MANUFACTURING VOLUMES OF PLATINUM JEWELLERY WERE RESILIENT IN 2007 AND NET PURCHASES FELL ONLY MARGINALLY

Despite a rising price, purchases of platinum by the jewellery industry, excluding scrap, fell only marginally to 1.59 million ounces according to Johnson Matthey’s newly-released Platinum 2008 industry review. Retail sales and manufacturing volumes were resilient in most geographical markets. However, the quantity of second hand jewellery and unsold retail stock returned for recycling in both China and Japan increased due to the high metal price.

China
Chinese jewellery manufacturing demand rose by 20,000 oz to 780,000 oz of new metal in 2007. The rise of the dollar price of platinum was mitigated to some extent by the strengthening of the Chinese Renminbi. However, the jewellery trade did use more recycled metal than previously, with large amounts of old jewellery being traded in by consumers in part exchange for new pieces, as is customary in China. Manufacture of beads to celebrate the new Year of the Pig added to demand early in 2007 as did the production of platinum memorabilia towards the end of the year in advance of the 2008 Olympic Games.

Europe
In Europe, platinum demand rose by 15,000 oz to 210,000 oz last year, supported by an increase in the amount of platinum jewellery hallmarked in the United Kingdom and a rise in the number of platinum watches produced in Switzerland. The extraordinarily high prices seen in much of the first quarter of 2008 have had a negative impact on jewellery industry purchases of platinum in Europe so far this year.

Japan
In Japan, platinum jewellery demand fell by 22 per cent to 280,000 oz in 2007. High rates of recycling of old jewellery were the main cause of this decline. Consumers have been encouraged to sell unwanted items by the high Yen price of platinum and by the proliferation of companies which are collecting and refining this material.

North America
North American jewellery purchases fell to 240,000 oz in 2007 from 245,000 oz a year previously. The high price caused a weakening of platinum’s presence in the middle and low end of the U.S. market. Retailers have trimmed working stocks and delayed repurchases of jewellery. However, platinum bridal ring manufacturing volumes for both domestic and export markets were good.

Platinum Jewellery Outlook
The prospects for platinum jewellery demand in 2008 are more dependent on price than in previous years. The high metal price in early 2008 did affect purchases by manufacturers in China and elsewhere and encouraged additional recycling of second hand pieces in Asia. Globally, the high end and bridal sectors remain relatively immune from the higher prices. A softening of the price in March encouraged increased jewellery industry off-take suggesting that the picture for 2008 may not be substantially worse than it was in 2007.

Source

http://www.platinum.matthey.com/media_room/Press_Releases.html