abrdn Palladium ETF Trust

This section provides a brief introduction to the palladium industry by looking at some of the key participants, detailing the primary sources of demand and supply.

In this annual report, the term “ounces” refers to troy ounces.

Platinum Group Metals

Platinum and palladium are the two best known metals of the six platinum group metals (“PGMs”). Platinum and palladium have the greatest economic importance and are found in the largest quantities. The other four—iridium, rhodium, ruthenium and osmium—are produced only as co-products of platinum and palladium. PGMs are known for their purity, high melting points and unique catalytic properties. In addition to their oxidation and reduction properties, they are also extremely resistant to corrosion. PGMs are utilized in a number of industrial processes, technologies and commercial applications. Their unique chemical and physical properties make PGMs an excellent raw material, catalyst and ingredient for manufacturing processes. Consumer and industrial products made with palladium and other PGMs include flat panel monitors, glass fiber, medical tools, computer hard drives, nylon and razors, among others. PGMs play a critical role in autocatalysis and pollution control in the automotive sector.

PGM mining is heavily concentrated in southern Africa (South Africa and Zimbabwe), with smaller percentages coming from the United States, Russia and other locations. South Africa is the world’s leading platinum producer and one of the largest palladium producers. Russia is the second largest producer of platinum. All of South Africa’s production is sourced from the Bushveld Igneous Complex, which hosts the world’s largest resource of PGMs. Together, South Africa and Russia accounted for over 77% of palladium supply in 2024.

World Palladium Supply and Demand 2015-2024

The following table sets forth a summary of the world palladium supply and demand from 2015 - 2024 and is based on information reported by Johnson Matthey, PGM Market Report. Information for the calendar year ended 2025 is not available as of the date of this report.

Source: Johnson Matthey PGM Market Reports (2015 – 2025).

The following are some of the main characteristics of the palladium market illustrated by the table:

Russia has traditionally been the largest producer of palladium, providing on average 40% of supply over the past 10 years. South Africa has, on average, supplied approximately 37% of production over the past 10 years. In 2024, Russia provided 41.3% of mine supplies, while South Africa produced 36.4%. North America contributed approximately 13.9% of mine supply in 2024. Scrap supply, from recycling of autocatalyst and other sources, accounted for roughly 30.6% of total supply in 2024 in line with the value from 2023.

Autocatalysts continue to be the largest component of palladium demand, averaging 84.2% of total demand from 2015 to 2024, compared to 83.2% in 2015. Jewelry demand for palladium has tapered off considerably over the last 10 years, contributing only 0.8% of total demand in 2024, down from a high of 2.4% in 2015. Other industrial demand (chemical, dental and electrical) has fallen from 19.8% of total demand in 2015 to 12.5% of total demand in 2024. Since 2015, pollution control demand has increased from 0.6% to 1.2% of total demand. Pollution control demand captures the production demand for emissions control in non-automotive applications.

Historical Chart of the Price of Palladium

The price of palladium is volatile and fluctuations are expected to have a direct impact on the value of the Shares. However, movements in the price of palladium in the past are not a reliable indicator of future movements. The following chart illustrates the movements in the price of an ounce of palladium in U.S. Dollars from December 31, 2015 to December 31, 2025 and is based on information provided by Bloomberg:

Source: Bloomberg, Aberdeen. Chart data from 12/31/2015 to 12/31/2025. Spot Palladium Price = PLDMLNPM Index.

The following is a discussion of the movements in the price of Palladium illustrated by the table:

The strong rally in 2014 palladium prices was completely unwound in 2015, when South African mine supply resumed back to pre-strike levels and pessimism about industrial demand in China overwhelmed the true tightness in the market. Palladium was then the top performer of the precious metals complex for 3 consecutive years from 2017 to 2019, where it rose nearly 182% from $676 per troy ounce on December 31, 2016 to $1,905 per troy ounce on December 31, 2019. The price of palladium reached an all-time high of $2,781/oz on February 19, 2020, before closing out the year at a price of $2,342/oz on December 31, 2020. Similar to other precious metals, palladium took a step back in 2021 as it returned -16% (as of December 31, 2021). A decline in autocatalyst demand due to the pandemic was a big reason for the negative performance seen during the year.

