Sibanye Stillwater Limited (JSE: SSW) has been navigating a challenging path this year, with its stock down more than 40% since the beginning of 2023. The company has not been immune to the industry-wide hurdles created by the decline in Platinum Group Metal (PGM) prices. In their recently released half-year report for 2023, Sibanye Stillwater reported a drop in revenue, falling from R70.38 billion to R60.57 billion. This decline also impacted their headline earnings per share (HEPS), which dropped from 423 cents to 208 cents.
Like many other South African companies in the metals and mining sector, Sibanye Stillwater has had to make some tough decisions to reduce costs and counter the impact of the softer PGM prices on their operations. Platinum prices are down 16% YTD, while Palladium has contracted close to 36% and Rhodium faltering even more, down 67%. They’ve acknowledged the inevitability of job cuts in their platinum mining sector and the potential restructuring of their Kloof gold mine operations due to ongoing operational losses. These moves add to the pressure on production alongside the industry-wide challenges of load curtailment.
Technical
On the 1D chart, the longstanding downtrend shows no sign of reversal, with the 50-SMA (blue line) recently crossing above the 25-SMA (green line), suggesting bearish momentum while providing additional resistance to potential upside moves. Trading at R28.37, the path to recovery seems steep.
However, the momentum could reverse if the share price can initiate a volume break above the 50-SMA at R29.23. In this case, the resistance at R30.12 is the only thing standing in the way of the share price testing the dynamic resistance of the downtrend. Should the trend be broken, higher resistance at R32.53 and R34.06 could soon come into play for a longer-term pullback of the current downtrend.
However, should the 50-SMA resistance prevent these upside moves, the downtrend could continue, with the first potential level of support at the 161.8% Fibonacci extension at R26.32. At this level, the support at R25.85 could be pivotal in preventing a steeper leg down, where neckline support is established at R24.63.
Summary
Sibanye Stillwater Limited has felt the pain of the industry-wide headwinds posed by the rapid decline in PGM prices year to date. With the 25-SMA and 50-SMA at R28.50 and R29.23 providing resistance to a sustainable reversal, there could be more downside ahead, with the 161.8% Fibonacci extension at R26.32 offering a potential level of support on the downside.
Sources: Koyfin, Tradingview, Sibanye Stillwater Limited
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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