Impala Platinum Holdings Limited (JSE: IMP) recently initiated a voluntary job reduction initiative aimed at reducing operational expenses amidst ongoing challenges in the metal market. Commencing at their headquarters last month, the company has extended exit packages to employees in select mines situated in the North West region.
This strategic move aligns with the fluctuating prices of metals, notably Palladium and Platinum, which have experienced a notable decline over the past year, as seen in the graph below. These market shifts have impacted Impala’s stock value, largely influenced by weakened demand from China.
In response to this turbulent landscape, job cuts have become a prevalent strategy across the industry, reflecting the efforts of South African miners to navigate the challenging environment by trimming costs and preserving their financial stability until metal prices rebound.
Technical
On the 1D chart, a descending triangle has formed, suggesting a continuation of the current downtrend, amplified by the 100-SMA (orange line) trading far above the shorter-term 50-SMA (blue line) and 25-SMA (green line). However, the price has recently broken above the 25-SMA resistance, indicating a potential shift in the shorter-term sentiment.
The dynamic resistance of the triangle is under threat of a breakdown, with the share price underpinned by the 25-SMA support at R78.74. A breakout could lead the price toward the 50-SMA at R85.45, where the sustainability of the breakout could be threatened. Should the price breach this level, the bullish trend reversal could be confirmed toward R87.08.
However, failure to move out of the triangle pattern could see the bearish pressure continue. In this case, any movement below R78.74 could result in a retest of the psychological support at R72.23. If this support fails to hold the sellers off, a breakdown could intensify the downtrend toward R69.71 and R65.37 in the longer term.
Summary
Due to the significant reduction in metal prices, Impala Platinum has been forced to take action to reduce expenditures by starting voluntary job cuts. However, failure to break above the dynamic resistance of the descending triangle formation could see the bearish pressure continue toward R78.74 and R72.23 in the upcoming sessions.
Sources: Koyfin, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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