Palladium: Cycles

From diesel's decline to the EV squeeze

Palladium boomed as petrol cars displaced diesel and emissions rules tightened; the Engelhard price reported by USGS averaged $2,419 per ounce in 2021. It then fell to $995 in 2024, a drop of almost 60%, as battery cars eroded demand and automakers moved back towards platinum. USGS estimates an 11% rise to about $1,100 in 2025 as output fell. This is a classic by-product cycle. High prices call forth little new supply, and low prices cut output only when they hurt the host mines.

US price, Engelhard unfabricated palladium, annual average

Super-cycles in palladium

Palladium does not follow the broad commodity super-cycles closely. Its price is set by a narrow tug of war between car emission rules and the output of two countries. It had a speculative spike around 2000-2001 when Russian exports were erratic, then a long boom from 2016 to 2022 as petrol cars replaced diesel and China tightened standards; the USGS annual average reached $2,419/oz in 2021. A bust followed as electric cars spread and carmakers swapped in platinum, with the average falling to $995 in 2024. Low prices then cut South African and US supply, and tariffs and sanctions on Russian metal set off a sharp rally in late 2025 and early 2026. Because supply is a by-product, booms and busts both last longer than for primary metals.

1. 1997-2001

   Delays and stops in Russian exports, after Soviet-era palladium stockpiles had been sold off through Zurich in the 1990s (Pitron, The Rare Metals War), collided with rising catalyst demand. No monthly price series for palladium was available to check levels for this episode.

2. 2016-2022

   The 2015 diesel emissions scandal pushed European buyers to petrol cars, and China 6 and Euro 6 rules raised catalyst loadings. The market ran a structural deficit from 2012 to 2024 (JM). Russia's invasion of Ukraine in 2022 added a supply-risk premium.

   Engelhard/S&P Global annual average $2,419/oz in 2021 and $2,134/oz in 2022 (USGS MCS 2026).

3. 2023-2024

   Battery-car growth, thrifting by carmakers and substitution of platinum for palladium cut automotive demand, while recycling recovered. Speculators built record short positions on NYMEX.

   Annual average fell to $1,352/oz (2023) and $995/oz (2024) (USGS); spot touched about $820/oz on 5 August 2024 (Nornickel).

4. 2025-2026

   South African output fell 9% and Russian output 6% in 2025 (USGS). The US imposed antidumping duties of 133% on Russian palladium after a Sibanye-Stillwater petition, and imports from Russia stopped in August 2025 (JM). Investors bought heavily, then the rally faded as JM forecast a 2026 surplus.

   Up more than 83% in 2025 to a high of $1,675.50/oz on 17 Dec 2025 (Investing News via Nasdaq); above $2,100 in late January 2026 and about $1,448 at end-March 2026 (JM); about $1,050/oz spot around 23 Oct 2026 (Mining.com price ticker).

What drives the cycle

• Petrol and hybrid car output. Automotive use is 81% of demand, so the number of petrol and hybrid vehicles built, and how much palladium each catalyst uses, sets most of the demand curve.
• Battery electric vehicle share. A battery car needs no catalyst. Every point of BEV share taken from petrol cars removes palladium demand, while hybrids keep it.
• Platinum-palladium price spread. Carmakers can swap about 25% to 50% of one metal for the other in some catalysts (USGS). A wide spread triggers substitution within a few model years.
• Russian supply and sanctions. Russia supplied about 45% of 2025 primary palladium. Tariffs, sanctions or equipment shortages at Norilsk move prices quickly.
• South African mining costs and power. High-cost deep mines close or slow when prices fall, which is how the market eventually corrects a glut.
• Recycling rates. Recycling is a third of supply and rises with scrappage of the petrol fleet and with price, so it caps rallies over time.

Metrics to track