UBS Hikes Medium-Term Palladium Outlook on Tight Supply

Written by Sandra Leggero

Sandra Leggero has a background in financial markets, having spent more than 9 years in commodities trading for several European and Asian companies. She holds a degree in Economics from the University of Pavia and specializes in emerging markets.

, | Updated: September 21, 2026

Key Moments

UBS increased its palladium price targets for December 2026 and March 2027 by $200 per ounce and for June 2027 by $100 per ounce.
Global palladium demand declined only modestly in 2025 and is projected to stay broadly stable in 2026, supported by hybrid vehicle adoption.
Global mine supply fell in 2025 and is expected to shrink again in 2026, with Russian and South African output under pressure, limiting price downside.

UBS Revises Palladium Forecasts Higher

UBS has raised its price projections for palladium for late 2026 and early 2027, pointing to a tighter physical market even as it maintains a cautious stance on the metal over the longer term. The bank increased its December 2026 and March 2027 price forecasts by $200 per ounce each, and lifted its June 2027 forecast by $100 per ounce.

According to UBS, palladium has recently outperformed its earlier expectations as underlying market fundamentals have tightened, leading to firmer prices than previously anticipated.

Demand Supported by Hybrid Vehicles and Autocatalysts

UBS noted that global demand for palladium slipped only slightly in 2025 and is expected to be broadly unchanged in 2026. A key factor has been the slower-than-expected shift away from internal combustion engines.

Hybrid vehicle adoption has been particularly important in gasoline-focused markets, including the US, Brazil, and certain Asian countries, where usage of palladium in autocatalysts continues to underpin consumption.

The bank highlighted that palladium’s growing price discount relative to platinum is enhancing the economic case for reintroducing palladium into autocatalyst formulations for gasoline-powered vehicles.

Structural Headwinds Remain for Long-Term Demand

Despite the recent support from hybrid and gasoline vehicle demand, UBS reiterated that the long-term outlook for palladium remains unfavorable. The bank continues to see transport electrification and an anticipated drop in internal combustion-engine vehicle production as negative structural forces for future palladium demand.

Mine Supply Under Pressure, Recycling Partially Offsets

On the supply side, UBS reported that global mine production declined in 2025 and is expected to fall again in 2026. The bank cited lower ore grades in Russia as weighing on output, while producers in South Africa are emphasizing capital discipline rather than increasing volumes.

Recycling activity has been improving, but UBS indicated that secondary supply only partially compensates for weaker mined production. This constrained supply environment is seen as a key factor that is likely to curb downside risks to palladium prices this year.