Palladium’s Three-Month Rally: When Deficit Fears Trump the EV Revolution
Nineteen percent in three months. That’s not a typo—it’s the story of palladium’s recent resurgence, a rally born from a heady cocktail of supply anxiety, industrial intrigue, and geopolitical chess.
From the Mine Shaft to Main Street: Anatomy of a Short Squeeze
There’s a reason hedge funds and automakers alike have been caught flat-footed: few commodities can whiplash from panic to euphoria as quickly as palladium. In the last 90 days, NYMEX palladium futures (ticker: PA) vaulted 19.3%, outperforming even gold and platinum. The catalyst? A supply deficit that refused to stay theoretical. The World Platinum Investment Council’s May report stunned markets by revising the 2024 palladium deficit up to 1.28 million ounces, a full million higher than expected. Suddenly, every ounce mattered.
When Russia’s position as the world’s largest palladium producer collided with fresh G7 sanction rumors in July, the market didn’t just twitch—it convulsed. A single week saw an intraday price spike of 15%. South African mining shares—another key supply source—jumped more than 10% in just two days. The squeeze was on.
ICE Engines Refuse to Fade Quietly
It’s tempting to write off palladium as a relic of the internal combustion engine. After all, 85% of demand comes from catalytic converters, and EVs are supposed to render those obsolete. But the real world isn’t a PowerPoint slide. Global auto sales are still forecast at nearly 99 million units in 2025, and hybrid vehicles—many still reliant on palladium—are seeing double-digit growth. Even as pure EV adoption accelerates, the ICE fleet’s sunset is proving far more gradual than climate pledges suggest.
Add to this a regulatory ping-pong match between Washington and Brussels. With U.S. emissions rules in flux and Europe postponing tougher Euro 7 standards until 2031, automakers are buying time—and palladium. The result: automotive demand remains stickier than pundits predicted, underpinning price strength even as the long-term narrative tilts bearish.
Recycling: The Silver Bullet Still Holstered
Analysts love to tout recycling as palladium’s future savior. And in theory, it is: by 2028, recycled supply could double to over 1.3 million ounces per year. But theory and practice keep trading places. Collection bottlenecks, regulatory delays, and the sheer inertia of the global car fleet mean secondary supply growth remains stubbornly slow. For now, every ounce not dug from Russian or South African soil is an ounce the market frets about losing.
Geopolitics: Where Fear Becomes a Trading Strategy
Sanctions on Russian metal aren’t just a footnote—they’re the plot twist driving volatility. Russia and South Africa together still account for around 70% of global mine output. Each rumor of new restrictions, each furnace maintenance delay, sends traders scrambling. As one strategist quipped, “Supply threats have reignited buying; fear triggers trades.” It’s a market where anxiety is as valuable as the metal itself.
Speculation: The Wild Card Behind the Curtain
Short positions have dominated NYMEX futures for two years. But when the narrative flips—from slow EV encroachment to imminent supply squeeze—those shorts fuel the fire. The past quarter’s 19% climb is as much about forced buying as it is about fundamentals. When funds scramble to cover, the rally writes itself.
The Uncomfortable Truth: Transition Is Messy
Palladium’s rally isn’t a verdict on the future of the ICE, or a denial of the EV trend. It’s a reminder that transitions—whether technological, regulatory, or geopolitical—are rarely linear. Markets move in fits and starts, and in those moments, scarcity and fear can outmuscle even the most convincing long-term arguments.
For now, the market has chosen to price in the here and now: deficits, disruptions, and a world where what’s in short supply commands a premium. Palladium’s three-month sprint is a case study in how the present can still outrun the future—at least for a season.