UBS Forecast on Palladium Prices

UBS Global Research, in a note dated Monday, has maintained a bearish stance on palladium, forecasting a price decline to $900/oz within the next 12 months. The brokerage attributes this negative outlook to a combination of factors impacting both supply and demand.

Supply Resilience

Despite concerns over potential disruptions due to international sanctions on Russia, the world’s largest palladium producer, mine supply has proven more resilient than anticipated. While production is expected to edge lower this year, primarily due to challenges faced by South African miners, the overall impact on supply is seen as limited.

Long-term Outlook

“We retain our long-term negative view on palladium, as we expect fewer cars to be produced this year versus last year,” said the analysts. A projected decline in global car production, coupled with the ongoing substitution of palladium with platinum in autocatalysts, is expected to weigh on consumption.

Export Diversions

However, UBS flags that Russian palladium exports have redirected towards the East, particularly Hong Kong and mainland China, mitigating the impact of self-sanctioning by Western customers.