"FRESH METAL DEMAND FOR PALLADIUM JEWELLERY MANUFACTURE DOWN AS CHINESE STOCKS NEAR CAPACITY AND SLOW SELLERS ARE REPROCESSED"

Johnson Matthey reports that worldwide demand for palladium from the jewellery sector in 2006 fell 30% from the previous year to 995,000 oz (30.9 tonnes). Palladium jewellery is a relatively new development with the majority of volume manufacturing and retail activity taking place in China, although fledgling markets are developing elsewhere. Exceptional demand for new metal during 2004 and 2005 was mainly to fill the counters of Chinese retail shops and during 2006 manufacturer’s metal requirements fell more into line with consumer purchases. Recycling of significant quantities of non-selling stock in China further reduced demand for newly mined palladium. The use of palladium as an alloying element in platinum and white gold alloys worldwide remained almost unchanged.

China
Two years of stock building in this, the principal palladium jewellery market, came to an end in 2006 and new metal demand was further reduced by recycling to 760,000 oz (23.6 tonnes). A large quantity of Pd950 (95% purity) jewellery was returned by retailers and wholesalers as the introduction of the purer Pd990 (99% purity) products made it difficult to sell Pd950 in some cities. Manufacturing volume was largely driven by consumer demand, which continues to be patchy. Palladium has still to make any impact in the major cities, where platinum is well established and affordable. It is selling, however, in some tertiary cities, where the colour, purity level and price appeal to consumers with lower disposable incomes.

Elsewhere
Although palladium jewellery is being test marketed in several other countries, most significantly the USA, new metal demand is yet to rise to significant levels.

Platinum 2007 is Johnson Matthey's latest market survey of platinum group metals supply and demand. This report, widely regarded as the world’s principal source of information on platinum group metals, is free of charge. It is available in printed form on request from Johnson Matthey at the address below or can be viewed and downloaded at www.platinum.matthey.com/publications

Johnson Matthey is the world’s leading authority on the production, supply and use of platinum and the other metals of the platinum group. The company’s main activities include the manufacture of autocatalysts, platinum process catalysts and speciality chemicals and the refining, fabrication and marketing of platinum group metals.

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