Palladium Prices Set to Plummet Further Amid Electric Vehicle Boom
In a tumultuous year for commodities, palladium has emerged as one of the hardest-hit metals, with prices plummeting nearly 30% since the beginning of the year. The autocatalyst metal, used primarily to neutralize harmful car emissions, has been on a downward spiral as the rapid rise of electric vehicles threatens to disrupt its traditional market.
Spot palladium hit a four-year low of $1,269.09 an ounce on Thursday, marking a stunning 60% drop from its record high set in 2022 during the war in Ukraine. Analysts are now predicting even further declines, with SP Angel analyst John Meyer warning that global sales of electric vehicles could impair palladium demand by 1.5 million to 2.25 million ounces this year.
While the palladium market is expected to remain undersupplied in 2023, the looming threat of electrification is casting a shadow on the metal’s future prospects. Companies like Metals Focus and Johnson Matthey are forecasting deficits in the palladium market, with the shift towards electric vehicles further exacerbating the situation.
Edward Moya, senior market analyst at OANDA, believes that palladium prices could plummet even further to the $1,250 level as the adoption of electric vehicles accelerates. The bearish sentiment surrounding palladium is also being fueled by broader economic softness and technical factors, which have led to a lack of interest in the market.
As the automotive industry moves towards electrification and automakers seek cheaper alternatives to cut costs, the future of palladium remains uncertain. With analysts warning of a potential drop to $1,000 if demand from China fails to materialize and interest rates remain high, the palladium market is facing a challenging road ahead.
