PGM market through the worst, says Tharisa CEO

Phoevos Pouroulis, CEO, Tharisa

THE platinum group metal (PGM) market had seen the worst of an 18-month price correction, said Tharisa CEO Phoevos Pouroulis in a third quarter update.

“PGM prices for the quarter were at slightly higher levels than in the previous quarter supporting the market view that the ‘bottom of the market’ has passed,” said Pouroulis who added that prices remained ‘range-bound’.

Tharisa received an average PGM price of $1,391 per ounce (6E) for the quarter compared to an average of $1,343/oz in the previous quarter. Coupled with an 8% increase in the metallurgical chrome price, the company generated a healthy $20m quarter-on-quarter lift in net cash to $92.2m.

Said Pouroulis: “The narrative for PGMs is changing with the realisation that the internal combustion engine (ICE) will remain around much longer, with hybrid drive-trains the natural progression in the longer term”.

Only platinum is stronger in price over the last 12 months, up about $7/oz. The prices for palladium and rhodium are 28% and 22% weaker respectively.

Analysts report a less than clear picture of the PGM market. A slow down in battery electric vehicle growth, constrained recycling supply and supply deficits “are all positives” but the overall demand profile for the metals “appears to be softening into 2024,” said analysts at RMB Morgan Stanley in a recent report.

Adrian Hammond, an analyst for Standard Bank Group Equities has previously said a turnaround in the market was unlikely until next year. He remains sceptical of an improvement in PGMs right now. “We remain underweight the sector until such time as we begin to see real green flags or leading indicators,” he said.

While EV demand is falling it’s also thought that sales of ICE vehicles would be flatter this year than previously expected.

Despite this shares in Tharisa stand alone among its PGM peers on a year-to-date basis owing to its sizeable chrome production which is selling at a premium. “The average chrome price was $309/t for the third quarter (Q2: $286/t), above our $290/t forecast,” said Berenberg Bank in a note today.

“We believe that prices are currently at $320/t,” the bank’s analysts said. “Importantly, we believe that chemical-grade and foundry-grade chrome, which Tharisa also sells, are selling at decent premiums to the metallurgical-grade price.”

Tharisa also said that in terms of a $5m share buy-back programme unveiled in March, it had purchased 1.6 million shares as of end-June.

Shares in Tharisa are 26% higher (17% higher over 52 weeks) whereas peers such as Northam Platinum is 8% lower. Shares in Impala Platinum and Anglo American Platinum are flat year-to-date.