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Palladium Price Forecast: Top Trends for Palladium in 2025
Jan. 21, 2025 02:00PM PST
Palladium fundamentals are seen weakening slightly in 2025, weighed down by oversupply and lower auto sector demand.
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Since reaching an all-time high of US$3,002 per ounce in February 2022, palladium has trended down.
More than 80 percent of palladium demand comes from the auto sector, where it is used in the production of catalytic converters. However, palladium's high price has prompted substitution for platinum, which is currently less expensive.
Palladium largely traded in the US$900 to US$1,100 range for most of 2024, but saw a short-term spike to US$1,200 in October as the US called for stricter sanctions on Russian precious metals.
Russia is one of the world’s top suppliers of palladium and other platinum-group metals.
What's the outlook for palladium in 2025 after 2024's relatively flat performance? Read on to find out.
What factors will impact palladium in 2025?
In a 2025 outlook video, Jeffrey Christian, managing partner at CPM Group, said he expects both platinum and palladium prices to stay rangebound in 2025, albeit with a downward bias.
He expects that bias to be more pronounced for palladium due to weakening demand from the auto sector.
The auto sector is critical to palladium demand, and while overall car sales are expected to rise 1.7 percent to 89.6 million units in 2025, an increasing number will be electric vehicles, which doesn’t require any palladium.
However, while electric vehicle (EV) demand is still growing, the speed at which EVs are gaining market share is slowing. According to data from S&P Global Mobility, EV market share for light vehicles is expected to reach 16.7 percent in 2025 — that's compared to 13.2 percent in 2024 and 7 percent in 2023.
The slowdown is in part due to market saturation; it has also been attributed to consumer fears around the availability of charging infrastructure and EV range anxiety. Additionally, broader electrical grid requirements may be stymied by a lack of necessary resources like copper to provide upgrades needed to handle an influx of new vehicles.
Another issue that may influence the auto industry in 2025 is the effect of policy proposals from the incoming Trump administration. In December, Donald Trump proposed sweeping 25 percent tariffs on the US’s largest trading partners, Canada and Mexico. If implemented, such tariffs would have an outsized impact on the North American auto sector, as vehicles and parts would face a 25 percent cost increase every time they enter the US.
Without carve outs, the move could decimate new light vehicle demand in all three countries.
However, during his election campaign, the president-elect also proposed eliminating subsidies for new EV sales, effectively pushing the price of new vehicles up by as much as US$7,500.
It remains to be seen how and when these promises will be implemented.
It’s also uncertain how much influence Tesla (NASDAQ:TSLA) CEO Elon Musk will have, especially over EV policy, but he has already endorsed rolling back the subsidies.
Palladium supply and demand in 2025
The auto sector accounts for 80 percent of palladium demand, making it by far the most important driver.
According to the World Platinum Investment Council's five year outlook for palladium, auto sector demand is seen growing "modestly," rising to a high of 8.5 million ounces, below the pre-COVID record of 9 million ounces.
However, this will be offset by lower levels of jewelry and industrial demand.
The firm predicts that the palladium market will transition to a surplus from 2025, with oversupply forecast to hit 897,000 ounces by 2025. That will come on the back of a 1.2 million ounce increase in recycling supply.
In addition to scrap material, output from both Russian and South African mines is anticipated to return to historic levels, further supporting an oversupplied palladium market.
What is the palladium price outlook for 2025?
Christian’s prediction of a sideways palladium price suggests a range of US$900 to US$1,000.
This viewpoint is supported by a recent report from Heraeus Precious Metals. It states that the metal is likely to trade between US$800 and US$1,200, also based on increasing supply and weak demand.
Overall, the consensus seems to be that the palladium market will be weaker in 2025.
Don't forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
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