Sibanye Stillwater (JSE: SSW) finds itself at a critical juncture. While its share price has gained 5.09% this week, it remains significantly down from its year-to-date peak, reflecting the harsh realities of the current commodity market. CEO Neal Froneman’s recent statements highlight the company’s proactive approach to weathering this storm.
With platinum group metal (PGM) prices tumbling, Sibanye is taking decisive action. Planned job cuts, both in South Africa and the US, aim to reduce costs and ensure the sustainability of operations. Froneman acknowledges the socioeconomic impact of these measures but emphasizes their necessity in light of the challenging price environment.
Despite the restructuring, Froneman assures investors that core production and recycling activities will remain largely unaffected. This focus on operational efficiency is crucial in maximizing output and profitability whilst navigating lower commodity prices.
Sibanye Stillwater’s current price at R24.78 reflects an ongoing struggle within a falling wedge pattern. Trading below major SMAs [50-SMA (blue line), 100-SMA (orange line), and 200-SMA (red line)] signals a prevailing bearish sentiment. Despite a marginal RSI uptrend at 44.96, the stock faces considerable downward pressure.
A sustained push above the wedge and R28.09 could signal a trend reversal, leaving the R35.37 and R45.53 resistance levels as the next levels of interest. Failure to break above the wedge could lead to a decline towards the R16.13 support level. A break below this level could further strengthen the bearish momentum and bring the R8.06 support level into play.
Sibanye Stillwater faces a confluence of negative factors: job cuts, falling metal prices, and a bearish technical picture. While renewable energy projects offer a positive long-term vision, near-term trading involves navigating a challenging landscape.
Therefore, while the technicals hint at potential short-term bullishness, the fundamental headwinds remain significant.
Sources: TradingView, Dow Jones Newswire, Sibanye Stillwater, MT Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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