January 13, 2005
Mining Weekly
Chinese consumers are showing little interest in platinum jewellery ahead of the Lunar New Year celebration and instead are turning to gold, which has gained in popularity among youngsters, dealers said.
High prices have discouraged both consumers and jewellery makers from buying platinum, which hit a two-week high yesterday thanks to gains in New York and early buying in Tokyo futures.
China is the world's largest consumer of platinum jewellery.
"I still don't see any fabricators or manufacturers who want to purchase platinum to start the wholesale business," said Duke Lee, managing director of Prime Platinum International, one of China's main platinum jewellery traders.
Demand for jewellery normally rises in Asia during festive seasons. The Chinese New Year falls in early February this year.
Dealers in China said platinum was competing with white gold - an alloy of gold and other light-coloured metals such as silver and palladium - and also the Italian-made 18 carat gold jewellery popularly known as the K-gold.
"The age group purchasing the gold jewellery is getting younger. These people prefer to have more fashionable items," said Lee, referring to K-gold which can offer a variety of colours such as white and red.
"The 24 carat (gold) usually carries very traditional, conservative designs," he added.
Gold is cheaper than platinum, which is also used in auto catalysts.
Precious metals refiner Johnson Matthey said in November demand for platinum from jewellery manufacturers in China could drop by 20% to 960 000 oz in 2004 as falling profit margins made cheaper metals more attractive.
"The problem is we have so much inventory in China. I very much believe purchases dropped by as much as 35% last year," one dealer said.
Some dealers said shops in Shanghai and other key trading cities in China had refrained from buying more platinum jewellery and would use old stock to replace sold items.
But dealers said platinum would hold at around $850/oz in coming weeks due to prospects of fresh buying in Japan, where demand for jewellery and auto catalysts was rising.
"The jewellery sector thinks this is a very suitable price level," said Yukuji Sonoda, a precious metals analyst at Daiichi Commodities in Tokyo.
Dealers pegged support levels at $850 to $858 an ounce, while immediate resistance was seen at $875 an ounce.
Demand for platinum in Japan was forecast by Johnson Matthey to rise to 1,335-million oz or 41,5 t in 2004 from 1,285-million oz or 40 t a year earlier. - Reuters.
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