PLATINUM JEWELLERY DEMAND SET TO SOFTEN IN 2010 AS HIGHER METAL PRICES REDUCE CONSUMER AND WHOLESALE PURCHASING

GROSS DEMAND FOR JEWELLERY FORECAST TO REDUCE BY 14 PER CENT

Gross global demand for platinum in the jewellery sector is forecast to fall by 14 per cent in 2010 to 75.3 tonnes as retailers and consumers reduce purchasing in response to relatively high prices according to Johnson Matthey in “PLATINUM 2010 INTERIM REVIEW”, released today. Recycling of platinum in the jewellery sector is expected to increase by 30 per cent to 22.9 tonnes. As a result, net platinum jewellery demand is expected to fall by 25 per cent to 52.4 tonnes.

HIGHER PRICES IMPACT WHOLESALE JEWELLERY DEMAND

Relatively high platinum prices are forecast to reduce gross global platinum demand for jewellery fabrication by 12.1 tonnes in 2010. Platinum traded higher in the first nine months of 2010 than for the full year of 2009. This had the effect of lowering wholesale purchasing of platinum by the jewellery sector, particularly in the price-sensitive Chinese market where full stock levels, thanks to last year’s lower prices, and reduced consumer spending this year are also expected to impact demand.

CHINESE JEWELLERY DEMAND FORECAST TO FALL TO 51.3 TONNES IN 2010

Following a strong year for platinum jewellery in China in 2009, gross demand in 2010 is forecast to fall by 13.4 tonnes to 51.3 tonnes. Higher platinum prices have reduced purchasing by wholesalers and retailers, heavy buying only emerging when platinum’s price has dipped below $1,500. Evidence suggests that full stock levels, as a result of stock building in 2009, have also reduced gross new demand in China. The elevated price levels have encouraged greater scrapping of old platinum jewellery, raising recycling levels by 36 per cent and contributing to a reduced net demand figure of 37.3 tonnes.

PLATINUM JEWELLERY DEMAND IN NORTH AMERICA FORECAST TO INCREASE

Gross platinum jewellery demand in North America is forecast to grow in 2010 in line with an improved economic situation and increased consumer confidence. Discretionary spending on platinum jewellery in North America and healthier exports to Asia are set to lift jewellery demand by 1.4 tonnes to 5.6 tonnes. Higher platinum prices appear to have been partly offset by improved economic conditions in North America in the first half of 2010. Medium to high end retailers report increased sales of platinum jewellery, while the bridal sector is also set to increase.

EUROPE AND JAPAN SET TO REMAIN STEADY

Platinum jewellery demand in Europe and Japan is expected to remain largely steady in 2010. Reduced consumer spending has affected jewellery purchases in Europe: however, demand is forecast to soften by a relatively modest 0.4 tonnes. The bridal jewellery sector in the UK is expected to remain resilient. We have substantially revised our 2009 figure for platinum jewellery in Japan downwards to 10.4 tonnes, due to a reassessment of the impact of the recession on demand for fashion jewellery. Gross demand from the Japanese jewellery market is forecast to soften by a further 0.1 tonnes in 2010 as recession and high platinum prices continue to affect the industry. Purchases of Kihei chain, bought by some consumers as an investment, are expected to hold up well in 2010.

RECYCLING OF OLD JEWELLERY SET TO RISE BY 30 PER CENT

Worldwide recovery of platinum from recycling of jewellery is forecast to increase by 5.3 tonnes to 22.9 tonnes. This includes old jewellery that consumers have traded in as well as unsold retail and wholesale stock. Recycling in the Chinese and Japanese jewellery sector is expected to be particularly strong as consumers return old platinum pieces for recycling through well-established networks.

PALLADIUM JEWELLERY EXPECTED TO CONTRACT AS CONSUMPTION IN CHINA FALLS

SOFTER PALLADIUM JEWELLERY DEMAND FORECAST FOR 2010

Gross palladium jewellery demand is set to soften by 4.5 tonnes in 2010 to 19.6 tonnes, the fall almost entirely due to reduced consumption in China. Recovery of palladium from recycling of old jewellery is set to increase by 0.4 tonnes to 2.6 tonnes, bringing net palladium jewellery demand to 17.0 tonnes, a fall of 23 per cent compared with 2009.

CHINESE PALLADIUM DEMAND TO CONTRACT

Gross demand for palladium jewellery manufacture in China is forecast to fall by 5.0 tonnes to 12.4 tonnes in 2010. With the exception of a few provinces, availability and promotion of palladium jewellery is sparse and it has struggled to maintain consumer interest. Several manufacturers have withdrawn from palladium jewellery production in 2010 while others are using increased quantities of recycled old jewellery.

EUROPEAN PALLADIUM DEMAND TO INCREASE

Palladium jewellery is anticipated to continue to gain popularity in Europe, particularly in the UK where hallmarking statistics show that it has quickly gained a good foothold in the market. We forecast that demand for palladium for jewellery manufacturing in Europe will strengthen by 0.6 tonnes, while remaining steady in the USA and other regions.

RECYCLING OF PALLADIUM JEWELLERY INCREASING

Recycling of palladium from jewellery is forecast to increase by 21% in 2010. Many Chinese retailers are less willing to exchange old pieces of palladium jewellery than they are gold and platinum pieces. Consumers can sell their old palladium jewellery to collection booths, which sell onto local refineries; the increasing metal price is teasing out more of this jewellery.

Note: “PLATINUM 2010 Interim Review” includes gross demand and recycling data for jewellery sector, from which net demand can be derived.