Demand For Platinum Jewelry
Forecast To Rise Modestly in 2011

       Gross demand for platinum in the jewelry sector is forecast to increase by 2% to 2.47 million ounces, according to Johnson Matthey in “Platinum 2011 Interim Review”, released today. Demand is expected to reach a two-year high, mainly as a result of higher levels of purchasing in China – the world’s largest market for platinum jewelry. Softer demand is forecast in the European market while in Japan and North America, demand is expected to be robust. Elevated gold prices, and the parity with platinum, may help platinum gain market share in the bridal sector, although both metals face competition from alternatives.

       Platinum Jewelry Demand in China To Be Marginally Higher in 2011. Despite higher prices, purchasing of platinum by the jewelry industry in China is set to rise by 35,000 oz to 1.69 million ounces this year, suggesting that manufacturers, retailers and ultimately consumers are adjusting to higher price levels. The recent price parity of gold and platinum has given something of a boost to platinum, which is seen as a good buy in comparison with gold by manufacturers, retailers, and some consumers. Overall this year, manufacturers report that the number of platinum pieces they produce has increased, although the weight of individual items has in many cases declined, in line with attempts to target particular price points in the market. Lower levels of recycling are set to result in a rise in net Chinese jewelry demand to 1.33 million ounces.

       Gross Jewelry Demand in Japan To Be Robust. Gross platinum demand in the Japanese jewelry industry is expected to remain fairly steady at 320,000 oz this year. In the aftermath of the earthquake and tsunami in March 2011, more couples are getting married, temporarily reversing a long-term trend towards later and fewer marriages and stimulating purchases of platinum wedding bands as well as engagement rings. However, due to a continued trend towards lighter weight pieces in response to higher prices, gross platinum demand has remained almost flat. With higher levels of recycling, net jewelry demand in Japan is expected to be negative.

       North American Jewelry Demand to Stay Flat. Consumption of platinum by the jewelry sector in North America is expected to remain flat in 2011 at 175,000 oz. The platinum jewelry market is likely to be supported this year by strong growth in production by high-end manufacturers. Production by these manufacturers for the domestic market as well as exports has been impressive, although middle-market manufacturers report challenging conditions. As elsewhere, higher platinum prices have contributed to a trend towards lower weight pieces to meet key retail price points.

       Purchase of Platinum By The European Jewelry Industry To Fall. Due to higher prices and economic uncertainty, gross platinum demand by the European jewelry industry is forecast to weaken by 10,000 oz to 165,000 oz. Although lower priced alternative metals are being chosen for men’s wedding bands, platinum continues to maintain its share of the engagement ring and women’s wedding band market. The recent high price of gold also appears to have encouraged consumers to choose platinum pieces, rather than gold, for only a slightly higher price.

       Platinum Jewelry Recycling Set to Decline This Year. Recovery of platinum from the jewelry sector is set to decline by 6% in 2011 to 690,000 oz, mainly due to a reduction in recycling in China of 20% from previously elevated levels. Growing sales of platinum jewelry in China are leading to less unsold retail stock being recycled, although recycling of old pieces by consumers is expected to remain constant. In Japan, the after-effects of the March disaster appear to have led many individuals to ‘declutter’ their homes and lives, resulting in higher recycling of old platinum jewelry.

Purchasing of Palladium By The Jewelry
Jewelry Industry To Fall in 2011

       Gross palladium demand from the jewelry sector is forecast to fall by 50,000 oz in 2011 to 545,000 oz. In China, the largest market for palladium jewelry, high prices have lowered consumer demand for a previously affordable metal and led some manufacturers to stop producing palladium jewelry. Higher metal prices are expected to keep demand flat in Europe, as lower weight pieces are manufactured to meet price points. In North America, a combination of higher prices and competition from cheaper alternatives has led to a softening of demand this year.

       Palladium Jewelry Demand To Fall in China. Gross demand for palladium in the jewellery sector in China is expected to decline in 2011, by 30,000 oz to 330,000 oz. During the first nine months of 2011, palladium prices were 41% higher in local currency terms than in 2010. This has simultaneously lowered consumer demand for what was previously seen as an affordable precious metal while also helping to stimulate recycling, thus lowering net demand.

       Gross Palladium Jewelry Demand in Europe To Remain Flat. Purchasing of palladium by the jewelry industry in Europe is expected to remain flat this year at 65,000 oz as higher metal prices encourage a trend towards lighter weight pieces. Some manufacturers have also begun to produce rings in lower-fineness alloys such as Pd500.

       Palladium Demand in North America To Decline. Gross demand for palladium in the jewelry sector in North America is expected to fall by 20,000 oz to 45,000 oz in 2011. As the price has increased this year, palladium’s positioning as a men’s jewelry metal has been increasingly challenged by non-precious alternatives. Palladium is also used to enhance the colour of white gold jewelry in some higher-end pieces, for which demand has been resilient.

       Japanese Demand For Palladium To Remain Firm. Demand for palladium in Japan, where it is mainly used as an alloying agent in platinum jewelry, will remain robust at 75,000 oz as purchasing of platinum pieces holds up well.

       Recycling of Palladium To Increase. Driven by higher prices, recycling of palladium jewelry in China is forecast to more than double this year, returning 190,000 oz of manufacturer and retail scrap. The increase in palladium recycling contrasts with platinum jewelry recycling in China, which is set to decline in 2011. It is also notable that the palladium being recycled in China is mainly unsold retailer and manufacturer inventory rather than metal from consumers. Total palladium jewelry recycling worldwide is set to rise to 210,000 oz this year.