Platinum prices remain firm, but U.S. market is weak

Platinum prices will likely remain firm, although the precious metal has been hit with a steep drop in U.S. demand, says Johnson Matthey, an advanced metals technology company, in its Platinum 2002 Review.

Demand for platinum reached a record 6.15 million ounces in 2002, but overall global demand for platinum jewelry dropped 10% to 2.55 million ounces.

Most of that drop came from North America, where platinum jewelry sales dropped 26%. Johnson Matthey says the high price of platinum relative to white gold contributed to the decline, with white gold gaining a larger market share as consumers became more price-sensitive. This was especially true, the report says, in the bridal market, where consumers are typically not concerned with price.

The report adds that jewelry sales for Christmas 2002 in the U.S. were stronger than expected, and says that leading indicators are trending upwards, increasing the likelihood of a recovery this year.

China, the largest market for platinum jewelry, increased 18% to a record 1.3 million ounces. However, demand in Japan dropped by a third to 710,000 ounces, the lowest level since the mid 1980s. The slump was primarily due to reduced consumer spending and an effort by both retailers and fabricators to reduce inventories.