supply from the recycling of old jewellery scrap after last year’s spike, although these positives could be partly dissipated by lower retail investment (2008 was exceptional). As for palladium, GFMS expects that moderate prices should in a limited way have similar effects in jewellery (both fabrication and scrap) and retail investment, although with considerably less dynamism in these areas (and lower absolute volumes), palladium is unlikely to benefit by nearly as much. However, for both metals, these forces are unlikely to overcome the expected fall in autocatalyst demand and weakness elsewhere, leading to sizeable reductions in overall demand. Nevertheless, with continued if volatile investor interest, GFMS see platinum trading in a range of $900 to $1,375 over the remainder of 2009, with palladium prices ranging from $170 to $325 per ounce.
Publication of Platinum & Palladium Survey 2009
Platinum jewellery fabrication down 12% due to sharply higher metal prices, while palladium jewellery demand edges higher on carat jewellery growth.
Today in London and Johannesburg, GFMS launched Platinum & Palladium Survey 2009. This is the sixth edition of this publication by GFMS, the independent precious metals consultancy. The following sets out some of the survey’s jewellery demand highlights. One of the key findings of the 2009 report was the price related contraction of platinum jewellery fabrication last year, with the global total declining for the sixth year in succession, by 12%. The drop was overwhelmingly attributable to the sharp fall in Japanese offtake, despite its end-year recovery on the back of weaker platinum prices. Another interesting feature of their findings was that the price-related increase in fourth quarter demand in China even proved sufficient to offset its substantial (also price related) first half decline, making that the only market of note to achieve growth in 2008.
The 2009 survey outlines an important change to GFMS’ methodology regarding platinum and palladium jewellery. Prior to this publication, their fabrication series was presented on a net basis, which equates to the amount of metal used in jewellery production less the volume of metal generated by the melting of old jewellery. Now, however, the data outlines jewellery demand on a gross basis, which measures the total amount of metal used irrespective of source. Paul Walker, CEO of GFMS noted in Johannesburg today, “this substantial change has been introduced to add clarity to the analysis as, in the last two years, platinum jewellery scrap has soared to levels sufficient to heavily distort the picture at a net level”. With jewellery demand shown gross, the survey therefore now presents a separate series for the supply from jewellery scrap - a unique feature in the world of published PGM supply and demand statistics. For 2008, GFMS report that the recycling of platinum jewellery surged by almost 70% to over 900,000 ounces (28 tonnes), with much of the gains coming from Japan and then China. Total palladium jewellery demand edged marginally higher in 2008 despite a significant decline in Japanese fabrication. A rise in carat palladium jewellery fabrication, principally in North America, but also in Europe and China offset the fall in Japan and those losses from the metal’s use in platinum and white gold jewellery. One of the major benefits last year, particularly in the first half, was the increasingly attractive retail price point of palladium carat jewellery compared with other competing precious metals, providing an affordable alternative when both gold and platinum prices were at their peak. The picture for scrap was also very different for palladium; the survey shows that this only grew by around 6% and remained below 200,000 ounces (around 6 tonnes). Turning to the outlook for 2009, Philip Klapwijk GFMS’ Chairman outlined at the London launch today that the precious metals consultancy were forecasting a strong recovery in platinum jewellery fabrication this year, given their expectation for only modest price gains for the metal. Similarly, palladium fabrication is also expected to rise, albeit at a more moderate pace, as increased output of carat jewellery offsets further weakness in the white gold sector with largest gains expected in the key market of China.
Klapwijk added, “jewellery’s actual call on the bullion markets should also rise even more noticeably as we’re expecting hefty declines in jewellery scrap, especially for platinum”.
