Market analyst Regina Meani discusses Zimplats Holdings (ASX:ZIM).
The Platinum Group metals (“PGMs”) are rare precious metals with similar chemical and physical properties and include platinum, palladium, rhodium, iridium, ruthenium, and osmium. PGMs are considered strategic industrial metals because of their extensive use in the petrochemical, automotive and electronic industries. In many cases, it is impossible to substitute PGMs economically or technically.
Platinum uses have evolved and developed since the 1950s where it was first used in the petroleum industry. In the 1960s Japan’s restrictions on the private ownership of gold created a window of opportunity in the jewellery industry. Further usage of the metal group by the automotive industry towards the end of that decade appeared as an auto catalyst to meet US legislated limits to restrict noxious tailpipe emissions from vehicles. During the 1980s and 90s new record levels were set in the platinum jewellery market while new industrial applications became significant particularly in electronics. These included its use in hard disks, and in the manufacture of high-purity glass used in lap-top computer screens, and the successful introduction of small platinum investment products i.e., proof and bullion coins.
More recently China has emerged as a rapidly developing user of Platinum.
From the Great Dyke in Zimbabwe, Zimplats Holdings Limited (ASX: ZIM $24.90) produces a range of the platinum group metals along with associated metals. These include Platinum, Palladium, Gold, Rhodium, Nickel, Ruthenium, Iridium, Silver, Copper and Cobalt.
The share price for Zimplats largely ran in tandem with the platinum price from the late 1990s, but from early 2016 the price seems to have benefited from its diversity of minerals and diverged from the continued slide in the platinum price to trend higher in line with the copper and gold prices. The nickel price also rose during the period and more recently there has been a significant boost in cobalt prices.
Enjoying a substantial rise from June 2000 at 18c the ZIM price trended steeply higher to peak at $19.30 in April 2007. From here and in line with the platinum price the stock oscillated lower within a widely ranging channel. In January 2016, in line with the copper and gold prices the ZIM price bottomed and began to swing higher.
In February 2021 the price broke the upper limits of its downward channel and sprang higher to reach $28.17 a month later to then experience a momentum pause as a result of more than doubling its price in a few short weeks. The corrective action has continued to develop but may be approaching completion. Over the short term a rise through $25.00 would indicate the potential to test higher resistance levels located at $26.00, then $27.00 and most importantly at the peak at $28.17. Traders may wish to use these levels with appropriate stop losses ahead of the price establishing its next main swing higher towards the $40-50 range and potentially beyond.
Over the near-term support lies in the $23.50-24.00 area with a drop below $22.50 delaying or changing the above scenario.
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