UBS Adjusts Price Forecasts#

UBS, a Swiss bank, has lowered its price forecasts for palladium and platinum by $200 per ounce. This decision stems from concerns about declining demand and broader economic growth risks.

Palladium Demand and Electric Vehicles#

The bank's new forecast for palladium is set at $1,600 per ounce, down from $1,800. UBS strategists Giovanni Staunovo and Wayne Gordon highlight that the majority of palladium demand comes from autocatalysts, which are crucial for gasoline-powered vehicles. This sector has represented 80 to 85% of palladium consumption over the past six years. However, as the automotive industry shifts towards electric vehicles, this heavy reliance poses a risk to future demand. The strategists noted that without new markets for palladium, the metal could face a structural surplus in the coming years.

New Applications for Palladium#

In an effort to diversify demand, the largest palladium producer is exploring new applications. They have filed patents for uses that could generate 1.7 million ounces of demand by 2030-2035, primarily in fiberglass production in China. Other potential uses include master alloys for bushings, solar energy technologies, and microelectronics. However, this projected demand still falls short of the approximately 8 million ounces consumed annually by autocatalysts.

Platinum Market Conditions#

UBS has also cut its platinum forecast to $2,300 per ounce from $2,500. The bank notes that signs of market tightness, which had characterized the platinum market over the past year, are beginning to ease. The three-month lease rate for platinum has dropped significantly, from nearly 19% at the start of 2026 to around 6%. Additionally, exchange-traded fund (ETF) holdings have decreased by nearly 300,000 ounces since January, indicating weaker demand.

Positive Signs for Platinum#

On a brighter note, platinum imports into China have increased, surpassing 10 metric tons in March, compared to lower averages in January and February. Furthermore, platinum holdings at Nymex warehouses have declined, suggesting some metal may have returned to Europe, contributing to the easing market conditions. Despite the forecast reduction, UBS maintains a moderately positive outlook on platinum, anticipating higher gold prices in the near future.