Gross platinum jewelry demand in North America is poised to
increase by 45,000 ounces to 180,000 ounces in 2010—an increase of 33 percent
over 2009—thanks to improved economic conditions, an increase in discretionary
spending on jewelry, and healthier exports to Asia. These factors are
offsetting high prices, which have hovered around $1,500 an ounce since the
beginning of the year.

This news comes courtesy of Johnson Matthey’s Platinum 2010
Interim Review, which was released Nov. 16 and presented to journalists
representing the jewelry, electronics, and automotive industries at the Four
Seasons Hotel in New York City. The 40-page survey covering platinum group
metals supply and demand is issued free of charge by Matthey, which tracks the
production, supply, and use of platinum and related group metals. The report
includes gross demand and recycling data for the jewelry sector, and is a
forecast of how the group sees the market for the whole of 2010, as well as an
outlook for the year ahead. Year-over-year figures are also compared to provide
a price forecast for the next six months.

Mark Danks, Ph.D., sales and marketing manager, Platinum
Jewelry Products North America with Johnson Matthey, told JCK that while many
mid- to high-level jewelers in North America are doing well with platinum,
overall economic concerns may hinder further spending. “Up to JCK Las Vegas
last year, the market was pretty bullish,” he explained. “The biggest challenge
is getting [platinum jewelry] into stores.” Help exists in the form of the
group’s newly launched Platinum Design Competition, and in exports to China,
which are helping to boost demand for some American manufacturers. One caveat:
“Platinum manufacturing is suffering in men’s wedding bands because there’s so
much competition,” he added.

After reviewing the report, here’s what JCK has learned
about projections for the platinum and palladium markets in the coming months:

• Globally, gross demand for platinum in the jewelry sector is predicted
  to fall by 14 percent in 2010 to 2.42 million ounces as retailers and consumers
  reduce purchasing in response to relatively high prices. Recycling of platinum
  jewelry is expected to increase by 30 percent to 735,000 ounces. As a result,
  net platinum jewelry demand is expected to fall by 25 percent to 1.69 million
  ounces. High platinum prices are also expected to reduce gross
  global platinum demand for jewelry fabrication by 390,000 ounces in 2010.
  Platinum traded higher in the first nine months of the full year, thereby
  lowering the wholesale purchasing of platinum in the jewelry sector,
  particularly in the price-sensitive Chinese market where full stock levels and
  reduced consumer spending are expected to impact demand.
• ·    
  Additionally, gross demand in China is expected to fall by 430,000
  ounces to 1.65 million ounces. Higher platinum prices have triggered reduced
  purchasing by wholesalers and retailers, with heavy buying occurring only when
  platinum’s price dips below $1,500. Evidence suggests that full stock levels—a
  result of slow 2009 sales—have also reduced new gross demand in China. Elevated
  price levels have encouraged greater scrapping of old platinum jewelry, raising
  recycling levels by 36 percent, and contributing to a reduced net demand of 1.2
  million ounces.
• In Europe and Japan, platinum jewelry demand is expected to soften by a
  relatively modest 10,000 ounces. Reduced consumer spending has affected jewelry
  purchases in Europe, though the bridal sector in the U.K. is expected to remain
  resilient. Last year’s figures for platinum jewelry in Japan have been revised
  downward to 335,000 ounces, due to a reassessment of the impact of the
  recession on demand for fashion jewelry. Gross demand from the Japanese jewelry
  market is forecast to soften by a further 5,000 ounces 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.
• Worldwide recovery of platinum jewelry is projected to increase by 170,000
  ounces to 735,000 ounces. This includes old jewelry that consumers have traded
  in as well as unsold retail and wholesale stock. Recycling in the Chinese and
  Japanese jewelry sector is expected to be particularly strong as consumers
  recycle old pieces.
• The Matthey team, including North America market research manager Ellen
  Zadoff, noted that most jewelry recycling takes place in China, and has grown
  popular in Japan only in the last five years when metal prices rose. North
  Americans, on the other hand, “generally don’t cash in their jewelry,”
  according to Danks.
• Meanwhile, overall demand for palladium jewelry is expected to fall
  along with the consumer rate of consumption due to metals prices and an
  increase in recycling.
• Gross palladium jewelry demand is set to soften by 145,000 ounces in
  2010 to 630,000 ounces—the fall almost entirely due to reduced consumption in
  China. Recovery of palladium from recycling of old jewelry is set to increase
  by 15,000 ounces to 85,000 ounces, bringing net palladium jewelry demand to
  545,000 ounces and representing a 23 percent drop compared with 2009.
• Gross demand for palladium jewelry manufacturing in China is expected to
  fall by 160,000 ounces to 400,000 ounces in 2010. With the exception of a few
  provinces, availability and promotion of palladium jewelry is sparse and has
  struggled to maintain consumer interest. Several manufacturers have withdrawn
  from palladium jewelry production in 2010 while others are using increased
  quantities of recycled old jewelry. 
• In Europe, however—particularly in the U.K.—palladium jewelry is
  anticipated to grow in popularity. The demand for palladium for use in jewelry
  manufacturing in Europe will strengthen by 20,000 ounces, while holding steady
  in the United States and other regions.
• Finally, recycling of palladium from jewelry is expected to increase 21
  percent by year’s end, even though many Chinese retailers are less willing to
  exchange old pieces of palladium jewelry than they are gold and platinum.

JCK