The platinum sector on the JSE has been a pretty bad place to be for investors in recent times. Share prices have been hammered as negative sentiment towards the industry has become pervasive.

?The price of platinum has fallen to prices last seen in mid-2009, driven down by the strength of the dollar and concerns about auto catalyst demand. Above-ground metal stocks and efficient recycling of the metal are also having an impact.

Producers of platinum group metals (PGMs) were hoping for a price recovery in 2015, but so far that has shown no sign of happening. After suffering through last year’s five-month strike, the industry just seems to get hit by more and more headwinds.

Over the last three months, many platinum counters have extended the losses they suffered during 2014. Amongst the big three producers, Lonmin has shed close to 35% of its value over the last 90 days, Impala is down nearly 25%, and Anglo American Platinum is just shy of 10% lower.

Eoin Treacy's view

Platinum miners have more problems than most miners with controlling costs as ore grades decline. The challenges they have with introducing mechanisation against a recalcitrant labour force are well documented but are still a drag and the falling price of the metal acted as an additional bearish catalyst. 

Platinum prices posted their largest upward dynamic today since December.  suggesting potential for an unwind of the short-term oversold condition has improved. 

The South African Platinum Mining sector has been trending lower since 2011 and posted new reaction lows last week. Nevertheless, yesterday’s upward dynamic suggests at least near-term support has been found and a sustained move below 30 would be required to question potential for an additional bounce. 

UK listed Lonmin almost halved between early February and last week. An unwind of the deep oversold condition is underway but it will need to find support above 100p on the next pullback to demonstrate demand is returning to dominance beyond the short term.