Palladium Trading Outlook 2025: Key Drivers and Market Expectations

The Bearish Backdrop for Palladium Trading

Palladium reached its zenith at US$3,002 per ounce in February 2022, but has since experienced a prolonged decline. Throughout 2024, the metal consolidated between US$900 and US$1,100, with only a brief interruption in October when geopolitical tensions—specifically US sanctions on Russian precious metals—pushed prices to US$1,200. This choppy price action reflects deeper structural headwinds facing the palladium market.

The fundamental challenge is straightforward: approximately 80 percent of palladium demand originates from the automotive sector, where the metal serves as a critical component in catalytic converters. As substitute materials gain traction and market dynamics shift, this dependency increasingly becomes a liability rather than a strength.

Electric Vehicles and the Shifting Auto Landscape

The automotive industry faces a pivotal transformation that will fundamentally reshape palladium’s demand profile. While total vehicle sales are projected to grow modestly to 89.6 million units in 2025, the composition of those sales is changing dramatically. Electric vehicles—which require zero palladium in their production—are expected to capture 16.7 percent of the light vehicle market in 2025, up from 13.2 percent in 2024 and just 7 percent in 2023.

This acceleration, however, masks a deceleration in EV adoption momentum. Market saturation, consumer anxiety over charging infrastructure availability, and range concerns are all tempering the pace of electrification. Furthermore, the electrical grid infrastructure required to support widespread EV adoption faces bottlenecks due to insufficient copper and other critical metals.

Policy Uncertainty and Tariff Risks

The incoming Trump administration’s policy proposals present additional headwinds for the auto sector and, by extension, palladium demand. A proposed 25 percent tariff on imports from Canada and Mexico—two critical markets in North American auto production—could severely disrupt vehicle sales and manufacturing. Simultaneously, proposals to eliminate EV subsidies would push new electric vehicle prices higher by approximately US$7,500, further dampening demand for the vehicles most likely to displace palladium-dependent production.

These competing policy signals create significant uncertainty about the trajectory of auto sector demand in 2025, making palladium forecasting particularly challenging.

Supply Dynamics Point Toward Market Oversupply

While demand headwinds are substantial, the supply side of the palladium equation presents its own challenges—but in the opposite direction. The World Platinum Investment Council projects that the palladium market will swing from balance to surplus beginning in 2025, with oversupply reaching approximately 897,000 ounces.

This surplus stems from multiple sources. Recycled palladium supply is expected to increase by 1.2 million ounces annually, while production from Russian and South African mines is anticipated to return to historic levels following recent disruptions. Russia remains among the world’s largest palladium suppliers, and normalization of Russian output would add meaningful volume to global markets.

The auto sector demand—despite modest growth projections to 8.5 million ounces—will remain insufficient to absorb this expanding supply. Jewelry and industrial demand are also expected to weaken, leaving little offset to the structural oversupply.

Price Forecasts: A Consensus on Weakness

When analysts trade palladium prices, they increasingly lean toward cautious outlooks. Jeffrey Christian, managing partner at CPM Group, anticipates that both platinum and palladium will consolidate in ranges during 2025, with a pronounced downward bias for palladium given weakening auto demand. His projection centers on a US$900 to US$1,000 trading band.

This view aligns with recent analysis from Heraeus Precious Metals, which suggests palladium will likely trade between US$800 and US$1,200 in 2025, reflecting a balance between elevated supply and depressed demand. The broader consensus appears settled: the palladium market faces structural headwinds that will likely keep prices under pressure throughout 2025.

The combination of EV penetration, policy uncertainty, and anticipated supply surpluses suggests that palladium investors should prepare for a challenging year ahead.