"PLATINUM JEWELLERY MANUFACTURING RESILIENT DESPITE HIGHER PRICE BUT INCREASED RECYCLING REDUCES DEMAND FOR NEWLY MINED METAL"

In its annual review of the platinum group metals markets, Platinum 2007, Johnson Matthey reports that demand for newly mined platinum from the jewellery industry worldwide fell by 18% to 1.61 million oz (50 tonnes) in 2006. The weight of platinum jewellery fabricated, however, was believed to be only marginally down compared to 2005. Increased recycling of scrap platinum jewellery significantly reduced manufacturers’ need for fresh metal. The high metal price encouraged retail stock rationalisation programmes and also the return of significant quantities of old platinum jewellery by consumers in Asia, both of which provided alternative sources of platinum for jewellery fabrication.

China
Platinum jewellery manufacturing levels during 2006 were similar to the previous year but reprocessing of slow selling lines by retailers, and old jewellery returned for exchange by consumers, combined to reduce the manufacturers’ requirement for newly mined metal to the lowest level for 8 years. 760,000 oz (23.6 tonnes) of new metal was purchased for fabrication into jewellery, 13%, less than in 2005. Although higher metal prices also reduced the amount of platinum jewellery purchased by Chinese consumers, retailers reported this was only slightly down and sales turnover figures were noticeably higher.

Japan
The Japanese market also saw demand for newly mined platinum in jewellery fabrication fall but, as with China, most of the 29% decrease [to 360,000 oz (11.2 tonnes)] was a result of the increasing amount of old jewellery, sold to pawn shops by the public, finding its way back into the manufacturing process. In addition changing demographics and social trends in Japan continued to depress the bridal sector, where platinum is so dominant.

USA
Manufacture of platinum jewellery in the USA fell as price point driven retailers reacted to higher metal prices by importing from lower cost production centres. Additionally US jewellery manufacturers reported that retailers are increasingly ordering white gold items to replace the platinum pieces they have sold from their stock to reduce financing costs. Both these factors led to a 13% fall in demand for platinum to 240,000 oz (7.5 tonnes) during 2006.

Europe
The European platinum jewellery market was less affected by the higher price than other regions, although it did begin to impact the hitherto resilient UK market. Germany, however, showed signs of recovery and platinum wedding rings began to gain acceptance in other European countries which were previously gold strongholds. Demand for newly mined platinum fell only 10% in Europe to 175,000 oz (5.5 tonnes).


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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