(Kitco News) - Jewelry demand for both platinum and palladium fell in 2010 in response to higher prices and stockpiles already accumulated by manufacturers, Johnson Matthey said in its “2011 Platinum” report issued Monday.
Still, jewelry demand for platinum—by far the larger market—was still described as historically strong, with the fall-off coming from an especially robust year in 2009. There was a dip in demand from the key market of China, which accounted for roughly two-thirds of the global jewelry demand, after 2009 demand had been the highest ever.
“Chinese demand was very strong, although it was off of the highs seen in 2009, which was a record year,” said Tim Murray, general manager of precious metals marketing for Johnson Matthey.
“If you go back...the last time we saw these prices levels was basically in 2008, and demand in China was actually higher in 2010 than it was in 2008. So if you compare apples to apples, assuming that it (demand) is price sensitive, it was a very, very good year despite being off by about 14%.”
Global demand for platinum in jewelry manufacturing fell by 14% in 2010 to 2.42 million ounces, said the report. Palladium-jewlery demand fell by 20% to 620,000 ounces.
Platinum-jewelry demand was marginally lower in Japan and Europe, the report said. Demand increased in North America and India.
Meanwhile, recycling of platinum from old jewelry, mainly in Japan and China, grew by 32% to 745,000 ounces. As a result, net platinum-jewelry demand fell to 1.67 million ounces from 2.25 million ounces in 2009.
Chinese Jewelry Demand For Platinum Lower In 2010 But Still Considered Robust
Gross Chinese platinum-jewelry demand came in at 1.65 million ounces, although this represented a fall of some 430,000 ounces from the year before, when lower prices and stock levels led to large amounts of metal being purchased.
“A combination of higher metal prices, adequate levels of manufacturers’ stock and a greater focus on producing gold jewelry contributed to the decline in 2010,” Johnson Matthey said. “However, demand in China was robust compared with historical levels.”
Murray pointed out that the Chinese demand last year might be considered especially strong considering the monetary-tightening measures undertaken by Chinese authorities to slow their economy and cool inflation.
Elsewhere, platinum-jewelry demand rose by 30% in North America in 2010, increasing by 40,000 ounces to 175,000 ounces as the economy recovered and consumer confidence began to return. Some larger manufacturers raised production levels, and medium- to high-end retailers introduced new platinum product lines in stores, said the report.
The launch of lighter-weight platinum pieces by some retailers to meet key price points also helped to lift demand, Johnson Matthey said. Also, a narrowing of the price difference between platinum and gold helped lift purchases of platinum at the high end of the market.
In Japan, even though overall consumer spending on jewelry appeared to improve in 2010, platinum-jewelry demand declined slightly. This occurred as the trade responded to elevated metal prices by offering lighter-weight pieces. Total platinum purchased by the Japanese jewelry industry softened by 10,000 ounces to 325,000 ounces.
“Platinum remains popular in the bridal jewelry segment, but was affected by downward trends in marriage rates and also the trend towards reduced piece weight,” Johnson Matthey said. “The platinum fashion jewelry segment remained subdued, partly due to price and also due to competition from cheaper jewelry metals. “
Platinum demand in the European jewelry industry softened by 10,000 ounces to 175,000 ounces in 2010 as economic uncertainty in the euro zone, elevated platinum prices and the lingering effects of recession affected the jewelry trade. However, the number of hallmarked jewelry pieces produced in the U.K. and Switzerland increased in 2010, demonstrating some underlying growth in consumer demand. However, the total weight of hallmarked platinum in these markets declined, suggesting that consumers were choosing smaller, lighter pieces in response to the price change.
Platinum jewelry continued to gain popularity in India, where sales to young, urban consumers have been strong, Johnson Matthey said.
Meanwhile, recycling of platinum jewelry last year was 745,000 ounces, up 180,000 ounces, or 32%, from 2009. Consumers and retailers took advantage of elevated metal prices to trade in old and broken jewelry, Johnson Matthey said.
Recycling in China was 450,000 ounces and in Japan was 290,000 ounces. Other than these two countries, platinum-jewelry recycling was minimal.
World Palladium-Jewelry Demand Falls 20% In 2010 As Chinese Manufacturing Declines
A decline in Chinese demand for palladium in jewelry was the main factor behind the 20% fall global palladium-jewelry demand to 620,000 ounces, Johnson Matthey said.
Otherwise, this demand rose in Europe and North America. Recycling of palladium jewelry rose by 14% to 80,000 ounces.
Palladium purchases by the Chinese jewelry sector fell by almost one-third in 2010 to 380,000 ounces, Johnson Matthey said. Rising palladium prices combined with sufficient levels of stock were mainly responsible for the decline. Some manufacturers and retailers ceased offering palladium due to weak consumer demand and competition from gold.
“Palladium jewelry continued to sell in certain cities and outlying metropolitan and rural areas, but demand suffered from a lack of promotion and competition from other luxury goods,” Johnson Matthey said.
Palladium demand in the European jewelry sector reached 70,000 ounces in 2010, a 40% rise over the previous year. Demand for palladium in North American jewelry increased by 5,000 ounces in 2010 to 65,000 ounces.
Meanwhile, global recycling of palladium jewelry went up by 14% to 80,000 ounces in 2010 as manufacturers and consumers alike took advantage of elevated metal prices to trade in unwanted jewelry, mainly in China and Japan. As a result, net jewelry demand for palladium in 2010 was 540,000 ounces, down from 705,000 ounces in 2009, Johnson Matthey said.
By Allen Sykora of Kitco News; asykora@kitco.com
Courtesy: www.kitco.com
