Palladium's 2.13% gain reflects a tentative stabilization after the metal's dramatic 79% decline from its 2024 peak of $6,900/oz. The market is transitioning from 14 years of structural deficit toward a more balanced state, driven by the dual forces of EV adoption reducing autocatalyst demand and platinum substitution eroding palladium's dominant position in gasoline catalyst formulations.
The demand erosion has been severe but is decelerating. Global autocatalyst palladium demand fell to 3.2 million ounces in 2025, down from 5.1 million ounces in 2021, a 37% reduction. However, the pace of decline has slowed from 18% year-on-year in 2023 to approximately 8% in 2025, suggesting that the most aggressive phase of demand destruction has passed.
Supply conditions are providing support at current levels. Nornickel's palladium production in Q1 2026 was 628,000 ounces, down 3.2% year-on-year, constrained by lower ore grades at the Oktyabrsky and Taimyr mines. South African PGM output — which accounts for 38% of global palladium supply — declined 2.5% in Q1 as Amplats and Sibanye-Stillwater faced shaft maintenance and safety stoppages.
The Russian supply risk premium has diminished but not disappeared. The US Section 232 investigation into PGM imports, initiated in November 2024, has yet to produce findings. A 10-15% tariff on Russian-origin palladium — which still accounts for 35% of US imports — would create a significant North American supply gap and likely push prices $200-300/oz higher.
Palladium has found a price floor around $1,200-1,400/oz supported by supply constraints and the deceleration in demand erosion. The upside catalyst would be any supply disruption or tariff action. Buyers should maintain normal inventory coverage but avoid long positions, as the structural demand trend remains negative over a 3-5 year horizon.