Investing.com – UBS released its market outlook for platinum group metals (PGMs), predicting that it will outperform from 2025, although both are expected to lag and .
The report suggests that industrial activity will be a key factor in driving the white metal market.
The bank predicts that a central bank rate cut and a likely weaker US dollar will have a positive impact on the market, while potential tariffs could pose a negative threat. Nonetheless, UBS maintains a moderately positive outlook for the platinum price, driven in part by the automotive sector.
“While auto production was disappointing in 2024, there is room for improvement in 2025 if economic activity picks up,” UBS strategists Giovanni Staunovo and Wayne Gordon said in a note.
Lower interest rates are expected to make vehicle purchases more affordable, which, along with the need to replace old vehicles, should support demand for auto catalytic converters.
Another positive factor, especially outside of China, is the slower pace of vehicle electrification, which is expected to maintain strong demand for auto catalytic converters.
UBS forecasts a platinum supply deficit of 500,000 ounces, or 6.4% of demand, for 2025, marking the third consecutive year of shortages after deficits of 700,000 ounces in 2024 and 760,000 ounces in 2023.
The bank questions when the reduction in accumulated overhead inventories will be enough for prices to reflect market constraints. Current World Platinum Investment Council estimates put those stocks at 3.5 million ounces, and UBS projections suggest a decline to 3 million ounces by the end of 2025.
“We believe that aboveground inventories need to go even lower, closer to 2 million ounces, to see prices react more strongly to an undersupplied market,” the strategists continued.
They expect a smaller supply of mines, but an increased supply of waste. While demand for autocatalysts is forecast to rise, UBS predicts stable demand for jewelery and a modest decrease in industrial demand for this year.
U.S. metals and oil prices soared above international benchmarks this week as traders speculated that President-elect Donald Trump could impose tariffs on imports.
In recent weeks, significant price differences have emerged between the New York and London markets for metals such as , silver and platinum. Similarly, differences in oil prices between the US and Canada have widened.
These changes reflect growing uncertainty about the direction of US trade policy under the new administration. Market volatility creates opportunities for retailers to source cheaper materials overseas and bring them into the US.
