According to chemical company Johnson Matthey, total consumption of platinum in jewelry fell 17% in 2020 as demand from manufacturers in the large Chinese market fell below one million ounces for the first time since 2005.
In its latest Platinum Group Metals (PGM) market report, the company said that demand in China weakened in the first half of 2020 due to prolonged store closures, low traffic following reopening of outlets in February and March, and consumer reluctance to spend on luxury goods. in the initial period after self-isolation.
“Nonetheless, production of platinum jewelery rose sharply in the third quarter, largely due to record gold prices that made gold jewelery much more difficult to sell and more expensive to store,” the report said. “This, in turn, has pushed Chinese retailers to renew their inventory and give platinum more shelf space. In the fourth quarter, this movement subsided as the increased visibility of platinum jewelry on store shelves did not lead to a significant increase in sales. ”
Johnson Matthey notes that with the fall in the price of gold and the rise in the price of platinum above $ 1,000 an ounce, financial incentives to increase platinum jewelry stocks have also begun to wane.
“Other regional jewelry markets are much less price sensitive, and demand trends have been largely driven by changes in consumer spending and behavior associated with the coronavirus,” the report said. “In the early stages of the pandemic, demand for platinum jewelry in the US was hit hard by restrictions and falling consumer confidence.”
However, since mid-2020, there has been a notable recovery in consumer spending on durable goods.
This reflected not only government policies such as monetary incentives, but changes in consumption patterns as people redirected their spending away from travel and other services to consumer goods.
Matthew Nyaungua, Editor-in-Chief, Rough & Polished Africa Bureau