PLATINUM shares have returned to buy territory after months of falling metals prices, sending valuations lower. The basket price for platinum, palladium and rhodium, the main platinum group metals (PGMs), is more than 30% lower than its January peak.
Hostilities in the Middle East are largely to blame for what is being described as a hiatus in the metals price run. The conflict has increased the likelihood of rate hikes, which pushes investors out of noninterest-bearing metal investments. That’s reflected in the data: platinum ETF holdings are down about 574,000 ounces from their peak in January, and Nymex holdings are 288,000 oz lower.
Inflation concerns stemming from the conflict also raise risks over automaker demand, as well as uncertainty. Original equipment manufacturers (OEMs, which point to industrial demand) are revising business plans to reflect the effect of higher energy prices and potentially higher interest rates on sales volumes.
“We don’t think this has fully played out yet, and we see OEM metal buying risk skewed to the downside,” say RMB Morgan Stanley analysts Brian Morgan and Christopher Nicholson. “We expect more downside in all three main PGMs in the second half [of the year].”
Consequently, Northam Platinum, Valterra Platinum and Impala Platinum are all lower in the past three months. Yet analysts think the optimism that drove their rerating is but a blip — “a pothole, not the end of the road”, say Morgan and Nicholson.
Investors can get a second chance hitching a ride on the most important drivers of all: static supply, rising demand. “The market is seeing too many ghosts and has become too bearish,” says Nedbank Securities analyst Arnold van Graan. “From here, one doesn’t need a bullish surprise — just stability,” he says. “And if the basket stops falling, equities will catch up fast.”
Speculative demand weakness aside, banks say platinum and rhodium will remain in deficit this year while supply is unresponsive.
HSBC analyst James Steel forecasts a 2026 supply/demand deficit of 531,000 oz for platinum and a price recovery, though he has lowered his average price for the year. Similarly, in palladium, he expects supply/demand deficits to “widen modestly this year and next” — though the CME (another futures market) is net short again.
“We believe recent share price weakness has been more pronounced than the deterioration in underlying fundamentals, creating increasingly differentiated opportunities across the sector,” wrote UBS analyst Steve Friedman in a note to clients. But he recommends being share selective rather than merely following the sector.
Breakeven
The most vulnerable share to further metal price weakness is Sibanye-Stillwater. A mere 13% aggregate decline in gold, PGMs and lithium prices would send it back to breakeven, says RMB Morgan Stanley in a report dated July 8. There’s more resilience at Impala, Northam and Valterra. They would be cash neutral only, were prices to fall 20%-25% before any working capital swings.
“Impala and Sibanye trade at about a 40% discount to Valterra and Northam,” the bank says. “We prefer Impala, as we think the market overestimates its operating leverage.” It adds that investors should be overweight the stock.
“We reiterate our overweight sector stance, with a clear quality bias towards Valterra and Northam, given their balance sheet strength and lower-cost positioning,” says Van Graan. “That said, a recovery in PGM prices would create a more compelling opportunity in Impala, Sibanye and Tharisa, where higher operational leverage could drive a sharper equity response.”
‘High level of contractedness’
The froth, tied to so-called debasement trade’ has largely disappeared in the platinum market. But the industry’s fundamental undersupply, as illustrated by the deficit forecasts for some metals, implies there’s a strong case for a long-term investment approach.
“While we’re cautious in the near term, we think this is a healthy reset for the sector,” say Morgan and Nicholson. “Even with steady erosion of internal combustion engine demand, we have platinum and rhodium in deficit for much of the rest of the decade. The sell-off in the equities significantly improves risk-reward, making valuations much easier to justify today than three months ago.”
Valterra CEO Craig Miller tells Miningmx that the company is seeing new metal supply contracts “at a high level of contractedness”. He adds: “Underlying demand from our key demand segments — the automotive sector, the industrial sector, even to some extent jewellery — is still very robust. Our customers continue to take the metal we’re producing.”
This is not only for platinum, palladium and rhodium, the primary PGMs, but also for minor metals iridium and ruthenium.
BMO Capital Markets analysts George Heppel and Helen Amos say: “With green hydrogen dreams steadily diminishing, the PGM sector is now turning its attention to other potential sources of demand, this time in the tech space.”
Demand is growing for iridium and ruthenium, which are produced in relatively small proportions to the overall basket — exponentially, some say, pointing to the infrastructure rollout behind AI’s advance.
“On aggregate, the iridium deficit is expected to increase year on year in 2026, while the ruthenium deficit is expected to decline but remain substantial at 14% of demand,” says Investec analyst Nkateko Mathonsi.
Industry-funded marketing and research organisation the World Platinum Investment Council estimates that about 500,000 oz in incremental PGM demand was created in the past two years from data storage, optical networks and semiconductor manufacturing. Platinum, palladium and rhodium underpin the PGM investment case, but rolling technological advances make for an upside that is not known at present — provided investors are prepared to wait for them.
