China platinum jewellery demand near record

China's demand for platinum jewellery jumped 16 percent to near record levels in 2012 as lower prices, particularly in relation to gold, attracted more buyers, Johnson Matthey said on Monday.

The world's biggest market for platinum jewellery consumed 1.95 million ounces last year, within sight of the 2009 all-time high of 2.08 million. Consumption was 1.680 million ounces in 2011.

Platinum refiner Johnson Matthey said there was a surge of buying by Chinese manufacturers last year to supply platinum jewellery to retail outlets in the word's most populous nation.

Consumers were lured by platinum's discount to gold, which encouraged jewellers to boost stocks, JM said. Platinum slid to a seven-month low around $1,374 an ounce in late July before bouncing back to around $1,726 by Oct. 5.

China and India are seen as vital growth markets for platinum jewellery demand, JM said. Buying there is still far from reaching a ceiling.

"Driven by these two markets, we expect gross global demand for platinum in jewellery fabrication to remain firm in 2013, while perhaps not attaining the level of 2012, which was the second highest on record."

China's demand for platinum to make autocatalysts was unchanged at 105,000 ounces, but its appetite for palladium pushed consumption to 1.255 million ounces last year from 1.155 million in 2011.

China, where most cars are gasoline-powered, is a much bigger market for palladium than for platinum, which is chiefly used in the diesel engines favoured in Europe.

"Output of light duty vehicles in China, most of them powered by gasoline engines, is forecast to rise substantially this year, and this will raise palladium demand significantly," JM said.

Demand for palladium as a catalyst will continue to rise over the next few years as new emission standards introduced in March roll out gradually across China, JM said.

The world's largest auto market aims to introduce national V standards for automotive diesel fuel by June and similar specifications for gasoline by end-2013.

Before that, Beijing will launch national IV fuel standards for automotive diesel, similar to Europe's IV quality, with sulphur content of 50 parts per million (ppm), the central government says on its website www.gov.cn.

By contrast with the strong interest from the auto sector, China's demand for palladium jewellery fell last year for a fourth straight year to 240,000 ounces from 305,000 ounces in 2011.

"Anaemic consumer demand for palladium jewellery in China has resulted in fewer manufacturers and retailers producing it or carrying stocks," JM said.