2006 Platinum Jewelry Manufacturing Fell 8%

For the fourth year in a row, platinum jewelry manufacturing declined in 2006, shrinking by 8 percent, a survey by GFMS has found. In 2006, some one million ounces of platinum jewelry were manufactured, 39 percent less than in 1999, when GFMS started to check supply and demand.

In their fourth Platinum and Palladium Survey, the London-based precious metals research and consulting firm concludes that higher platinum prices took their toll in nearly every key market with the greatest decline, in absolute terms, in China.

Chinese demand for platinum jewelry was less than expected. More people getting married in the Year of the Dog partially offset lower demand in other areas of the market.

In Japan, platinum jewelry manufacturing declined 7 percent, affected by higher metal prices and rising import competition. Platinum jewelry output last year stood at a little over a third of the level seven years ago.

In the palladium jewelry sector, the decline in global manufacturing was even greater last year. In the U.S., a modest increase in volume was noted due to growth in palladium jewelry produced for the wedding market. This, however, was offset by a sharp decline in China, with 2006 levels falling to near the level seen in 2004.

GFMS reported that while this might suggest that palladium jewelry has failed to build on recent gains, China’s 2005 total was boosted by stocking of the supply pipeline. The depletion of these inventories last year also partially substituted for manufacturing.

GFMS’s outlook is not positive, voicing concerns a continued rise in platinum prices is the greatest threat to platinum jewelry sales in 2007. GFMS forecasts platinum prices to surpass $1,400 per ounce.

The company is forecasting a recovery in global palladium jewelry demand, although much will depend on whether palladium gains greater acceptance in the U.S. In China, a recovery is expected “as the inventory effect unwinds and the marketing campaign gathers momentum.”