Platinum market outlook for 2025: UBS By Investing.com

Investing.com – UBS released its market outlook for platinum group metals (PGMs), predicting they will outperform in 2025, though both are expected to lag behind and .

The report suggests that industrial activity will be the key factor driving the white metals market.

The bank expects the central bank’s interest rate cuts and possible weakening of the US dollar to have a positive impact on the market, while potential tariffs could pose a downside risk.However, UBS maintains a moderately positive outlook for platinum prices, 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,” said UBS strategists Giovanni Staunovo and Wayne Gordon.

Low interest rates are expected to make vehicle purchases more affordable, which, coupled with the need to replace older vehicles, should support demand for autocatalysts.

Another positive factor, especially outside of China, is the slower pace of vehicle electrification, which is expected to maintain strong demand for autocatalysts.

UBS forecasts a platinum supply shortfall of 500,000 ounces, or 6.4% of demand, in 2025, marking the third consecutive year of shortages after shortfalls of 700,000 ounces in 2024 and 760,000 ounces in 2023.

The bank raises the question of when the reduction in accumulated ground reserves will be enough for prices to reflect market tightness. Current estimates by the World Platinum Investment Council put these reserves at 3.5 million ounces, with UBS forecasts suggesting a decline to 3 million ounces by the end of 2025.

“We believe that surface inventories need to fall further, by about 2 million ounces, for prices to react more strongly to an undersupplied market,” the strategists continued.

They expect less mine supply, but more scrap.While demand for autocatalysts is forecast to rise, UBS predicts steady jewelry demand and a modest decline in industrial demand for the year.

U.S. metals and oil prices rose outside international benchmarks this week as traders speculated that President-elect Donald Trump might impose import tariffs.

Metals such as silver and platinum have widened in recent weeks between the New York and London markets, while oil prices have widened between the US and Canada.

These shifts reflect growing uncertainty about the direction of U.S. trade policy under the new administration.