Investing.com — UBS has released its outlook for the platinum group metals (PGMs) market, predicting a strong recovery in 2025, although both are expected to lag.

The report shows that industrial activity is the main driver of the clean metal market.

The bank expects the central bank’s easing and the weakening of the US dollar to affect the market, while interest rates may be at risk. However, UBS maintains a positive value for platinum, which is driven by the automotive sector.

“While auto production was disappointing in 2024, there is room for improvement in 2025 if the economy picks up,” UBS analysts Giovanni Staunovo and Wayne Gordon said in a statement.

Low interest rates are expected to make car purchases more affordable, which, combined with the need to replace aging vehicles, should support autocatalyst demand.

Another good thing, especially outside of China, is the slow movement of car electricity, which is expected to increase the demand for autocatalysts.

UBS is forecasting a platinum shortage of 500,000 ounces, or 6.4% of demand, for 2025, marking the third consecutive year of shortages following shortages of 700,000 ounces in 2024 and 760,000 ounces in 2023.

The Bank is asking when the reduction in the stockpiles above ground will be enough for prices to reflect the strength of the market. The current estimate of the World Platinum Investment Council puts this supply at 3.5 million ounces, while the UBS estimate shows a drop to 3 million ounces by the end of 2025.

“We think the above inventory needs to drop significantly, closer to 2 million ounces, to see prices rise significantly in an undersupplied market,” he continued.

They expect a decrease in mining but an increase in waste. While demand for autocatalysts is expected to rise, UBS predicts stable demand for cosmetics and a slight decline in industrial demand for the year.

U.S. steel and oil prices rose above international limits this week as traders speculated that President-elect Donald Trump might introduce tariffs on imported goods.

In recent weeks, a large price difference has appeared between the markets of New York and London for metals such as , silver, and platinum. Likewise, the oil price gap between the US and Canada has widened.

The changes reflect growing uncertainty over US trade policy under the new administration. Market instability is creating opportunities for entrepreneurs to source cheap products from abroad and bring them to the US.