Publication of Gold Survey 2009
Global Jewellery Fabrication Slips 10% in 2008, with Further Weakness Anticipated for This Year GFMS’ latest publication on the international gold market, Gold Survey 2009, was launched today at events in London, Johannesburg and Toronto. In the report, GFMS revealed the global jewellery fabrication declined by around 10% or almost 250 tonnes. The bulk of the loss was attributable to the slump of over a fifth in the first half, which offset a near 10% rise in the third quarter and near stability in the fourth. As the Gold Survey reveals, record and volatile gold prices, combined with a deteriorating economic environment, were the key drivers for this marked affect on the jewellery market. In terms excluding scrap, which gives a clearer indication of the call on the international gold market, 2008’s decline was yet steeper at almost 20%%, with the first half loss ramping up to over a third. The second half, however, still managed a rise, if only a modest one. The analysis in Gold Survey 2009 reveals that the decline in jewellery fabrication demand was not limited to just historically price sensitive regions with western markets also suffering a significant downturn. Nonetheless, India remained the chief architect of the global decline with offtake from the world’s largest gold market slipping almost 100 tonnes on price pressures while jewellery fabrication in Italy fell by almost a fifth, the tenth consecutive year of contraction that has seen fabrication volumes fall to roughly a third of the peak of 1998. Elsewhere, demand in the Middle East slipped around 10%, with the bulk of the fall attributable to Turkey due to a slump in the local economy and a significant rise in the local price due to currency weakness.
The only obvious positive last year was the modest rise in Chinese jewellery fabrication, in the process establishing yet another record, firmly placing China as the world’s second largest market behind India. The increase was driven largely by robust local consumption and a rise in the renminbi, coupled with a significant surge in investment driven purchases. Losses elsewhere across East Asia where comparatively restrained, with the whole region’s jewellery offtake only just slipping. Looking ahead to this year, price and economic recovery will remain the key drivers in determining the performance of global jewellery fabrication markets. Already in 2009, GFMS has witnessed a sizable slump in jewellery offtake as economic uncertainty and elevated gold prices continue to impact on end-user demand. Philip Klapwijk, GFMS’ Executive Chairman, who delivered the annual findings in London today, commented that global jewellery fabrication could fall substantially in 2009, given the current economic backdrop and the GFMS view that gold prices are likely to again test $1,000 this year and further advances beyond this level cannot be discounted.
Publication of Platinum & Palladium Survey 2009
Platinum jewellery fabrication down 12% due to sharply higher metal prices, while palladium jewellery demand edges higher on carat jewellery growth.
Today in London and Johannesburg, GFMS launched Platinum & Palladium Survey 2009. This is the sixth edition of this publication by GFMS, the independent precious metals consultancy. The following sets out some of the survey’s jewellery demand highlights. One of the key findings of the 2009 report was the price related contraction of platinum jewellery fabrication last year, with the global total declining for the sixth year in succession, by 12%. The drop was overwhelmingly attributable to the sharp fall in Japanese offtake, despite its end-year recovery on the back of weaker platinum prices. Another interesting feature of their findings was that the price-related increase in fourth quarter demand in China even proved sufficient to offset its substantial (also price related) first half decline, making that the only market of note to achieve growth in 2008.
The 2009 survey outlines an important change to GFMS’ methodology regarding platinum and palladium jewellery. Prior to this publication, their fabrication series was presented on a net basis, which equates to the amount of metal used in jewellery production less the volume of metal generated by the melting of old jewellery. Now, however, the data outlines jewellery demand on a gross basis, which measures the total amount of metal used irrespective of source. Paul Walker, CEO of GFMS noted in Johannesburg today, “this substantial change has been introduced to add clarity to the analysis as, in the last two years, platinum jewellery scrap has soared to levels sufficient to heavily distort the picture at a net level”. With jewellery demand shown gross, the survey therefore now presents a separate series for the supply from jewellery scrap - a unique feature in the world of published PGM supply and demand statistics. For 2008, GFMS report that the recycling of platinum jewellery surged by almost 70% to over 900,000 ounces (28 tonnes), with much of the gains coming from Japan and then China. Total palladium jewellery demand edged marginally higher in 2008 despite a significant decline in Japanese fabrication. A rise in carat palladium jewellery fabrication, principally in North America, but also in Europe and China offset the fall in Japan and those losses from the metal’s use in platinum and white gold jewellery. One of the major benefits last year, particularly in the first half, was the increasingly attractive retail price point of palladium carat jewellery compared with other competing precious metals, providing an affordable alternative when both gold and platinum prices were at their peak. The picture for scrap was also very different for palladium; the survey shows that this only grew by around 6% and remained below 200,000 ounces (around 6 tonnes). Turning to the outlook for 2009, Philip Klapwijk GFMS’ Chairman outlined at the London launch today that the precious metals consultancy were forecasting a strong recovery in platinum jewellery fabrication this year, given their expectation for only modest price gains for the metal. Similarly, palladium fabrication is also expected to rise, albeit at a more moderate pace, as increased output of carat jewellery offsets further weakness in the white gold sector with largest gains expected in the key market of China.
