Platinum demand remains resilient despite price

Global demand for platinum jewelry, such as this piece from Scott Kay, remained strong in 2007 despite the metal's high price, according to Johnson Matthey's 2008 report.

Despite platinum's rising price, which averaged $1,304 per ounce last year—36 percent more than in 2006—retail sales and manufacturing volumes of platinum jewelry in 2007 remained fairly resilient, boosted primarily by the high-end and bridal sectors, according to Johnson Matthey's annual platinum report for 2008.

Global demand for new metal in the jewelry industry actually dipped slightly in 2007, the metals consultancy said, falling 55,000 ounces to a total of 1.59 million ounces, yet demand from both the trade and consumers alike stayed strong for the majority of the year.

Platinum jewelry demand in Europe increased by 7.7 percent to a total of 210,000 ounces in 2007, and net demand for new metal from the Chinese jewelry sector increased by 20,000 ounces to a total of 780,000 ounces.

China remains the largest market for platinum jewelry, according to Johnson Matthey, with Chinese manufacturers buying 2.6 percent more of the metal compared with other markets. In the last year especially, platinum demand in China was particularly supported by the production of novelty platinum items and memorabilia manufactured in preparation for the 2008 Beijing Olympics.

In North America, however, where the economic slowdown has been accompanied not only by higher platinum prices but also by pressure on local manufacturing from imported jewelry, purchases of platinum by jewelry manufacturers declined by 5,000 ounces in 2007 to a total of 240,000 ounces.

Looking forward, Johnson Matthey expects platinum prices to remain volatile, though the high prices haven't yet been felt in the jewelry industry this year. The outlook for jewelry demand in 2008 is more dependent on price than previously, Johnson Matthey said in the report, but the high-end and bridal sectors will remain insulated from price changes.

While perhaps the biggest story regarding platinum for 2007 was supply—which fell by 4 percent in 2007—Johnson Matthey said there is still the possibility that supply for 2008 will increase. Among the biggest issues concerning supply in the last year were strikes and wage negotiations at mines in South Africa, plus a Lonmin smelter shutdown in the country, and general issues concerning improved safety and the acquisition of skilled staff.
Source: nationaljewelernetwork