Asia's passion for platinum jewellery cools, cramping global use
Tue April 02 2024
Gold's searing rally is doing nothing to reignite enthusiasm for platinum jewellery in Asia, leaving the global sector facing another year of weak consumption despite growth in the United States, analysts said.
Jewellery accounts for 23% of total demand for platinum, and is still the third largest area of consumption after autos and other industries. However, its share has shrunk in recent years due to dramatic decline in China, where demand has plunged 79% from a peak of around 2 million troy ounces in 2014.
Gold has been more expensive than platinum since 2015 and is currently trading near a record high, while platinum is stuck in a tight range amid high metal inventories at automakers.
"Chinese platinum jewellery demand and the destruction of it over the decade is an under-appreciated fact behind persistently lower platinum prices," said Nicky Shiels, head of metals strategy at MKS PAMP SA.
"We do not see a large rebound in growth from that region given low economic growth and even worse consumer sentiment," Shiels added.
With consumption of 408,000 ounces in 2023, China lost its top spot in the platinum jewellery market to North America, according to the World Platinum Investment Council (WPIC).
"My choice is gold jewellery without looking at platinum jewellery," said Linda Liu, 27, a researcher at a pharmaceutical firm in Beijing, planning for her wedding.
"I know gold jewellery more, and I trust it in the store of value," she said.
Of the three jewellery shops that a Reuters correspondent visited at a shopping mall in Beijing, only one sold platinum jewellery and the ten pieces it had were displayed in a remote corner.
North America accounted for 433,000 ounces of platinum consumption in 2023, with U.S. demand more than doubling over 10 years, the WPIC estimates. But that has done little to make up for the losses from China.
"We are seeing an increase for (U.S.) demand in platinum across both bridal and fashion jewelry," said Platinum Guild International, an industry group funded by South African platinum producers, forecasting further growth in 2024.
In India, platinum jewellery consumption of 203,000 ounces is rising from a low base, but consumer confidence is shaky.
"While platinum had a brief moment in the spotlight, gold has consistently outperformed it over the past decade," said a Mumbai-based bullion dealer with a private bank. "Gold's price has steadily climbed, proving its worth as a long-term investment."
Gold jewellery can be easily exchanged for cash in India, he said, while only few jewellers accept platinum jewellery if people need to sell it. (Reporting by Polina Devitt in London, Amy Lv in Beijing, Rajendra Jadhav in Mumbai and Ashitha Shivaprasad in Bengaluru Editing by Mark Potter)
Source: https://uk.finance.yahoo.com/