Prices shifted sharply as palladium futures fell to $1,461.50, dropping 3% against a green broader market, after Johnson Matthey's closely watched 2026 PGM Market Report forecast a palladium surplus for the first time since 2011 — ending a 13-year run of supply deficits. Palladium Drops 3% as Electric Cars Kill a 13-Year Supply Shortage — Is This the Beginning of a Structural Decline or a Buying Opportunity?
Prices fell sharply as palladium futures slid 3% to $1,461.50, bucking a rising broader market, after Johnson Matthey's 2026 PGM Market Report forecast the metal's first surplus in over a decade. The report, released ahead of London Platinum & Palladium Market Week, marks a watershed: the end of a supply deficit that had persisted since 2012 and propped up prices for years.
Gasoline Cars Were the Whole Story — and That Story Is Fading
More than 80–90% of palladium demand comes from the automotive industry, where it is used in catalytic converters — the emissions-cleaning devices required on gasoline engines.
Johnson Matthey now forecasts that lower production of gasoline vehicles will cut automotive palladium demand by 5%. As electric vehicles grab more market share, every car sold without a tailpipe is a car that needs zero palladium. That demand erosion is the core of this selloff.
A 13-Year Deficit Era Just Ended
Palladium recorded structural deficits from 2012 to 2024, with the shortfall hitting 0.91 million ounces in 2023 and 0.50 million ounces in 2024. Those shortfalls forced the market to drain stockpiles year after year. Now, Johnson Matthey says palladium is predicted to move into balance, as robust growth in Chinese automotive recycling boosts secondary supply — enough to tip the scales into a small surplus. For investors, the shift from shortage to glut removes a key price floor.
Miners Are Already Bleeding at These Prices
A report by Goehring & Rozencwajg notes that roughly 40% of global PGM production is uneconomic at current price levels, after the price fell from around $3,000/oz in early 2022 to around $900 by late 2024. Prices have since recovered significantly, but further declines could trigger mine closures, especially as Canada's Lac des Iles mine is expected to cease commercial production by mid-2026. Supply cuts could eventually re-tighten the market — but that's a slow, painful process.
The Wild Card: Hybrids and Tighter Emissions Rules
New emissions standards in Europe and China mean both gas-powered and hybrid cars will need slightly higher loadings of palladium per vehicle.
Hybrids actually use 10–20% more palladium per car than standard gasoline models. If the EV transition stalls and hybrids surge, demand could surprise to the upside. But that is a bet against the market's current trajectory — and today, the market isn't buying it.