UBS has raised its palladium price forecasts for December 2026 and March 2027 by $200 per ounce each, and its June 2027 forecast by $100 per ounce, citing tighter physical market conditions. The bank points to slower-than-expected demand decline and shrinking mine output, even as it keeps a cautious longer-term view tied to vehicle electrification.
UBS has raised its palladium price forecasts for late 2026 and early 2027, pointing to tighter physical market conditions and demand that has held up better than the bank previously expected. The revised absolute price targets were not disclosed.
The bank increased its December 2026 and March 2027 projections by $200 per ounce each, and its June 2027 forecast by $100 per ounce. Despite the upgrade, UBS maintained a cautious assessment of palladium's longer-term prospects, reflecting the expected impact of vehicle electrification on demand.
Automotive demand proves more resilient than expected
Palladium prices have performed better than UBS anticipated, supported by a slower decline in demand and constraints on global supply. Worldwide palladium consumption fell only modestly in 2025 and is expected to remain broadly stable in 2026.
The transition away from internal combustion engines has progressed more slowly than previously expected, which has helped sustain demand for palladium in automotive catalytic converters. Hybrid vehicle adoption in markets with substantial gasoline-powered vehicle fleets, including the United States, Brazil and parts of Asia, has also supported consumption.
Palladium is used in autocatalysts to reduce harmful exhaust emissions from gasoline-powered vehicles, including many hybrid models. Its growing price discount relative to platinum has improved the economic case for manufacturers to substitute palladium for platinum in certain catalytic converter applications. However, UBS continues to expect longer-term demand to weaken as electric vehicle adoption increases and internal combustion-engine vehicle production declines.
Mine production expected to contract again
Supply constraints are another factor behind the bank's revised forecasts. Global palladium mine production declined in 2025 and is expected to fall again in 2026.
Russian output has been affected by declining ore grades, while producers in South Africa have continued to prioritize capital discipline rather than expanding production volumes. Recycling activity is improving, but UBS expects the additional recovered metal to compensate for only part of the decline in mined supply.
The combination of relatively stable near-term demand and reduced primary production has tightened physical market conditions. As a result, UBS expects these supply constraints to limit the potential for further palladium price declines during 2026, even as the bank maintains its cautious longer-term demand outlook.
Source: Yahoo Finance
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