Platinum Jewelry Demand Resilient in 2007

Despite the high price for the precious metal, demand fell only slightly

Anthony DeMarco, Senior Editor -- JCK-Jewelers Circular Keystone, 5/19/2008 11:04:00 AM

North American platinum jewelry purchases fell to 240,000 ounces in 2007, only a 5,000-once drop compared to the prior year, despite reaching record highs of more than $1,500 per ounce—due to increased overall demand for the precious metal coupled with a decline in supply.

Resiliency is becoming a common theme for the precious metal when it comes to its use in jewelry fabrication, according to Johnson Matthey's report on the 2007 market and the outlook for the rest of the year. It is the same term the company, which specializes in market analysis and the fabrication of platinum and the platinum groups metals, used in November, 2007, when it gave its last market report.

Global jewelry demand for new platinum fell 55,000 ounces to a total of 1.59 million, ounces, which Ellen Zadoff, Johnson Matthey Precious Metals Division North American market research manager, used as another example of the precious metal's resiliency

"It isn't much, considering how strong the platinum price was," Zadoff said during the briefing on the report to analysts and the press Monday in New York City. 

In fact, some countries saw a rise in platinum demand.

In North America, the high price caused a weakening of platinum's presence in the middle and low end of the U.S. market, according to the report. However, platinum remains strong in the bridal and the luxury goods sectors.

Platinum Group International is quick to point out that designers such as Scott Kay, Phyllis Bergman, and Ritani are offering platinum products in lighter weight, lower price-pointed pieces.

"This strategy has opened the platinum door and made high quality platinum available to broader range of price-conscious consumers," PGI said in a statement.

In China, new platinum jewelry manufacturing demand rose by 20,000 ounces to 780,000 ounces in 2007, according to the report. The rise of the dollar price of platinum was mitigated to some extent by the strengthening of the Renminbi, according to the report. However, there was an increase in recycled metal, as people traded in old pieces for new. In addition, demand increased for the manufacture of platinum for beads for the new Year of the Pig and for memorabilia for the upcoming 2008 Olympic Games.

In Europe, platinum demand rose by 15,000 to 210,000 ounces last year, supported by an increase in the amount of platinum jewelry hallmarked in the United Kingdom and a rise in the number of platinum watches produced in Switzerland, according to the report.

In Japan, platinum jewelry demand fell by 22 percent to 280,000 ounces in 2007, due to high rates of recycling, according to the report.

In its global outlook, Johnson Matthey said that platinum jewelry demand in 2008 may be more dependent on price than in previous years. The high-end and bridal sectors were largely unaffected by the higher price for the precious metal. And a softening of the price in March encouraged increased jewelry industry activity, "suggesting that the picture for 2008 may not be substantially worse than it was in 2007."

Zadoff, and Timothy Murray, general manager, Johnson Matthey U.S. Operations, Precious Metals Marketing, who was at the meeting also noted that, while it's difficult to track the amount of jewelry available for recycling in China and Japan, there may be less of it available for recycling.

Meanwhile, global palladium jewelry demand fell from 995,000 ounces in 2006 to 740,000 ounces in 2007. The largest market by far for the precious metal as jewelry is China, and it is there where jewelry demand fell by a third to 500,000 ounces.

Palladium is popular in the far northeastern areas of China and in the west. In the major cities, platinum is favored.

In North America, demand for the white precious metal for jewelry manufacturing increased from 40,000 ounces in 2006 to 50,000 ounces in 2007. In Europe it rose from 40,000 to 45,000 ounces during the same period.

Murray said he is expecting increased awareness of palladium in North America and Europe due to a more coordinated marketing effort by manufacturers and suppliers. In addition, he said that manufacturers in North America are still learning how to work with the precious metal.

Palladium's lower intrinsic cost relative to platinum and gold allows for jewelry to be made at lower costs, according to the report. Palladium made inroads into the men's wedding band sector in North America in response to pressure on wedding budgets from rising diamond and metal prices.

This relative lower cost should also help to increase demand in North America and Europe in 2008.

In answering a question, Murray noted that to eye, it's difficult to tell the difference between platinum and palladium jewelry. "Obviously when you pick it up, platinum is much more dense."