PGM shares hit by basket slump, but analysts call the sell-off a pothole

South African platinum group metal (PGM) shares have retreated for three months as metal prices fell from their January highs, but several bank analysts argued in mid-July 2026 that the sell-off had gone further than fundamentals justify.

According to Miningmx on 20 July, the basket price of platinum, palladium and rhodium was more than 30% below its January peak. Hostilities in the Middle East were largely to blame: the conflict raised the prospect of interest-rate increases, which tends to push investors out of metals that pay no yield. Platinum ETF holdings were about 574,000oz below their January peak and Nymex holdings 288,000oz lower.

Downside risk in the second half

RMB Morgan Stanley analysts Brian Morgan and Christopher Nicholson warned that carmakers were revising business plans for higher energy prices and possibly higher rates, and said they expected more weakness in all three main PGMs in the second half. Northam Platinum, Valterra Platinum and Impala Platinum had all fallen over the preceding three months.

Yet the same analysts described the retreat as a pothole rather than the end of the road, arguing that platinum and rhodium would remain in deficit for much of the decade even with a steady erosion of combustion-engine demand. They said the sell-off made valuations far easier to justify than three months earlier.

Who is most exposed

RMB Morgan Stanley calculated in an 8 July report that a 13% decline in gold, PGM and lithium prices would push Sibanye-Stillwater back to breakeven, while Impala, Northam and Valterra would only become cash neutral after a 20%–25% fall. It said Impala and Sibanye-Stillwater were trading at about a 40% discount to Valterra and Northam, and preferred Impala.

Nedbank Securities' Arnold van Graan said the market had become too bearish and that equities would recover quickly if the basket simply stopped falling. He kept an overweight stance with a bias to Valterra and Northam because of their balance sheets and lower costs, but said a price recovery would favour higher-leverage names such as Impala, Sibanye-Stillwater and Tharisa. UBS analyst Steve Friedman said share prices had fallen further than underlying fundamentals and advised being selective.

Supply is the anchor

HSBC's James Steel forecast a 2026 platinum deficit of 531,000oz and expected palladium deficits to widen modestly this year and next. Valterra chief executive Craig Miller told Miningmx that customers in the automotive, industrial and jewellery segments were still taking all the metal the company produced, including iridium and ruthenium.

For South Africa's producers, the episode is a reminder that much of the 2025 rally came from investment flows that can reverse quickly. What has not changed, analysts argue, is the constrained supply base, and that is the factor on which the medium-term case for PGM equities rests.

Sources

• Miningmx: Platinum selldown a “pothole, not the end of the road”, 20 Jul 2026
• Miningmx: Northam Platinum in new output record as chrome surges, 13 Jul 2026

Photo: The Sandton skyline in Johannesburg, home to the JSE where South Africa's PGM producers are listed. Andres de Wet, Wikimedia Commons, CC BY-SA 3.0.