UBS has kept a cautious view on palladium in its latest metals outlook, released Tuesday, pointing to the metal’s significant reliance on conventional car technologies.
The bank emphasized that more than 80% of palladium demand comes from its use in catalytic converters for internal combustion engine (ICE) vehicles, concentrating the market’s exposure to a single sector.
While the adoption of electric vehicles outside China has been slower than anticipated, UBS underlined that the broader trend toward phasing out ICEs remains firmly on track.
Analysts at the bank anticipate that this gradual shift away from traditional engines will eventually create a structural surplus in the palladium market. UBS indicated that this imbalance is expected to emerge “at some point over the coming years,” without pinpointing an exact timeframe for the shift.
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