Palladium futures have climbed to around $1,720 per ounce, marking the highest point since January 2023. This increase is driven by the anticipated easing of EU policies and tight supply conditions. The European Commission has suggested relaxing its 2035 ban on combustion engines, proposing to adjust the emissions reduction target from 100% to 90%. This adjustment would allow some non-electric vehicles to continue being sold past 2035. Additionally, China's Guangzhou Futures Exchange has garnered significant interest from investors following the introduction of platinum and palladium futures on November 27.
On the supply front, Nornickel, Russia’s leading palladium producer, predicts a market deficit of 200,000 ounces for 2025 when factoring in investment demand, although the market is expected to be more balanced without this demand. Looking ahead to 2026, Nornickel anticipates a supply shortfall of 100,000 ounces, excluding investment demand.