Palladium prices have collapsed from a peak of over $3,400 per ounce in 2022 down to around $800 by late 2024, and they remain low near $1,600 as of late 2025 despite ongoing supply shortages.https://shanakaanslemperera.substack.com/p/the-palladium-paradox-thirteen-years-of-deficits-western-supplyhttp://markets.chroniclejournal.com/chroniclejournal/article/marketminute-2025-11-20-precious-metals-navigate-choppy-waters-gold-and-silver-shine-amidst-uncertainty-platinum-and-palladium-face-headwinds
The main reason starts with the auto industry story everyone bought into. About 85 percent of palladium goes into catalytic converters for gasoline cars to cut pollution. When electric vehicles started booming, traders thought demand would vanish. Prices plunged 76 percent from that 2022 high as the market bet on the end of gas engines.https://shanakaanslemperera.substack.com/p/the-palladium-paradox-thirteen-years-of-deficits-western-supplyhttp://markets.chroniclejournal.com/chroniclejournal/article/marketminute-2025-11-20-precious-metals-navigate-choppy-waters-gold-and-silver-shine-amidst-uncertainty-platinum-and-palladium-face-headwinds
Car makers sped up the shift by swapping palladium for cheaper platinum in those converters. Stricter rules on emissions made platinum a better fit in some cases, and lower prices made the switch even easier. This substitution cut demand fast.http://markets.chroniclejournal.com/chroniclejournal/article/marketminute-2025-11-20-precious-metals-navigate-choppy-waters-gold-and-silver-shine-amidst-uncertainty-platinum-and-palladium-face-headwinds
Markets ignored the supply side completely. Reports from Johnson Matthey show the palladium market ran deficits every year since 2012, eating up stocks for thirteen straight years. No new mines opened to fix it due to delays, permits, and fights over resources. Russia supplies a big chunk, adding risks from sanctions and geopolitics.https://shanakaanslemperera.substack.com/p/the-palladium-paradox-thirteen-years-of-deficits-western-supplyhttps://www.aberdeeninvestments.com/en-us/investor/insights-and-research/commodities-the-year-that-was-the-year-that-could-be-2026
Speculators piled in with huge short bets, pushing prices lower. In December 2025, managed money held bearish positions equal to about fifty tonnes, their third record high in a row. Paper contracts flooded futures markets, tricking traders into thinking supply was plentiful when physical shortages grew.https://shanakaanslemperera.substack.com/p/the-palladium-paradox-thirteen-years-of-deficits-western-supplyhttps://www.investing.com/analysis/silver-200-isnt-crazy–palladium-holds-the-clue-200671051
Macro factors added pressure too. A stronger dollar, softer hopes for Fed rate cuts, and a US-China trade deal eased safe-haven buying. Recycling from old cars proved tough for platinum group metals, so it did not fill the gap as expected.http://markets.chroniclejournal.com/chroniclejournal/article/marketminute-2025-11-20-precious-metals-navigate-choppy-waters-gold-and-silver-shine-amidst-uncertainty-platinum-and-palladium-face-headwindshttps://www.goldenstatemint.com/blog/on-the-spot-with-gsm-precious-metals-market-report-for-12-18-2025/
Even with these deficits, the EV hype and substitution locked in the downtrend. Prices stayed low for four years straight before 2025, matching platinum’s own struggles despite its shortages.