Commodities & ZAR Outlook: Mining Boom Contrasts with Industrial Slump

The commodity super-cycle is showing renewed vigor, providing a potential lifeline for the South African Rand (ZAR) even as the domestic industrial sector faces significant challenges driven by shifting global demand.

Precious Metals Rally Drives Profits

Impala Platinum (Implats), a bellwether for the mining sector, has forecast a fivefold increase in profits. This surge mirrors a sector-wide recovery driven by soaring global prices for Platinum Group Metals (PGMs) and Gold (XAU).

• Sector Impact: ZAR support expected against the USD due to export revenues.
• Bullish Momentum: Continued strength forecast for XAU/USD and commodity indices.

The 'Dutch Disease' Risk & Industrial Slump

While miners cash in, the local manufacturing base is shrinking. Mpact has ceased local production, resulting in the retrenchment of nearly 400 workers.

Technicals

• Pair: USD/ZAR displays a complex ceiling due to high metal prices.
• Trend: Structural weakness in the domestic economy limits ZAR capitalization of the commodity cycle.