Global platinum jewellery demand is expected to drop by 2% in 2018 to 2,405 koz, but may stage a marginal recovery in 2019 with demand rising by 1% to 2,430 koz, the World Platinum Investment Council has said in its latest World Platinum Quarterly published last week. If the estimated increase happens in 2019, this would make it the first year of growth since 2014, WPIC added.

The forecast, while announcing Q3 supply and demand figures, comes on the basis of what the organisation described as a “surprisingly weak quarter for China”, which offset the year-on-year growth during the quarter in other regions, mainly US and India.

Overall, Q3’18 global jewellery demand was 580 koz, down 10 koz from the previous quarter and flat year-on-year, WPIC reported.

Demand from Chinese jewellery manufacturers declined 9% year-on-year for the quarter. Purchasing of platinum on the Shanghai Gold Exchange by jewellery end-users fell at a double digit rate year-on-year in Q3’18 and this was an even sharper drop than that seen in H1’18, it stated. Chinese demand will also reflect the impact of a fashion trend towards jewellery pieces for daily wear and purchases by younger consumers. This trend is likely to lead to a move away from weight-based pricing to design-led pieces, which are priced by piece, leading to less metal demand for the same level of retail spending.

In Japan, the local market for platinum has been lifted by the low platinum price which consumers there view as a buying opportunity, although this has not been fully reflected in manufacturer demand in Japan as production for export has declined due to lower Chinese platinum jewellery demand, according to the report.

The overall Indian jewellery market has been soft in Q3’18 owing to the weak rupee but platinum demand continues on its upward trend. Strong economic conditions in the US, and the combination of lower platinum prices with a steady US$ 400/oz discount to gold in Q2’18 and Q3’18, have contributed to strong platinum jewellery demand growth, while growth in Europe has been more muted.

The weakness in the Chinese market is due to cautious consumer sentiment fuelled by the ongoing trade tensions with the US and a slowdown in the economy

While the Indian rupee continues to weaken and could be a headwind going into Q4’18, this is more likely to affect gold jewellery demand, WPIC noted. It also said that estimates for the US were revised up marginally due to a good economic environment which resulted in strong Q3’18 platinum jewellery demand and improved expectations for the final quarter of the year.

Jewellery recycling is also forecast to decline by 20 koz to 480 koz in 2019 owing to a low platinum price and a further contraction in the Chinese platinum jewellery market.