Palladium Supply Deficit Narrows Amid Falling Demand – Commerzbank

Palladium Supply Deficit Narrows Amid Falling Automotive Demand – Commerzbank

The global Palladium market is expected to experience a smaller physical supply deficit in 2025, according to a report from Metals Focus cited by Commerzbank. The deficit is projected to shrink to 254,000 ounces, compared to 407,000 ounces in the previous year. This shift is largely attributed to weakening demand, particularly from the automotive sector.

Demand for Palladium is forecast to fall by 3% to 9.42 million ounces this year, with the automotive industry's consumption expected to decline for the second consecutive year — down 5% in 2025. Despite the demand slowdown, the supply side will also contract. Mine production is estimated to decrease by 6%, due in part to low price levels making a significant portion of Platinum Group Metal (PGM) output economically unviable. Metals Focus notes that 16% of PGM production was uneconomical last year, prompting cost-cutting and output reductions.

Over-ground inventories of Palladium dropped to 11.3 million ounces in 2024 — the lowest level in over 50 years — but still sufficient to cover roughly 14 months of demand. Due to these dynamics, significant price increases are unlikely in the near term. Metals Focus forecasts Palladium prices to reach $950 per troy ounce by the end of Q3 2025, and around $1,000 by mid-2026.