Record gold price persuades bridal buyers to trade up to platinum.
A surplus of 430,000 ounces of platinum was created in 2011 as supply rose by 7% to a four-year high of 5.53 million ounces, while demand crept up by just 2%.
Recycling of platinum accounted for much of the increase in supply – rising by 12% to over 2 million ounces, almost half of which came from the jewellery industry feeding 10% more of the precious metal into global supply compared to 2010.
The annual market report compiled by Johnson Matthey Precious Metals Marketing revealed that jewellery manufacturers bought 2.48 million ounces of platinum in 2011. There was a surge in buying by Chinese manufacturers in the second half of the year, when a surge in gold prices led to platinum being cheaper than gold.
The average price for platinum was $1721 per ounce in 2011, up from $1611 in 2010. Gold traded at $1900 per ounce in September last year.
Global demand for platinum jewellery rose slightly from 2.42m to 2.48m ounces; still well below its peak in 2009 of 2.81m ounces. Europe ended a three year slide in platinum jewellery demand, with total consumption matching 2010’s 175,000 ounces.
“Supported by the bridal sector, platinum purchasing by the trade in Europe remained solid at 175,000 ounces,” Johnson Matthey reported.
“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,” the report concluded.