SHARES in Valterra Platinum, which last month demerged from Anglo American, surged in Johannesburg after the platinum price reached its highest in more than three years.
The company gained as much as 7.1% by midday, followed by Impala Platinum, which was seven per cent higher. Northam Platinum and Sibanye-Stillwater were 5.4% and 4.3% higher respectively.
At just over $1,200 per ounce, platinum was nearly 11% higher. Sister metal palladium gained 9% on the day to trade at $1,077/oz.
The improvement in metal prices is not a complete surprise. Analysts and chief executives say that South African supply is falling whilst the adoption of electric vehicles, a threat to the PGM market’s autocatalyst sales, has slowed.
“Our autos team now forecast global BEV [battery electric vehicle] penetration rates only exceeding 30% in 2030, reflecting the third consecutive year of downgrades from a peak forecast of 50%,” said UBS in a report on Monday.
South African PGM exports are down 25% year-on-year in April (and 14% lower year to date), the bank said, adding that platinum jewellery was staging a comeback. China and Hong Kong PGM imports were up 19% year-on-year in April “as platinum jewellery fabrication appears to be gaining some traction after a decade-long downturn given its large discount to gold,” it said.
The PGM market has been in the doldrums for more than two years after recording all-time highs. The slump has resulted in production closures and major write-downs of assets in the South African PGM industry.
Forecast total supply in 2025, including from recycling, will be the lowest in five years, declining by 4% to 6.99 million oz, according to a first-quarter forecast by the World Platinum Investment Council (WPIC) last month. Of this, first-quarter mined supply fell 13% year-on-year to 1.16 million oz, below levels last seen before Covid.
However, analysts have been predicting the market is at an inflection point. “I think if you look at the trading range for the last four-and-a-half years, it’s clearly tapering. So, you know, we’re seeing lower highs and higher lows. And so that usually is a precursor to a [price] breakout,” said Ed Sterck, director of research at the WPIC.
An improvement in PGM prices would come as a huge boost for Valterra Platinum. Its CEO Craig Miller told Miningmx that his company’s share price would be volatile post the firm’s demerger from Anglo. That is because some Anglo shareholders are not permitted to hold the share.
If the metal markets are on a positive trajectory, however, that could attract new investors and help preserve the holdings of others. “Amplats [Valterra] remains our top pick … as we believe its more mechanised, higher-margin portfolio should limit the downside risk … whilst still offering attractive leverage to a potential cyclical recovery,” said UBS analyst Steve Friedman in a recent note.
“Amplats remains one of the better long-term PGM investment cases, in our view. This is largely a function of its strong balance sheet … and quality assets, which are mostly positioned on the lower end of the cost curve,” said Arnold van Graan at Nedbank Securities.
“Platinum prices are starting to find momentum after several years of deficits, with signs of improvement in both jewellery and autocatalyst demand,” said Morgan Stanley.
