Supply deficit on the Palladium market is shrinking - Commerzbank

In addition to the forecasts for Platinum, Metals Focus has also published forecasts for Palladium, Commerzbank's commodity analyst Carsten Fritsch notes.

Mine production of Palladium is expected to fall by 6% this year

"The Palladium market is expected to post a physical supply deficit (excluding ETF demand) of 254 thousand ounces this year. Last year, this figure was 407 thousand ounces. The reason for the lower supply deficit is falling demand, which is expected to decline by 3% to 9.42 million ounces. The decline in demand is due to weaker demand from the automotive industry, which is expected to fall by 5% for the second year in a row."

"The fact that the supply deficit is not even smaller is due to the expected simultaneous decline in supply of 2% to 9.16 million ounces. Like Platinum, Palladium supply is being curbed by the low price level. According to Metals Focus estimates, 16% of Platinum group metal production was loss-making last year, which led to a series the of cost-cutting announcements and production cuts. In contrast to 2024, there is unlikely to be any positive supply stimulus this year as a result of additional work-in-process material."

"As a result, mine production of Palladium is expected to fall by 6% this year. According to Metals Focus, above-ground Palladium inventories fell to 11.3 million ounces last year, the lowest level in more than 50 years. However, they would still cover 14 months' demand. Falling demand from the automotive industry and the resulting shrinking supply deficit argue against a significantly higher Palladium price. We see Palladium at $950 per troy ounce by the end of the third quarter and at $1,000 per troy ounce by the middle of next year."