Investing.com – UBS has released its forecast for the market for platinum group metals (PGMs), predicting they will outperform in 2025, although both are expected to lag behind.
The report indicates that industrial activity will be a major factor driving the white metals market.
The bank expects that central bank interest rate cuts and potential weakness of the US dollar will positively impact the market, while potential tariffs may pose a negative threat. However, UBS maintains a somewhat positive price outlook for platinum, driven in part by the automotive sector.
“While auto production was disappointing in 2024, there is room for improvement in 2025 if economic activity increases,” Giovanni Stanovo and Wayne Gordon, strategists at UBS, said in a note.
Lower interest rates are expected to make automobile purchases more affordable, which, combined with the need to replace older vehicles, should support demand for autocatalysts.
Another positive factor, especially outside China, is the slowing pace of vehicle electrification, which is expected to maintain strong demand for autocatalysts.
UBS expects a platinum supply shortfall of 500,000 ounces, or 6.4% of demand, for 2025, which would mark the third consecutive year of shortages after a shortfall of 700,000 ounces in 2024 and 760,000 ounces in 2023.
The bank raises the question of when the decline in above-ground inventories will be sufficient for prices to reflect market tightness. Current estimates from the World Platinum Investment Council put these stocks at 3.5 million ounces, with UBS forecasts suggesting a decline to 3 million ounces by the end of 2025.
The strategists continued: “We believe that above-ground inventories need to decline further, closer to 2 million ounces, to see prices react more strongly to an undersupplied market.”
They expect a decline in mine supplies but an increase in scrap supplies. While demand for autocatalysts is expected to rise, UBS expects jewelry demand to stabilize and a modest decline in industrial demand for this year.
U.S. metal and oil prices rose beyond international standards this week, as traders anticipate that President-elect Donald Trump may impose tariffs on imports.
In recent weeks, large price gaps have emerged between the New York and London markets for metals such as silver and platinum. Likewise, oil price differentials between the United States and Canada have widened.
These shifts reflect growing uncertainty about the direction of US trade policy under the new administration. Market fluctuations create opportunities for merchants to source cheaper materials from abroad and bring them into the United States.
