Investing.com — UBS has released its market outlook for platinum group metals (PGMs), forecasting outperformance in 2025, although both are expected to lag and .
The report suggests that industrial activity will be a key driver of the white metals market.
The bank expects central bank rate cuts and a likely weaker U.S. dollar to have a positive impact on the market, while possible tariffs could pose a negative threat. Nonetheless, UBS maintains a moderately 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,” UBS strategists Giovanni Staunovo and Wayne Gordon said in a note.
Lower interest rates are expected to make vehicle purchases more affordable, which, coupled with the need to replace aging vehicles, is expected to support demand for automotive catalysts.
Another positive factor, particularly outside China, is the slower pace of vehicle electrification, which is expected to support strong demand for automotive catalysts.
UBS forecasts a platinum supply shortfall of 500,000 ounces, or 6.4% of demand, for 2025, marking the third consecutive year of shortages following deficits of 700,000 ounces in 2024 and 760,000 ounces in 2023.
The bank raises the question of when the reduction in accumulated stocks above ground will be sufficient for prices to reflect market tensions. Current estimates from the World Platinum Investment Council put these stocks at 3.5 million ounces, with UBS projections suggesting a decline to 3 million ounces by the end of 2025.
“We believe overhead inventories need to fall even further, closer to 2 million ounces, to see prices respond more strongly to an undersupplied market,” the strategists continued.
They expect mining supply to decline but scrap supply to increase. While demand for automotive catalysts is expected to increase, UBS forecasts stable demand for jewelry and a slight decline in industrial demand for the year.
U.S. metal and oil prices jumped above international benchmarks this week as traders speculated that President-elect Donald Trump would introduce tariffs on imports.
In recent weeks, significant price gaps have emerged between the New York and London markets for metals like silver and platinum. Likewise, oil price differentials between the United States and Canada have widened.
These changes reflect growing uncertainty about the direction of U.S. trade policy under the new administration. Market volatility creates opportunities for traders to source cheaper materials from overseas and import them into the United States.
