The World Platinum Investment Council (WPIC), releasing its quarterly report for the three-month and twelve-month periods ended December 31, 2019, said that global demand for platinum jewellery during 2019 declined by 150 tonnes or 7% year-on-year, driven almost entirely by the contraction of the demand from China.

WPIC said that during the year, platinum supply and demand remained in balance, with a surplus of only 65 koz, as a significant increase in investment demand more than offset lower automotive, jewellery and industrial demand compared to 2018. The report noted that total demand in 2019 was 8,060 koz, 11% higher than in 2018. Exceptional investment demand of 1,185 koz (985 koz ETF and 215 koz bar and coin) was 1,170 koz higher than in 2018 and more than offset demand decreases in the automotive (-210 koz or -7%), jewellery (-150 koz or -7%) and industrial demand (-20 koz or -1%).

However, WPIC clarified that a large part of investment demand occurred in the first quarter as investors took advantage of the low platinum price and its large discount to gold and palladium.

Global jewellery demand stood at 2,095 koz in 2019. Almost all the contraction was in China, where demand fell by 14% year-on-year to 945 koz. which is now more than 1 moz lower than peak levels in 2013. According to data from the National Bureau of Statistics of China (NBS), jewellery retail sales in mainland China grew by just 0.4% in 2019 – with annual metal price increases of 19% and 22% for gold and platinum respectively – making the jewellery industry the sector with the second-lowest growth among the 15 retail sectors that the NBS tracks.

Jewellery demand in Japan, WPIC reported, had a tumultuous year with strong buying in the first three quarters followed by a sharp fall at the end of the year, as the government implemented a sales tax hike from 8% to 10% on 1 October which impacted overall sales for the year. Demand in Japan fell by 15 koz to 330 koz in 2019.

In the US, purchasing of platinum jewellery held up relatively well at 275 koz for the year (compared to strong demand of 280 koz in 2018), and solid bridal sales helped to offset ongoing structural changes in the jewellery industry as sales shifted from ‘bricks and mortar’ to e-commerce. The ongoing price discount to gold also aided platinum jewellery sales.

WPIC said that the picture in Europe was a similar, although the shift to lighter-weight pieces dampened meaningful upside to jewellery sales, with demand reaching 260 koz.

Platinum jewellery sales increased by an estimated 8% to 210 koz in India. An economic slowdown, along with high gold prices impacting jewellery store footfall and consumer budgets, hindered further upside to platinum jewellery demand.

On the investment front, the report described 2019 as a “remarkable year for platinum”.G lobal demand exceeded 1 moz. with record inflows into platinum ETFs along with solid bar and coin demand. This meant that investment demand reached 1,185 koz, which was only slightly offset by a decline in exchange stock holdings of 15 koz, WPIC said.

In 2020, the organisation expects to see a further loss of jewellery demand in China, but as this will be almost offset by gains elsewhere, overall, jewellery offtake is expected to reach 2,070 koz.

Demand in Japan is expected to grow in 2020 thanks to the boost from the Tokyo Olympics and the backdrop of benign economic conditions in the country. This also rests partly on the assumption that the coronavirus crisis in Asia dissipates within the next two to three months.

Demand in Europe and North America should also show gains as bridal sales continue to benefit from platinum’s discount to gold.

High-end jewellery and watch fabrication should also bounce back thanks to restocking and stronger consumer sales as US-China tensions ease.

Demand is also expected to recover in India 2020 due to improvements in the economy and an easing of the liquidity crunch.

However, WPIC clarified that this forecast for the year is premised on a view that the coronavirus becomes contained in a matter of months and that economic growth soon resumes.