PGM industry looks to automotives for answers

PGM prices have stabilised somewhat over the last quarter, if company results are to be believed, but producers and commentators are concerned about the future of the industry, and the strength of Chinese OEMs, delegates heard during PGM Industry Day, held yesterday in Johannesburg. 

"The automotive industry has played an incredibly important part in the upcycle of PGM prices in the last quarter of a century",  Wilma Swarts, director of PGM research at Metals Focus, said, pointing to the ‘four peaks' in the PGM basket price.

Swarts, along with other speakers, agreed that emissions legislation has gone some way to boosting the PGM price.

"Every time we see emission legislation come through we do see a spike in palladium and rhodium prices," Swarts said.

The most recent peak was attributed to COVID-19. 

Key trends are however are the automotive industry and linking of the Internal combustion engine.

"We need to look at how that can change," Swarts said.

"Most western car manufacturers are acutely aware of how fast the Chinese manufacturers are getting into this game and how competitive they are becoming," Henk de Hoop, CEO of SFA Oxford said.

"So I absolutely agree with previous commentators… there will be trade wars, which is not great for economic development."

Tharisa net cash drops in Q2

Tharisa, the Cyprus-headquartered PGM and chrome producer, which holds the Tharisa PGM and chrome mine in South Africa meanwhile posted strong first-quarter output figures, but heavily-depleted quarter-on-quarter net cash.

Cash of US$184.6 million, and debt of $114.0 million, resulted in a net cash position of $70.6 million. This compares to a net cash position of $94.9 million in Q1 2024 and $126.6 million in the previous quarter.

"PGM prices have stabilised after a pricing correction driven in the main by negative sentiment around long-term demand drivers," the company said in a market update.

In chrome, the company pointed to robust fundamentals, pointing to tightening output from the major UG2 PGM. 

"We see continued strong demand by ferrochrome and downstream stainless steel producers in China and, while port stocks have risen marginally this calendar year, most of these stocks are already accounted for and the market remains tight," the company said.