Commodity Online
LONDON: Platinum and palladium jewellery fabrication is expected to make a strong recovery in 2009 due to the modest price gains for the metals. Palladium fabrication is expected to rise on increased output of carat jewellery that will offset further weakness in the white gold sector with largest gains expected in key market of China, according to GFMS Ltd, leading metals consultancy.

Philip Klapwijk, Chairman, GFMS Ltd noted “jewellery’s actual call on the bullion markets should also rise even more noticeably as we’re expecting hefty declines in jewellery scrap, especially for platinum”

One of the key findings of the 2009 report was the price related contraction of platinum jewellery fabrication last year, with the global total declining for the sixth year in succession, by 12%. The drop was overwhelmingly attributable to the sharp fall in
Japanese offtake, despite its end-year recovery on the back of weaker platinum prices.

Another interesting feature of their findings was that the price-related increase in fourth quarter demand in China even proved sufficient to offset its substantial (also price related) first half decline, making that the only market of note to achieve growth in 2008.

The 2009 survey outlines an important change to GFMS’ methodology regarding platinum and palladium jewellery. Prior to thi spublication, their fabrication series was presented on a net basis, which equates to the amount of metal used in jewellery production less the volume of metal generated by the melting of old jewellery.


Now, however, the data outlines jewellery demand on a grossbasis, which measures the total amount of metal used irrespective of source. Paul Walker, CEO of GFMS noted in Johannesburg, “this substantial change has been introduced to add clarity to the analysis as, in the last two years, platinum jewellery scraphas soared to levels sufficient to heavily distort the picture at a net level”.

With jewellery demand shown gross, the survey therefore now presents a separate series for the supply from jewellery scrap – a unique feature in the world of published PGM supply and demand statistics. For 2008, GFMS report that the recycling of platinum jewellery surged by almost 70% to over 900,000 ounces (28 tonnes), with much of the gains coming from Japan and then China.

Total palladium jewellery demand edged marginally higher in 2008 despite a significant decline in Japanese fabrication. A rise in carat palladium jewellery fabrication, principally in North America, but also in Europe and China offset the fall in Japan and those losses from the metal’s use in platinum and white gold jewellery. One of the major benefits last year, particularly in the first half, was the increasingly attractive retail price point of palladium carat jewellery compared with other competing precious metals, providing an affordable alternative when both gold and platinum prices were at their peak. The picture for scrap was also very different for palladium; the survey shows that this only grew by around 6% and remained below 200,000 ounces (around 6 tonnes). 

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