Klapwijk added, “jewellery’s actual call on the bullion markets should also rise even more noticeably as we’re expecting hefty declines in jewellery scrap, especially for platinum”.
Publication of Gold Survey 2009
Global Jewellery Fabrication Slips 10% in 2008, with Further Weakness Anticipated for This Year GFMS’ latest publication on the international gold market, Gold Survey 2009, was launched today at events in London, Johannesburg and Toronto. In the report, GFMS revealed the global jewellery fabrication declined by around 10% or almost 250 tonnes. The bulk of the loss was attributable to the slump of over a fifth in the first half, which offset a near 10% rise in the third quarter and near stability in the fourth. As the Gold Survey reveals, record and volatile gold prices, combined with a deteriorating economic environment, were the key drivers for this marked affect on the jewellery market. In terms excluding scrap, which gives a clearer indication of the call on the international gold market, 2008’s decline was yet steeper at almost 20%%, with the first half loss ramping up to over a third. The second half, however, still managed a rise, if only a modest one. The analysis in Gold Survey 2009 reveals that the decline in jewellery fabrication demand was not limited to just historically price sensitive regions with western markets also suffering a significant downturn. Nonetheless, India remained the chief architect of the global decline with offtake from the world’s largest gold market slipping almost 100 tonnes on price pressures while jewellery fabrication in Italy fell by almost a fifth, the tenth consecutive year of contraction that has seen fabrication volumes fall to roughly a third of the peak of 1998. Elsewhere, demand in the Middle East slipped around 10%, with the bulk of the fall attributable to Turkey due to a slump in the local economy and a significant rise in the local price due to currency weakness.
The only obvious positive last year was the modest rise in Chinese jewellery fabrication, in the process establishing yet another record, firmly placing China as the world’s second largest market behind India. The increase was driven largely by robust local consumption and a rise in the renminbi, coupled with a significant surge in investment driven purchases. Losses elsewhere across East Asia where comparatively restrained, with the whole region’s jewellery offtake only just slipping. Looking ahead to this year, price and economic recovery will remain the key drivers in determining the performance of global jewellery fabrication markets. Already in 2009, GFMS has witnessed a sizable slump in jewellery offtake as economic uncertainty and elevated gold prices continue to impact on end-user demand. Philip Klapwijk, GFMS’ Executive Chairman, who delivered the annual findings in London today, commented that global jewellery fabrication could fall substantially in 2009, given the current economic backdrop and the GFMS view that gold prices are likely to again test $1,000 this year and further advances beyond this level cannot be discounted.
GFMS believe the precious metals in general will continue to attract investors in 2009 against a background of weak stock markets and long-term inflation worries as they seek shelter in these products for wealth preservation. With little support from autocatalyst and industrial demand (where heavy declines are expected), the key factors, especially for platinum, will be the price elastic areas of jewellery and retail investment. In 2009, GFMS expect platinum prices to remain sufficiently benign to yield not only a rise in gross jewellery fabrication but also, and perhaps more importantly, a significant decline in
platinum jewellery as private individuals (especially in Japan) cashed in on these elevated prices. Together with further gains in the recycling of scrapped autocatalysts, this injected a considerable volume of platinum back into the market, compensating for the fall in mine production and averting what might otherwise have been a supply crisis.
In contrast, GFMS estimate that palladium’s gross deficit almost doubled to nearly 650,000 ounces in 2008, due chiefly to a drop in mine supply, one that was proportionately larger than for platinum. Ryan added, “It is all too easy to forget that South Africa is a major palladium producer and Russia, the world number one, didn’t escape, suffering a more than 10% fall”. In contrast, autocatalyst scrap was reported to have risen by almost a quarter. On the demand side, the survey notes that palladium benefited from further substitutionrom platinum in autocatalyst uses but thrifting and lower vehicle output still meant a 6% drop in this area was recorded in 2008. Demand for palladium in jewellery was slightly higher, with offtake in the all-important Chinese market up marginally and useful gains in the United States market where palladium jewellery remains at an early stage of development. Much of the gains were in carat jewellery, although the report noted losses for its use in the production of white gold alloys. Despite these apparently supportive developments, GFMS believe that the fact that the annual average palladium price fell last year was due to generous above-ground stocks of the metal and a rise in inventory sales by the Russian government, which left palladium with a residual surplus of almost 260,000 ounces. However, investment was not seen to be lacking, with for example palladium’s two ETFs seeing significant gains in 2008 and proving more resilient to liquidations in comparison to platinum.
