The Zimplats (ASX:ZIM) share price is up nearly 93% since January. What’s going on?

The Zimplats Holdings Ltd (ASX: ZIM) share price has surged 93% since the beginning of this year. We take a closer look.

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The Zimplats Holdings Ltd (ASX: ZIM) share price has surged since the beginning of this year.

The platinum miner’s share price opened the year at $13.15 and is now trading for $25.30, which is up 92.4% in just under 3 months. Just today, it opened 11% higher before retreating to be up 1.2%. For comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.47% today and 2.07% year-to-date.

The Zimplats share price has been breaking its own all-time record almost once a week. So, what’s driving these gains?

Zimplats share price surging alongside platinum prices

When the Zimplats share price first broke its all-time record at the beginning of March, Motley Fool Australia reported the movement was highly correlated with the price of rhodium.

Rhodium is one of the elements Zimplats specialises in – along with platinum and palladium, as well as iridium, ruthenium, and osmium. Rhodium is the rarest non-radioactive element on Earth. It has many uses, but its most important one is in car exhausts. The element is used as a catalyst in cars to reduce the amount of nitrogen oxide (an air pollutant) in exhaust fumes. 

Car manufacturers are increasingly demanding rhodium as nations around the world increase environmental regulations, according to website Trading Economics.

Supply has also diminished due to COVID-19 work stoppages. As a result of increasing demand and decreasing supply, rhodium’s price is surging.

At the time of writing, rhodium was trading in the commodities market for US$26,200 a troy ounce (t oz). While it’s down from its all-time high of US$29,800t oz, it is still up 54.12% since the beginning of this year.

What about platinum and palladium?

Rhodium isn’t the only element with a surging commodity price. Both palladium and platinum’s price have been a boon for the Zimplats share price.

Since the beginning of the year, the price of palladium has increased 6.95% ($2,617.78t oz) and platinum by 10.89% ($1182.50t oz).

Both platinum and palladium, like rhodium, are used as catalysts for car exhausts to reduce emissions. While not as rare as rhodium both metals are seeing increased demand, nevertheless.

Platinum is also used in oil refinery and as jewellery. Palladium’s other uses include electronics, dentistry, medicine, and hydrogen purification. Palladium’s price is at an all time high, after hitting a 5-year high in February this year.

Zimplats share price snapshot

Most of the Zimplats share price growth has occurred in 2021. Over the last 12 months, the company’s value has increased 166.6%.

Its share price has increased over 10% on four separate days this year. In fact, on Monday 29 March, the share price increased a whopping 25.7% by close of trade. At one point it reached an all-time high of $2.75.

Zimplats has a market capitalisation of $2.7 billion.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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