Investing.com — UBS released its outlook for the platinum group metals (PGMs) market, forecast to exceed 2025, although both are expected to lag behind and.
The report suggests that factory activity will be the main factor driving the white metal market.
The bank expects that central bank rate cuts and a possible weakening of the US dollar will have a positive impact on the market, while potential tariffs could pose a negative threat. However, UBS maintains a positive value outlook in the platinum sector, driven by the automotive sector.
“While auto production was disappointing in 2024, there is room for improvement in 2025 if economic activity picks up,” UBS experts Giovanni Staunovo and Wayne Gordon said in a note.
Low interest rates are expected to make vehicle purchases more affordable, and this, along with the need to replace aging vehicles, should support demand for autocatalyst.
Another positive, especially outside of China, is the slow pace of vehicle electrification, which is expected to sustain strong demand for autocatalysts.
UBS forecasts a platinum supply shortfall of 500,000 ounces, or 6.4% of demand, in 2025, marking the third consecutive year of shortages following shortfalls of 700,000 ounces in 2024 and 760,000 ounces in 2023.
The bank raises the question of when the reduction in stockpiles above ground will be enough for prices to reflect market congestion. Current estimates by the World Platinum Investment Council put this figure at 3.5 million ounces, with UBS estimates suggesting a drop to 3 million ounces by the end of 2025.
“We think that high-end inventories need to fall even further, closer to 2 million ounces, to see prices perform strongly in an undersupplied market,” the planners continued.
They expect lower mine supply but increased scrap supply. While demand for autocatalysts is forecast to rise, UBS predicts stable demand for jewelery and a slight decline in industrial demand for the year.
Steel and oil prices in the US rose above international benchmarks this week as traders speculated that President-elect Donald Trump might introduce tariffs on imports.
In recent weeks, significant price gaps have emerged between the New York and London markets for metals such as silver and platinum. Similarly, the oil price differential between the US and Canada has widened.
These changes reflect growing uncertainty about the direction of US trade policy under the new administration. Market volatility creates opportunities for traders to source cheap goods from abroad and bring them into the US.