Palladium’s super demand growth not good enough
By: Gareth Tredway
Posted: '15-FEB-05 08:00' GMT © Mineweb 1997-2004
JOHANNESBURG (Mineweb.com) -- Gareth Tredway As the gap between platinum and palladium prices continues to widen, efforts to add a cooler to the oversupplied platinum market could be working slightly better than expected.
In a second update to its 2004 Survey on Platinum and Palladium, catalyst firm Johnson Matthey says palladium jewellery demand in China will likely exceed November’s estimate while demand for platinum jewellery will be down as much as forecast.
The company says its November forecast of 510,000 ounces of Chinese jewellery demand for palladium in 2004 could possibly be exceeded by about 17.65 percent when final figures are in.
“Research is continuing, but it is possible that the final figure for demand last year will exceed 600,000 ounces,” said the update.
In 2003 as a whole 25,000 ounces of palladium were used in Chinese jewellery, while in 2004, Johnson Matthey says demand averaged 51,000 ounces per month between May and December.
The company says the rapid development of the palladium jewellery market reflects the dynamics of the broader Chinese economy. “Despite efforts to slow growth, Chinese GDP climbed by 9.5 percent in 2004, per capita income of urban residents increased by more than 11 percent between January and November, and total retail sales of consumer goods surged by more than 13 percent over the same period,” said the update.
Johnson Matthey says that outside of the major cities, where platinum has a ‘strong presence’, retailers were quick to add palladium to their jewellery product lines.
“Consumers seeking white precious metal jewellery but who could not afford platinum were attracted to palladium, which has the advantage of ‘purity’ over white gold,” says the update. Johnson Matthey says palladium helped grow the overall precious metal market in 2004, but also took sales from white gold and plain platinum jewellery.
Despite the good jewellery demand numbers for palladium and good demand in other sectors, the update says the price outlook still remains weak. Swiss trade data showed an inflow of 700,000 ounces of palladium last year, raising the total implied inventory at well over 6 million ounces.
“The scale of the surplus is evident from lease rates that are effectively negative and the fact that the palladium price ended 2004 at $184/ounce, $10 below where it started the year, despite substantial speculative buying.”
Also, because the scale of Chinese purchasing was boosted to build stocks in the product, purchases of palladium may slip lower this year according to Johnson Matthey.
“At the same time, production of palladium in South Africa will increase and the supply of palladium from autocatalyst recycling will continue to grow.”
Johnson Matthey says it is also sticking with its forecast figure of 960,000 ounces Chinese jewellery demand for platinum in 2004, 20 percent down on the year before. “Many manufactures also reduced their production of platinum jewellery in favour of white gold and/or palladium products as, during the first half of the year at least, these offered much better profit margins.”
On the plus side, diamond demand helped platinum. “Platinum benefited from the strong preference amongst Chinese consumers for diamonds to be set in platinum, particularly in the case of bridal rings.”
The volumes of rough and polished diamonds imported via the Shanghai stock exchange increased by a reported 35 percent, according to Johnson Matthey.
www.mineweb.net/sections/platinum/413879.htm
By: Gareth Tredway
Posted: '15-FEB-05 08:00' GMT © Mineweb 1997-2004
JOHANNESBURG (Mineweb.com) -- Gareth Tredway As the gap between platinum and palladium prices continues to widen, efforts to add a cooler to the oversupplied platinum market could be working slightly better than expected.
In a second update to its 2004 Survey on Platinum and Palladium, catalyst firm Johnson Matthey says palladium jewellery demand in China will likely exceed November’s estimate while demand for platinum jewellery will be down as much as forecast.
The company says its November forecast of 510,000 ounces of Chinese jewellery demand for palladium in 2004 could possibly be exceeded by about 17.65 percent when final figures are in.
“Research is continuing, but it is possible that the final figure for demand last year will exceed 600,000 ounces,” said the update.
In 2003 as a whole 25,000 ounces of palladium were used in Chinese jewellery, while in 2004, Johnson Matthey says demand averaged 51,000 ounces per month between May and December.
The company says the rapid development of the palladium jewellery market reflects the dynamics of the broader Chinese economy. “Despite efforts to slow growth, Chinese GDP climbed by 9.5 percent in 2004, per capita income of urban residents increased by more than 11 percent between January and November, and total retail sales of consumer goods surged by more than 13 percent over the same period,” said the update.
Johnson Matthey says that outside of the major cities, where platinum has a ‘strong presence’, retailers were quick to add palladium to their jewellery product lines.
“Consumers seeking white precious metal jewellery but who could not afford platinum were attracted to palladium, which has the advantage of ‘purity’ over white gold,” says the update. Johnson Matthey says palladium helped grow the overall precious metal market in 2004, but also took sales from white gold and plain platinum jewellery.
Despite the good jewellery demand numbers for palladium and good demand in other sectors, the update says the price outlook still remains weak. Swiss trade data showed an inflow of 700,000 ounces of palladium last year, raising the total implied inventory at well over 6 million ounces.
“The scale of the surplus is evident from lease rates that are effectively negative and the fact that the palladium price ended 2004 at $184/ounce, $10 below where it started the year, despite substantial speculative buying.”
Also, because the scale of Chinese purchasing was boosted to build stocks in the product, purchases of palladium may slip lower this year according to Johnson Matthey.
“At the same time, production of palladium in South Africa will increase and the supply of palladium from autocatalyst recycling will continue to grow.”
Johnson Matthey says it is also sticking with its forecast figure of 960,000 ounces Chinese jewellery demand for platinum in 2004, 20 percent down on the year before. “Many manufactures also reduced their production of platinum jewellery in favour of white gold and/or palladium products as, during the first half of the year at least, these offered much better profit margins.”
On the plus side, diamond demand helped platinum. “Platinum benefited from the strong preference amongst Chinese consumers for diamonds to be set in platinum, particularly in the case of bridal rings.”
The volumes of rough and polished diamonds imported via the Shanghai stock exchange increased by a reported 35 percent, according to Johnson Matthey.
www.mineweb.net/sections/platinum/413879.htm
