May 22, 2020

WPIC: Global Demand for Platinum Jewellery Down 26% in Q1 2020

Demand for platinum jewellery worldwide during the first three months of 2020 (Q1) was down 26% year-on-year, as consumers in most countries cut back on non-essential spending first on account of fears related to the global economic slowdown and subsequently to the growing uncertainty over the coronavirus spread, World Platinum Investment Council (WPIC) said in its quarterly bulletin released recently. The content and data for the report is independently prepared by consultancy Metals Focus.

Total jewellery demand for the period was 401 koz, or 138 koz lower than the 540 koz of platinum jewellery bought in Q1 2019, the report noted.

China was the worst hit, with platinum jewellery fabrication demand in Q1 dropping by 45% year-on-year. Demand in January remained lacklustre due to fierce competition from the gold jewellery market. The business was then interrupted over February as lockdowns were implemented and fears of contracting the virus grew. However, after the metal’s sharp price fall in early March, demand enjoyed a healthy recovery fuelled by bargain hunting, WPIC noted.

Indian platinum jewellery demand fell by 30%, the WPIC figures revealed. This was largely due to a cautious approach adopted by consumers towards high value purchases like jewellery due to the slowdown in the economy. Later, as the lockdowns took effect in March, demand suffered even more notably. Several jewellers interviewed in India reported 60%-80% declines in that month.

In North America, offtake began the quarter on a bright note, with retailers keen to stock up following a robust holiday season and as platinum’s metal discount to gold kept its margins attractive, according to the reporr. However, as COVID-19-driven lockdowns were implemented in March and weddings were postponed, demand fell heavily, as only partial compensation was achieved through online sales.

Meanwhile, WPIC said that European demand fell more steeply than in the US, chiefly as factories (especially in Italy) were obliged to close sooner with the earlier onset of lockdowns. Production for the high-end brands had also been hit by yet earlier restrictions on retailing in the key market, China.

Looking forward, the trade body estimates that platinum jewellery demand in 2020 will decline by 15% (-315 koz) to 1,785 koz as the jewellery segment adapts its business model to contend with a drop in store footfall and a more cautious consumer.

Overall, in 2020 total platinum supply is expected to be 7,197 koz, 10% (-836 koz) lower than the average of the past 5 years, with total platinum demand at 6,950 koz, down 13% (-1,034 koz) on the same basis. Consequently, the surplus expected for 2020 is 247 koz compared to the prior estimate of 119 koz.

Total platinum demand in 2020 is forecast to be 6,950 koz, 18% (-1,480 koz) lower than in 2019 due to lower demand from all four demand segments: automotive (-413 koz), jewellery (-315 koz), industrial (-104 koz) and investment (-647 koz). Despite forecast total investment demand in 2020 being 51% lower than in 2019, bar and coin demand is expected to be up 115% at 605 koz due to the (mainly retail) flight to hard assets associated with significantly increased global risk.