Johnson Matthey report shows rise in platinum demand, but a fall for palladium

Growth came mainly from the jewellery trade in China, where demand reached 1.68 million ounces, and also in India, where platinum jewellery demand increased rapidly from a low base. Platinum jewellery demand in China rose by two per cent to 1.68 million ounces. Demand in the first half remained robust despite higher prices than in the previous year; and in the second half, when platinum prices dropped and gold began to trade at a premium to platinum, there was a surge in buying by Chinese manufacturers, raising gross platinum demand. Demand for platinum in the Japanese jewellery sector softened slightly, with gross demand declining by three per cent to 315,000 ounces as the impact of the Great East Japan Earthquake was felt, together with long-term population and social trends. Sales reverted to more normal levels in the second half. Platinum jewellery demand in North America increased by six per cent to 185,000 ounces. High-end manufacturers continued to be extremely busy meeting export as well as domestic demand for platinum jewellery pieces. Successful marketing of platinum engagement and wedding rings to young couples helped sales of bridal jewellery against an overall backdrop of falling marriage rates. Supported by the bridal sector, platinum purchasing by the trade in Europe remained solid at 175,000 ounces. Consumer confidence remained low in many parts of Europe and spending on jewellery items generally decreased. However, purchases of platinum in the bridal sector were resilient and lower prices in the fourth quarter encouraged some consumers to 'trade up' from white gold to platinum for wedding and engagement rings. European luxury brands continued to do very well in the high end of the market, boosting demand for platinum used in the manufacture of jewellery and watches. Purchases of platinum by the jewellery sector in India grew by a third to 80,000 ounces. An increase in retail outlets offering platinum and rising consumer purchases drove platinum jewellery demand up to record levels in India. Purchasing of palladium by the global jewellery industry, on the other hand, declined by 15 per cent to 505,000 ounces. The metal is reported to have continued to suffer from a lack of positioning in the key Chinese market, and in Europe and North America the price elasticity of demand was demonstrated – palladium traded on average 39 per cent higher than in 2010, leading manufacturers to offer lower weight and lower fineness palladium alloys to meet retail price points. Gross demand for palladium in the Chinese jewellery sector fell by 55,000 ounces to 305,000 ounces last year, whilst demand in Europe weakened by eight per cent to 60,000 ounces; Japanese demand softened by seven per cent to 70,000 ounces; and gross demand in North America fell by 31 per cent to 45,000 ounces. In terms of 2012, Johnson Matthey is predicting lower palladium jewellery demand, assuming that consumer awareness remains limited by a lack of effective marketing, particularly in China, the biggest market. However, demand in Europe and North America should be firm as palladium holds on to its share in niche markets. Meanwhile the future looks bright for platinum jewellery, which is expected to see further momentum in 2012. Image: Johnson Matthey

Johnson Matthey report shows rise in platinum demand, but a fall for palladium

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