (a 2-percent year-on-year increase), primarily due to hybrid electric vehicles (HEVs) that use palladium in their catalysts. Major automakers are increasingly implementing hybrid-focused strategies as many countries (the USA, EU, and UK) reconsider their deadlines for phasing out ICE vehicles completely.
“The hype around the former technology fades as soon as a ceiling penetration rate, limited by the charging infrastructure availability, is reached,” according to Norilsk Nickel’s December Quintessentially PGMs study.
Global production of all types of vehicles increased by 5.6 percent in 2025, exceeding the pre-COVID levels:
Production of vehicles, mn units.Green – all types; blue – ICE vehicles.
Source: Norilsk Nickel’s 2025 IFRS Presentation
Nevertheless, pressure on demand for platinum group metals remains due to ongoing austerity measures in China and the growing adoption of series hybrids (or EREVs) that require significantly less metal than traditional parallel hybrids, according to the authors of the Quintessentially PGMs study.
The structure of a vehicle sales growth differs between the core markets in the USA and China. In the USA, the growth in the BEV segment has slowed amid revising the EV sales incentives and reduced support for charging infrastructure. In the first nine months of 2025, BEV sales grew just by 9 percent - one of the weakest growth rates in recent years. Meanwhile, the hybrid vehicle market surged by 35 percent, reaching 1.8 mn units.
However, the situation in the PGM market in China is negative. At 9-percent overall growth, the ICE vehicle production is expected to increase just by 2 percent, to 23.3 mn units, while BEV production is expected to grow by almost 28 percent, exceeding 10 mn units for the first time. This shift reflects the long-term strategy of China’s government to accelerate the development of the BEV segment and strengthen China’s position as a global leader in using electric vehicles. With the world’s largest charging infrastructure, China has created the conditions for really large-scale adoption of hybrid electric vehicles. “No other country has been able to replicate such deep integration of electric transport into both the economy and the urban landscape,” Quintessentially PGMs notes.
Palladium’s dominant role in ICE autocatalysts continues to weaken as BEV adoption steadily expands, and no major new industrial applications have emerged to offset the loss, according to Kirillenko of CRU.
Norilsk Nickel expects the palladium demand in the automotive sector to grow by 2 percent in 2026, to 7.5 mn ounces, which will be the main driver of a 2-percent growth in global palladium use, to 9.3 mn ounces. Platinum demand for vehicles is expected to decline by 2 percent, to 2.9 mn ounces, due to the ongoing shift from diesel vehicles to gasoline hybrids, as well as the palladium-for-platinum substitution in some types of catalysts.
Industrial palladium demand and the potential of new applications
Demand for palladium from other industrial sectors increased by 5 percent in 2025, driven by a surge in its use in electronics industry amid the development of AI and data centers, as well as in the chemical industry that uses palladium in catalytic processes, according to a Norilsk Nickel’s press release. In 2026, industrial demand for palladium (excluding the automotive and jewelry industries) is expected to grow by 2 percent, to 1.5 mn ounces.
SFA (Oxford) estimated the industrial palladium demand at 1.39 mn ounces in 2025, a slight change from the previous year. Record gold prices shifted some of the demand to palladium for certain types of electroplating, leading to increased demand for palladium from the electronics industry. Demand from dental sector continues to decline over the long term, partially offsetting the growing demand from the electronics sector, while the demand from other sectors remains stable.
Source: The Palladium Standard 2025, SFA (Оxford)
Norilsk Nickel that established a Palladium Technology Center to develop innovative materials expects new applications to significantly expand the industrial use of palladium. Dmitry Izotov, Director of the Norilsk Nickel’s Palladium Technology Center, believes that palladium has a long-term potential in manufacturing solar panels and microelectronics.
Palladium is already increasingly popular in the glass industry (one of the key industrial uses of platinum, accounting for approximately 10 percent of demand). Thanks to the solutions being developed for palladium, this industry could require up to 2 mn ounces of the metal. Projects for using palladium in electrochemistry, including the ones for water disinfection, production of cathode nickel, copper foil, as well as for chloralkali industry, could increase palladium demand by another 0.2 mn–0.3 mn ounces.
