February 15, 2005
Business Report & Independent Online
London - Chinese jeweller demand for palladium rocketed more than 2000-fold last year, while interest in platinum - almost five times more expensive - fell by 20 percent, the Johnson Matthey brokerage said Tuesday.
In a final update to its 2004 report, the specialist in platinum group metals estimated Chinese demand for palladium destined for use in jewelry could have surpassed 600 000 ounces last year, compared with 25 000 in 2003, a leap of 2 300 percent.
Rapid development of the jewelry market for palladium reflected the Chinese economy's dynamic growth, the closely-watched study said.
Consumers sought white metal jewelry and because they could not afford platinum they were attracted by palladium, which has the advantage of being "pure" rather than an alloy, the company said.
Chinese consumption of platinum for jewelry fell by 20 percent last year to 960 000 ounces, it added.
Information from jewellers indicated that the speed with which production fell off may have been greater, while other sources -
including the volume of Hong Kong imports - tended to suggest a less pessimistic view of the market.
High platinum prices certainly dissuaded jewellers from maintaining large stocks, the study said, though it also noted a certain resistance within the market.
An ounce of platinum currently costs about $870 on London's Platinum and Palladium Market, while its sister metal can be had for roughly $180 dollars an ounce.
Looking ahead, Johnson Matthey reiterated forecasts for supply and demand in 2005.
Platinum production was expected to move into surplus for the first time in six years, while the palladium market was tipped to face a surplus of around one million ounces, it said.
As a result, prices were likely to fall, in particular for palladium.
The brokerage forecast platinum would trade for between $760-$880 an ounce in the coming three months, while an ounce of palladium was expected to fetch $160-$250. - AFP
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