Platinum demand for jewellery up 12% in 2012

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New Johnson Matthey report says metal retained strong position in UK.

Platinum jewellery demand was up 12% in 2012 to a total of 2.78 million ounces, according to the latest platinum demand figures released today by Johnson Matthey.

The Platinum 2013 report covers last year’s supply and demand figures for platinum, palladium, rhodium and ruthenium across the realms of jewellery, industrial manufacture and autocatalysts.

In the UK platinum retained a strong position in the jewellery sector in terms of consumer interest. The number of British-made hallmarked platinum articles rose slightly by 1.8% in 2012.

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World demand for platinum’s use in jewellery rose 12% last year to 2.78 million ounces, bolstered by the expansion of retail store networks in mainland China and the increase in manufacturers’ finished stock needed for these stores.

In Europe demand for platinum in jewellery manufacture jumped by 5,000 ounces to 180,000 marking the first annual rise in demand since 2007. The lower price of platinum, both in absolute terms and when aligned with gold, helped to drive sales, encouraging consumers to "trade up" to platinum.

Swiss demand for the metal showed a large increase in 2012, with platinum hallmarking soaring 14% in Switzerland, with an additional 9,500 platinum watch cases hallmarked.

North American demand for platinum jewellery in 2012 was flat according to Johnson Matthey, as demand for platinum bridal jewellery increased by about 1%. A drop in the marriage rate to 6.8 per thousand compared to the 8.2 per thousand recorded 10 years ago may have had a knock-on effect for platinum jewellery sales.

Japanese demand for platinum use in jewellery showed growth last year, with a total 310,000 ounces recorded in 2012 following an increase in retail sales of platinum jewellery since 2009. Lightweight platinum jewellery has also helped to boost sales, as did the price of the metal in 2012. Lightweight platinum chains have also grown in popularity in Japan, in terms of non-bridal jewellery.

China remains the boom country for platinum jewellery, with 2012 demand increasing 16% to 1.95 million ounces, second only to the 2.08 million ounces bought in 2009.

Chinese retailers, who price jewellery by weight rather than design, maintained a relatively slim premium in the per gram price of platinum last year, boosting consumer confidence in the metal and driving robust platinum jewellery sales in the first three quarters of 2012.

The platinum price and its affordability in China also bought in a fresh wave of younger consumers in "lower-tier" cities.

Figures from India show the platinum is beginning to play an ever-more important role in jewellery demand and sales in the country, with larger retail chains incorporating new platinum jewellery areas to their stores last year.

Profit margins on platinum jewellery at retail level in India were greater than gold in 2012, prompting more retailers to enter the platinum market. Marketing initiatives in India, driven by the likes of the Platinum Guild International, also helped to increase awareness and desirability of the metal, linking it to auspicious days and targeting it at the 20 to 35 age group.

Investment demand for platinum was steady, totalling 450,000 ounces, with strong investor demand in North America and a rise in the minting of platinum coins.

The platinum market was in deficit by 375,000 ounces in 2012 as supply fell to a 12-year low, due to steep decline in output in South African owing to legal and illegal strike action.

Primary supply of platinum fell 15% to 5.64 million ounces, the lowest in 12 years, while total demand for platinum was down 0.6% to 8.05 million ounces. Platinum recycling totalled 2.03 million ounces in 2012, slightly less than 2011.

Platinum shipments from South African producers fell 16% to 4.10 million ounces last year, with at least 750,000 ounces of production lost to illegal and legal strike action, safety stoppages and closure of marginal mining operations. Changes to supply in other regions were described as "insignificant by comparison".

Looking ahead, Johnson Matthey has outlined an outlook for platinum in 2013, with supply set to remain under pressure owing to weak margins and unstable labour relations in South Africa.

Demand for platinum in jewellery may decline and if investment demand continues to be positive, the platinum market may be slightly in deficit in 2013.

Retail sales of platinum have already been reportedly weaker in Q1 of 2013, in particular in China where Valentine’s Day and Chinese New Year coincided, meaning a more consolidated spend among consumers.

However major jewellery brands planning further expansion in China will help to stimulate platinum jewellery production as demand for retail stock continues.

Check in tomorrow for Johnson Matthey’s 2012 palladium round up.
 

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