The Palladium Technology Center’s portfolio includes patents for using palladium in existing and emerging markets, with an estimated annual demand of 1.7 mn ounces by 2030 to 2035. Nornickel expects that the global market launch of new products will fully offset the decline in palladium consumption in autocatalysts by 2030.
Estimates by major palladium producers
Palladium supply fell by 3 percent last year, to 9.2 mn ounces, due to the decreased palladium production in North America (by 21 percent) and South Africa (by 6 percent). In South Africa, its production was impacted by long-term insufficient investments and temporary mine shutdowns due to flooding, while in North America, the palladium production at the Stillwater mine declined sharply. Part of the deficit was offset by increased secondary palladium supply due to higher prices for metals baskets and the recycling of more vehicles with higher PGM loadings.
Strong industrial and investment demand - amid sluggish supply - sharply pushed up leasing rates, ultimately exceeding 12 percent for palladium, indicating a shortage of the metal. Consumers in the chemical and glass industries using closed-loop PGM production processes have begun to cancel contracts due to rising leasing rates and started buying the metal directly, further tightening the market, according to a Nornickel’s press release.
Nornickel expects the palladium market to be balanced in the medium term, although a small deficit of approximately 100,000 ounces is possible in 2026. “If investment demand that was a driving force behind PGM price growth in 2025 continues, this will provide additional support to demand, potentially resulting in a deficit in the market,” Nornickel believes.
Nornickel forecasts the palladium supply to remain at the level of the last year. Primary palladium supply is expected to decline by 2 percent due to anticipated production cuts in Russia and North America and will be partially offset by a production recovery in South Africa. The overall neutral trend is expected to be achieved through increased secondary palladium production, as scrap collection intensifies amid high prices, and the precious metal content in recycled catalysts increases.
The U.S. antidumping investigation against Russian-origin palladium results in higher market volatility, although it will not have a long-term impact on its fundamentals, according to the Russian company.
Valterra Platinum (formerly Amplats) expects the palladium market to remain tight in the medium term, although the metal shortage will decrease slightly in 2026 (from 320,000 ounces in the previous year), and the deficit will become insignificant in 2027.
Valterra Market Forecasts:
Source: Valterra Platinum 2025 Annual Results Presentation
Sibanye-Stillwater has a similar forecast:
Source: Sibanye-Stillwater IR Presentation February 2026
Sibanye-Stillwater believes that despite a continued growth in the manufacturing of BEVs that will account for approximately 35 percent of the total number by 2034, the demand for PGMs for ICE vehicle autocatalysts is supported by further improvements in ICE forecasts, easing off the EC’s plans to phase-out them, and the rollback of federal support measures for BEVs in the USA. At the same time, primary palladium supply continues to decline, and the purchase of global stockpiles of critical metals will likely contribute to a price growth.
What will be the impact of the war in the Middle East?
To understand the long-term trend for precious metals that a war in Iran could shape, it’s useful to recall how prices behaved during previous escalations in the Middle East that were also accompanied by a spike in energy prices (oil shocks).
Historically, oil shocks have had a limited direct impact on precious metal prices, with the price trend preceding the oil shock usually remaining unchanged, Heraeus notes in one of its reports. However, the overall economic situation can impact the price for precious metals.
Dynamics of oil and precious metal prices during wars and revolutions in the Persian Gulf countries:
Source: Heraeus precious metals appraisal, 16th March 2026
The two oil shocks of the 1970s occurred amid a ‘bull’ precious metals market, and prices kept on growing afterward, but peaked and reversed when the U.S. economy fell into a recession. The 1990 Gulf War occurred amid a downturn in prices for precious metals, and this trend continued because the war coincided with the recession. The Russia-Ukraine conflict of 2022 and the Iraq War of 2003 occurred two years after a recession, and the economy overall was still strengthening, so the oil shock was not followed by a recession.
While an oil shock does not have direct consequences for precious metals, it can have an indirect impact through triggering a recession due to rising energy prices. Six years have passed since the last recession, and the situation is ominous given that typical business cycles last five to six years. A potential recession will have a more negative impact on the prices for platinum group metals and silver than on gold due to their greater industrial use.
Sergey Bondarenko for Rough&Polished
