Investing.com — UBS has released its market outlook for platinum group metals (PGMs), predicting a breakthrough in 2025, although both are expected to be delayed and .

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

The bank expects that central bank rate cuts and a likely weak US dollar will positively affect the market, while potential tariffs may pose a negative threat. However, UBS maintains a moderately positive price outlook for platinum, partly driven by the auto sector.

“While auto production is disappointing in 2024, there is room for growth in 2025 when economic activity increases,” UBS strategists Giovanni Staunovo and Wayne Gordon said in a note.

Lower interest rates are expected to make the purchase of cars cheaper, which, combined with the need to replace older cars, should support the demand for autocatalyst.

Another positive factor, especially outside of China, is the slow 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, for 2025, marking the third consecutive year of shortages to meet shortfalls of 700,000 ounces in 2024 and 760,000 ounces in 2023. .

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

“We think aboveground inventories need to drop further, closer to 2 million ounces, to see prices react more strongly to an undersupplied market,” the strategists continued.

They expect lower mine supply but increased scrap supply. While demand for autocatalysts is predicted to increase, UBS predicts strong demand in jewelry and a modest decline in industrial demand for the year.

Prices for US metals and oil surged beyond international benchmarks this week as traders speculated that President-elect Donald Trump could introduce tariffs on imports.

In recent weeks, significant price gaps have emerged between the New York and London markets for metals such as , silver, and platinum. Similarly, oil price differences between the US and Canada have widened.

These shifts reflect growing uncertainty about the direction of US trade policy under the new administration. Market volatility creates opportunities for entrepreneurs to source cheaper materials overseas and bring them to the US.