Although platinum jewelry sales are expected to remain strong in the US and India this year, sales in China are expected to slide 8%-12%, platinum industry expert Jenny Luker said Monday.
The expected drop follows a 7% decline in Chinese jewelry sales last year as the economy began slowing, said Luker, president of Platinum Guild International USA.
The jewelry industry accounts for nearly 32% of annual platinum demand. The automotive industry accounts for 42% of annual demand for use in catalytic converters to control emissions of greenhouse gases and pollutants.
"We were looking at very strong double-digit growth for many years, and then recently we are seeing the market move into a more developed market and seeing the struggles that come from a developed market," Luker said in a presentation at the International Precious Metals Institute conference.
Many in the industry are wondering when Chinese consumers will return to the market. "We still feel like there is going to be some bottoming out before we start to see growth," Luker said, adding that consumer marketing initiatives with large retailers appears to be having some effect.
Turning to India, Luker said, "we've seen very strong growth momentum there, but interestingly, the government continues to throw challenges to jewelry."
Platinum jewelry demand in India rose 19% in 2018 and is expected to increase 15%-20% this year, she added.
"Young India [consumers] love platinum," Luker said. "Obviously, India is still a gold-centric market and it continues to be, especially in bridal exchange jewelry. But our team there has found opportunities to ensure that platinum is being differentiated from gold."
Japanese platinum jewelry demand rose 1% last year and is expected to grow this year 1%-2%. Although bridal jewelry demand remain strong, that consumer demographic is shrinking with the aging population, she said.
US platinum jewelry demand jumped 11% last year, mainly on the back of lower platinum prices, Luker added.
US demand this year is expected to grow 8%-10%, though demand in 2020 ahead of the US presidential election remains unclear. Nevertheless, the industry continues to benefit from lower platinum prices, she said.
NYMEX platinum for July delivery closed Monday at $794.60/oz, while COMEX gold for August delivery closed at $1,342.90/oz.
The strong platinum jewelry sales in the US and India are helping offset the loss of demand from the automotive sector following the Volkswagen emissions scandal in 2015, Luker said.
Catalytic converters for diesel-powered vehicles, like those driven in Europe, use mostly platinum and rhodium to control emissions. Following the scandal, more consumers turned to gasoline-powered vehicles, which use mostly palladium to control emissions.
Platinum demand from the auto sector will increase when original-equipment manufacturers begin using platinum-heavy catalytic converters in gasoline-powered vehicles, Luker said.
In the meantime, the Platinum Guild International, which South African platinum producers established in 1975 to promote platinum usage, will look to promote platinum jewelry to offset some the lost automotive demand, she added.
"We are anticipating ... the move into potentially replacing palladium catalysts with platinum, which analysts are saying could happen in two to five years," Luker said.
"But [platinum producers] use jewelry to help create demand, with the anticipation of hopefully helping with the pricing."
