UBS raises palladium price target on tighter supply outlook

UBS has raised its palladium price forecasts for late 2026 and early 2027, driven by a tighter physical supply backdrop and resilient demand. The investment bank increased its December 2026 and March 2027 price forecasts by $200 per ounce, while lifting its June 2027 projection by $100 per ounce. The upward revision follows a slower-than-expected transition away from internal combustion engine vehicles, with sustained hybrid vehicle adoption in key markets such as the US, Brazil, and parts of Asia continuing to bolster autocatalyst consumption. Furthermore, palladium's wide discount relative to platinum is encouraging manufacturers to substitute palladium back into autocatalysts for gasoline-powered automobiles. On the supply side, global mine output is anticipated to contract again in 2026 after declining in 2025. Lower ore grades in Russia and strict capital discipline from South African producers are constraining mined supply. Although UBS maintains a cautious long-term outlook due to vehicle electrification, it expects the current tighter supply environment to effectively limit price downside in the near to medium term.