By Samer Hasn, Senior Market Analyst at XS.com
Palladium nears 2025 highs again and attempts to solidify above $1500 per ounce, extending a rally that has steadily rebuilt momentum over the past two months.
Palladium movements seem to reflect a rare alignment of supportive demand signals from Germany and China, softer EV adoption trends that ease substitution risk and persistent concerns about Russian supply reliability.
Palladium’s latest advance has been underpinned by improving signals from Germany and China, two markets that typically anchor global auto demand. Germany’s factory orders rose 1.5 percent in October, and industrial production climbed 1.8 percent, a combination that points to stabilizing industrial activity even as domestic car registrations continue to cool chronically.
This divergence is important because it suggests the manufacturing base is recovering faster than consumer auto demand, often an early sign of production-led restocking that tends to support auto catalyst metals such as palladium.
According to the China Passenger Car Association, China presented a similarly nuanced picture. Retail auto sales declined 8.1 percent in November and slipped 1.1 percent month over month, but exports hit a record, rising 52 percent to 601,000 units. New-energy vehicle sales grew only 4.2 percent year over year, undershooting expectations and reinforcing the theme that the domestic EV momentum is cooling faster than previously assumed.
The export boom, however, keeps Chinese production elevated and sustains global palladium demand through foreign-market supply chains.
China’s broader trade performance strengthens the outlook further. According to the General Administration of Customs, the country’s goods trade surplus surpassed 1 trillion dollars for the first time, driven by a 5.4 percent surge in exports. This milestone underscores China’s industrial dominance and helps maintain high utilization rates across sectors that indirectly support auto parts and catalytic materials. The sustained export machine also gives Chinese automakers the financial buffer to keep production levels firm even when domestic demand softens, an environment that historically increases palladium pull-through.
EV dynamics remain another bullish layer. According to Reuters and BMI, global EV sales growth in November rose only 6 percent, the slowest since February 2024 as China plateaued and North America suffered a 42 percent collapse following the end of US tax credits. Europe remained the only bright spot with registrations up a third, but the global trend is clearly decelerating.
Slower electrification limits the speed of substitution away from palladium-heavy combustion engines, extending the life cycle of auto catalyst demand at a time when supply growth remains an open question.
The supply story is no less critical. Russia controls nearly a quarter of global palladium exports, and according to recent reporting on Ukraine’s strikes against Russia’s shadow fleet, geopolitical risks continue to rise. While the impact on metal shipments remains uncertain, the probability of disruptions is increasing.
Markets tend to price such risk asymmetrically, giving the metal a natural floor whenever tensions escalate or export channels face even marginal threats.
Still, several macro forces are pulling in the opposite direction. According to S&P Global, the outlook for global light-vehicle production remains highly sensitive to the evolving US trade landscape. Automakers have contained costs so far, but tariff-driven pressures could begin filtering through to consumers next year, softening demand. Forecast updates showed modest upward revisions for Europe and China and smaller upgrades for Japan, Korea and North America. Yet the broader pattern suggests flattish global production trends for 2026, a scenario that keeps palladium demand growth steady but not spectacular.
Monetary conditions add another cooling factor. Following Jerome Powell’s latest remarks, rate-cut expectations fell sharply. According to the CME FedWatch Tool, markets no longer expect a January cut and are split on the likelihood of easing by March. This shift tightens financial conditions at the margin and can weigh on cyclical commodities if real yields rise further. For palladium, the main risk comes from sentiment rather than fundamentals, since tighter policy tends to temper speculative participation.