Battered PGM shares poised to recover, says bank

2O25 could signal a change in direction for platinum group metal shares following nearly two years of underperformance, most of which had been priced into the market.“Although PGM producers still face significant headwinds, we believe the fallout from the lower basket price has largely been priced into equities,” said Arnold van Graan, an analyst for Nedbank Securities in a note on Wednesday.“Further restructuring, growth capex rationalisation, coupled with a sustained recovery in the basket price, could see the valuation multiples start to expand from these depressed levels,” he said. “Although we expect continued volatility, we believe the equity downside from here is limited.”Northam Platinum is Nedbank’s preferred PGM pick, but it has also recommended investors buy shares in Anglo American Platinum, due to be unbundled from Anglo American in April, and Sibanye-Stillwater. Impala Platinum (Implats) had staged a recovery last year, therefore its potential upside was already in the share, he said.From a supply perspective, there was the likelihood miners could further trim production or cut back on growth projects.RMB Morgan Stanley analysts said PGMs “remain stuck” in the same position as last year with a PGM basket price in the cost curve implying no free cash generation. It said there was “ongoing (large) downside risk to consensus earnings”.Van Graan said, however, that the case for growing demand of PGMs was supported by a preference for hybrid vehicles, which use the metals, over battery electric vehicles, which don’t. “These positive developments could trigger a correction in the PGM basket price to more normalised levels – from what we currently see as unsustainably low levels,” he said.Mined platinum supply is forecast to fall two percent next year owing to continued restructuring by producers, according to a report by the World Platinum Investment Council (WPIC) last year.Commenting in its third quarter supply and demand report, in which a third successive supply deficit was forecast for the metal in 2025, the council said newly mined production was set to remain flat this year at about 5.68 million ounces.At $956/oz, the platinum price was 1% lower last year and close to the averages of $961/oz in 2022 and $965/oz in 2023. The major culprit for weaker PGM average prices was palladium. It declined 26% year-on-year, extending a cumulative drop of 59% on the annual average since 2021.According to Metals Focus, a UK consultancy, the palladium price is expected to stabilise in 2025 driven by the slight physical deficit, unwound OEM stocks and saturated short positioning. “Further downwards revisions to mine or recycled supply could bolster theprice, while the market remains susceptible to short squeezes,” said Metals Focus.The post Battered PGM shares poised to recover, says bank appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com