The palladium sector is facing challenging times ahead. Over the years, there has been a consistent supply deficit for palladium, a precious metal widely used in the automotive industry. However, experts now anticipate a shift towards market equilibrium in the current year.
According to Johnson Matthey, a leading catalytic converter manufacturer, a 6% decline in palladium demand is expected. This decrease is primarily attributed to the reduction in gasoline-powered car production and an increase in recycling volume in China, impacting the overall market dynamics.
The demand outlook for platinum, palladium, and rhodium remains uncertain in 2025 due to US trade policies and potential countermeasures by affected nations. The Platinum Group Metals (PGM) market, crucial for the automotive and industrial sectors, could witness fluctuations based on these geopolitical factors.
Johnson Matthey forecasts a 5% reduction in PGM usage for automotive catalysts this year, with the possibility of a more significant decline if US tariffs lead to decreased automobile production. In the case of palladium, the growth of recycling in China’s automotive industry is anticipated to boost secondary supply by 4%, counterbalancing the projected decline in mine supply from other regions.
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As for platinum, experts predict a third consecutive annual market deficit, primarily due to a 3% decrease in mine supply from South Africa and limited recycling supply outside of China. The increased adoption of electric vehicles is expected to contribute to a 5% decline in platinum usage in 2025 after reaching a peak in 2024.
Similarly, rhodium is likely to experience another supply deficit this year, with both supply and demand expected to decrease by 1%. Factors such as low mine supply and weakened automotive demand could contribute to this scenario, according to Johnson Matthey’s analysis.
The evolving landscape of the palladium, platinum, and rhodium markets underscores the intricate relationship between global trade policies, industrial demand, and recycling practices. As the industry navigates these uncertainties, stakeholders must adapt to changing market conditions and explore sustainable strategies to ensure the stability of the precious metals sector.
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