Johnson Matthey interim PGM review reveals latest jewellery forecasts.
Johnson Matthey today held its Platinum 2012 interim review in London, outlining the changing trends in the platinum group metals (PGM) market for jewellery.
The review outlined the steady fall of palladium in the jewellery marketplace, with gross demand for palladium expected to fall 11% to 450,000 ounces by the year-end.
In Europe, gross demand for palladium jewellery has fallen, while the Chinese market has weakened, owing to what Johnson Matthey dubs “a lack of positioning and effective marketing”, with lower carat gold alloys also affecting palladium’s hold in China.
Overall, the global outlook is unoptimistic for palladium jewellery, which contrasts the expectations for platinum demand in jewellery, which is expected to reach a three-year high of 2.73 million ounces this year.
Gross demand from the trade in China is forecast to reach 1.92 million ounces by the year-end, driven by lower average platinum prices and an increase in the manufacturing of platinum jewellery.
Johnson Matthey also noted that the increase in large Hong Kong jewellery houses moving into secondary and tertiary cities in mainland China has boosted the stock of platinum jewellery, with demand up for new stock to be put in to the new store locations.
India has also shown strong demand for platinum jewellery so far in 2012 – an increase of about 25% – following the continued marketing campaign for the precious metal in the largely gold-driven country, something that Mark Bedford, PMM director at Johnson Matthey, said is beginning “to bear fruit”.
In the UK platinum demand has shown some growth, while the Swiss market has grown due to demand for Swiss-made platinum timepieces.
Bedford added that while the global market for platinum has been flat year-on-year – it has fallen just slightly to 8,070,000 ounces in 2012 – this should be considered “pretty strong” considering the current global economic situation.
Looking ahead, supplies of palladium are expected to fall in 2013 as a result of lower output from Russia and a diminishing likelihood of output from South Africa owing to continued disruption across its mines.
For platinum, recycling is forecast to fall 11% to 1.83 million ounces in 2012, with jewellery recycling expected to weaken as consumers hold on to items.
Gross platinum demand is expected to grow “modestly” in 2013, but supplies will remain sluggish owing to the South African mining strikes and the potential restructuring of its platinum industry.