In contrast, GFMS estimate that palladium’s gross deficit almost doubled to nearly 650,000 ounces in 2008, due chiefly to a drop in mine supply, one that was proportionately larger than for platinum. Ryan added, “It is all too easy to forget that South Africa is a major palladium producer and Russia, the world number one, didn’t escape, suffering a more than 10% fall”. In contrast, autocatalyst scrap was reported to have risen by almost a quarter. On the demand side, the survey notes that palladium benefited from further substitutionrom platinum in autocatalyst uses but thrifting and lower vehicle output still meant a 6% drop in this area was recorded in 2008. Demand for palladium in jewellery was slightly higher, with offtake in the all-important Chinese market up marginally and useful gains in the United States market where palladium jewellery remains at an early stage of development. Much of the gains were in carat jewellery, although the report noted losses for its use in the production of white gold alloys. Despite these apparently supportive developments, GFMS believe that the fact that the annual average palladium price fell last year was due to generous above-ground stocks of the metal and a rise in inventory sales by the Russian government, which left palladium with a residual surplus of almost 260,000 ounces. However, investment was not seen to be lacking, with for example palladium’s two ETFs seeing significant gains in 2008 and proving more resilient to liquidations in comparison to platinum.
The main finding of this year’s survey as regards platinum is that its gross surplus more than tripled to over 260,000 ounces in 2008. Much of this the consultancy ascribe to autocatalyst fabrication (around half of all demand) being hit by weaker vehicle production, which has since fallen severely in the early months of 2009. Last year’s decline in platinum demand for autocatalyst applications was its first this decade. A second key factor was the slump of over 10% in platinum jewellery fabrication, primarily due to exceptionally high prices in the first half of the year. However, the report also highlights a brighter note for jewellery - a marked recovery in the second half of 2008 (and continuing into 2009) after the price collapsed from July of last year.
Last year, global mine production of platinum suffered a hefty decline for the second year in succession. Global mine production fell by 7% in 2008, mainly due to South Africa (the world’s largest producer) where a power crisis and the flooding of a major mine early in the year compounded the legacy of skills shortages and enhanced safety management, which had already damaged production in 2007. These events were concentrated in the early part of the year, stimulating especially strong investor interest (notably in ETFs) and driving the platinum price to an all-time high of US$ 2,376 in March. Behind the scenes, however, this also triggered exceptionally heavy sales of old
Last year, global mine production of platinum suffered a hefty decline for the second year in succession. Global mine production fell by 7% in 2008, mainly due to South Africa (the world’s largest producer) where a power crisis and the flooding of a major mine early in the year compounded the legacy of skills shortages and enhanced safety management, which had already damaged production in 2007. These events were concentrated in the early part of the year, stimulating especially strong investor interest (notably in ETFs) and driving the platinum price to an all-time high of US$ 2,376 in March. Behind the scenes, however, this also triggered exceptionally heavy sales of old
Publication of Platinum & Palladium
Platinum Forecast to Remain in Surplus in 2009 despite Jewellery Easing Autocatalyst Gloom, but Palladium to Struggle in the Absence of Price Responsive Cushioning factors.
At briefings in London and Johannesburg, GFMS launched its Platinum & Palladium Survey 2009. This is the sixth major report on these markets by GFMS, the independent precious metals consultancy. The following sets out some of the highlights of the survey from the briefing given at the London launch by Peter Ryan, senior consultant of GFMS.
Platinum Forecast to Remain in Surplus in 2009 despite Jewellery Easing Autocatalyst Gloom, but Palladium to Struggle in the Absence of Price Responsive Cushioning factors.
At briefings in London and Johannesburg, GFMS launched its Platinum & Palladium Survey 2009. This is the sixth major report on these markets by GFMS, the independent precious metals consultancy. The following sets out some of the highlights of the survey from the briefing given at the London launch by Peter Ryan, senior consultant of GFMS.
