Wilma Swarts

Despite an exceptional supply-driven deficit in 2023, the palladium price still fell 35% from the start till the close of the year. In 2024, we expect a shallower but still sizeable deficit, the last before the market shifts to structural surpluses for some years to come. The deficit this year owes much to an only very modest recovery in supply, due to improvements in secondary supply. On the demand side, we forecast a modest decline as petrol- and diesel-powered vehicle production has already seen its post-COVID peak in 2023 (78 million units), falling 2% this year to 77 million. From a fundamental perspective, a deficit market should benefit the price. However, record levels of investor shorting ahead of future surpluses will offset the inherent upward price pressure.

Additionally, it is important to note that above-ground stocks of palladium remain abundant. In Western markets, inventories have been rising in recent years due to stock-building during the chip shortage, as minimum quantities from mine supply contracts outstripped chip-impaired production. Additionally, geopolitical risk concerns saw further accumulation to ensure the security of supply. As such, we expect the 2024 annual average will be $1,100, an 18% decline y/y, reaching fresh lows of $850 in the second half.