## Why Is Palladium Falling? Understanding the Price Decline and 2025 Market Outlook

**Palladium's struggle is no mystery.** From its US$3,002-per-ounce peak in February 2022, the metal has entered a prolonged downturn, spending most of 2024 oscillating between US$900 and US$1,100. While a brief spike to US$1,200 occurred in October following US sanctions threats on Russian precious metals, the overall trajectory remains bearish. The fundamental question driving today's market: why palladium price going down?

### The Auto Sector Squeeze

The answer lies predominantly in one sector: automotive manufacturing, which consumes over 80 percent of global palladium supply. This extreme concentration creates vulnerability. Vehicle makers traditionally relied on palladium in catalytic converters, but market dynamics are shifting dramatically.

Electric vehicles represent the elephant in the room. Though EV adoption accelerated, penetration rates are moderating faster than anticipated. S&P Global Mobility projects EVs will capture 16.7 percent of light-vehicle sales in 2025—up from 13.2 percent in 2024, but a slower expansion than earlier projections suggested. Consumer hesitations around charging infrastructure, range anxiety, and potential price increases from proposed US tariffs are dampening demand. Since EVs require zero palladium, every EV sold represents lost demand for the metal.

Meanwhile, car sales themselves face headwinds. Proposed 25 percent tariffs on Canadian and Mexican imports could severely disrupt North American vehicle production and sales. Additionally, rumored elimination of EV purchase subsidies would inflate vehicle prices by as much as US$7,500, further suppressing unit sales—the last thing palladium demand needs.

### Supply Deluge Incoming

Demand weakness intersects with supply expansion, a bearish combination. The World Platinum Investment Council forecasts the palladium market transitioning into surplus by 2025, with oversupply potentially reaching 897,000 ounces. This surplus stems from multiple sources: recycled scrap material is expected to increase 1.2 million ounces annually, while Russian and South African mining operations are anticipated to return to historical production levels.

Russian supply remains geopolitically relevant—the nation ranks among world's largest palladium exporters—yet even sanctions-driven disruptions appear temporary.

### Price Targets and Market Consensus

Expert analysis points toward range-bound trading in 2025. CPM Group's Jeffrey Christian anticipates palladium remaining trapped between US$900 and US$1,000, with a distinct downward bias. Heraeus Precious Metals offers a wider but equally pessimistic band of US$800 to US$1,200, citing chronic oversupply and depressed auto-sector offtake.

The convergence of forecasts suggests institutional consensus: 2025 will challenge palladium bulls. Without demand catalysts offsetting structural oversupply, the metal faces pressure to establish new ranges at lower price levels than 2024's mid-range trading.

Auto-sector substitution toward cheaper platinum adds another headwind, effectively creating a ceiling on palladium appreciation even if supply tightens unexpectedly.