The price of palladium reached a record high of $3,015 per ounce on March 7, 2022, as Russian’s invasion of Ukraine infused uncertainty into global markets and created additional price pressure that pushed the price of palladium nearly 53% above its 2021 close. While each of the precious metals (gold, silver, platinum) saw prices fluctuate throughout the year, the price of palladium showed greater correlation with the price of Platinum during the first quarter. The price of palladium fell by roughly 25% between March 8th and March 31st, ending the first quarter at a price of $2,259 per ounce. On June 14th, 2022, the price of palladium fell as low as $1,810 per ounce, as aggressive interest rate policies from the U.S. Federal Reserve drove the U.S. Dollar higher. Contrary to the other three precious metals, the price of palladium increased as high as $2,315 per ounce on October 4th, 2022, as supplies were further constrained by operational challenges in South African and North American mines, as well as a weaker automotive recycling market. Throughout the year, tailwinds from supply disruptions were countered by weaker automotive and investment demand, higher interest rates and the risk of a potential recession. As a result, while the other three precious metals rallied to end the year, the price of palladium reversed course during the fourth quarter to end the year at $1,775 per ounce, down 10% from the end of 2021.

In 2023, palladium production in Russia and South Africa continued to impact global supply. Russian production was relatively flat compared to 2020 and 2021, however sanctions imposed in 2022 constrained the production capacity of Russian metals producer Nornickel, the world’s largest palladium producer. In contrast, South Africa continued to experience power supply disruptions along with rising electricity prices. Coupled with labor strikes, political instability, inflation and volatile prices, which compressed profit margins and subsequently led to a decrease in expected supply from the world’s second leading producer. However, despite the supply deficit, investors sold short a large amount of palladium that year, in hopes that electric vehicles would curtail the demand for palladium in gasoline-powered automobiles. Additionally, while a positive outlook at the beginning of the year, fueled by China’s loosening of COVID-19 related restrictions, drove the price as high as $1,628 per ounce on April 21, 2023, the Chinese economic rebound disappointed investors. As a result of these two factors, the price of palladium continued on a downward trend throughout most of the year before reaching a low of $957 per ounce on December 6, 2023. Fears of additional Russian sanctions sparked a year-end rally that saw the price climb as high as $1,221 per ounce on December 20, 2023, but the precious metal ultimately ended the year at $1,136 per ounce, 36% below its 2022 closing price.

In 2024, palladium markets continued to be volatile as the market remained net short and prices did not respond to the existing supply side deficit as the market worked through above ground stockpiles. While autocatalyst demand continued to be the largest component of palladium demand, it has not yet returned to pre-pandemic levels, and the price remained between $850 and $1,050 per ounce for much of the year. In October, the threat of potential new sanctions on Russian exports, which accounts for roughly 40% of new mined supply, sent the price as high as $1,222 per ounce on October 29, 2024, as short sellers bought long contracts to reduce their positions. However, once market fears about disruptions in supply dissipated the spot price retreated and ultimately ended the year at $909 per ounce on December 31, 2024 (-19.98%).

In 2025, palladium markets remained volatile, but benefited from a deficit-driven, supply-constrained environment that saw prices rebound off 2024 lows. While the palladium market has been in deficit of various magnitudes since 2012, this year saw a turn in the overwhelming narrative driving weak prices. Several mining companies reduced mining operations into the prior year end and U.S. government support for EV subsidies waned. Nearly 80% of palladium demand comes from the automotive sector for pollution control of internal combustion engine vehicles and hybrids. The cessation of the $7.500 EV tax credit in September accelerated automakers’ decisions to offer more fossil fuel and hybrid vehicles which use palladium for pollution control. Further, weaker than anticipated South African supply and recycling, along with revised market forecasts for 2025 and 2026, contributed to a sharp increase in the spot price of palladium that reached $1,297 per ounce on July 18, 2025, an increase of 42.7% from the end of 2024. The spot price of palladium pulled back into a tighter range between July and the end of September before pricing became increasingly sensitive to financial flows, with futures positioning amplifying the movement in spot price driven by U.S. tariff uncertainty, South African disruptions, tighter leasing markets and strong Chinese imports. The spot price would reach as high as $1,837 per ounce, before ending the year at $1,567 per ounce on December 31, 2025 (+72.4%).