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China's platinum jewelry market expected to grow in 2009

By Li Fangfang (chinadaily.com.cn)
Updated: 2009-02-24 15:31

In 2008, platinum demand for jewelry use in China was estimated at around 0.76 million ounces, accounting for 68 percent of the global total of 1.12 million ounces, according to the Platinum 2008 Interim Review released by Johnson Matthey, the world's leading authority on the platinum industry.

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It was the ninth year China had the world's largest market for platinum jewelry since 2000.

China's platinum jewelry market experienced unprecedented challenges in 2008, mainly due to widely fluctuating platinum prices.

In the first half of the year, high prices drove manufacturers to adopt a very cautious attitude toward procurement and led them to optimize their inventory management systems.

Manufacturers made more efforts to recycle platinum to reduce risks, while high platinum prices also depressed platinum jewelry sales.

However, with platinum prices falling in the second half of 2008 and along with proactive domestic fiscal policies, the platinum market is expected to see new opportunities in 2009, said Platinum Guild International (PGI), a global organization dedicated to promoting platinum jewelry.

PGI said that this situation was due to a combination of several factors: a drop in platinum prices as a result of falling industrial demand; China's proactive domestic fiscal policies stimulating domestic spending, Chinese consumers' passion for platinum, and the consistent promotion of platinum over the past decade.

Since the onset of the global financial crisis in the third quarter last year, industrial demand for platinum has fallen, along with the global price of platinum. The falling platinum price then triggered a desire to purchase among domestic manufacturers.

According to statistics from the Shanghai Gold Exchange, platinum purchases increased 16 percent year-on-year in 2008.

The fall in global platinum prices led in turn to a fall in the retail price of platinum jewelry, leading to stronger platinum jewelry sales.

According to a survey conducted by PGI, 17 key retailers in northern China reported that sales of platinum jewelry increased significantly over Christmas and the New Year.

In southern China, platinum sales increased by 20-30 percent over Christmas and by 15-50 percent over the New Year season, with Shanghai reporting the greatest rise.

Moreover, in the second half of 2008, China adopted a proactive fiscal policy and more moderate monetary policies, aimed at expanding domestic demand and stimulating economic growth.

According to the latest statistics released by PGI, retail sales for the first three days of 2009 rose 13 percent year-on-year, showing that the government's efforts to spur domestic demand and prevent an economic slowdown are yielding results.

In addition, Oracle Added Value, a leading marketing research and consulting firm in China, said in its survey, "The Wedding Jewelry Market in 2008", that platinum jewelry retains its dominance in the wedding market with 75 percent of brides and 68 percent of grooms interviewed saying they had chosen platinum wedding rings.

"As the current price is less than half of the peak in 2008, we expect rapid growth in Chinese platinum demand," said Johnson Matthey.

"As the world's largest market for platinum jewelry, China has experienced steady and rapid development in terms of both market scale and industry growth over the past decade. Faced with a turbulent market situation in 2008, China's platinum jewelry industry adopted timely and effective measures, showing the overall strength of China's jewelry industry," said Grace Man, director of PGI China.

"In 2009, with a more stable market price, a booming wedding market and the orchestrated efforts of the industry, we are confident of the future development of the platinum jewelry industry in China."