Platinum Demand by Application 1986-97
Demand for platinum for the fabrication of jewelry has shown the fastest rise of any sector of platinum demand during the last 11 years.
In fact, at 2.16 million oz. of a total global demand of 5.2 million oz. (or 42%) jewelry is now the biggest single end-use for platinum in the world. To see how platinum got this far, we should take a brief look at history. Platinum was rarely used to make anything decorative until the second half of the nineteenth century. Even then it was not widely used until the discovery in 1877 of a method to liquefy and store oxygen in pressurized steel cylinders. This led to the development of the jeweler's torch, which permitted easier melting and welding of platinum and consequently the creation of all platinum jewelry pieces. Platinum was used freely and to great effect in
achieving light delicate mounts and the precise geometric shapes that came into fashion in the 1920s.
Platinum Demand for Jewelry Fabrication 1925-97
By 1930, annual consumption of platinum for jewelry was around
160,000 oz. (5 tons), over 80 per cent of total world demand for platinum at that time. By far the largest market was the U.S. The use of platinum for jewelry declined during the Depression, and with the advent of World War II its use was
restricted as a strategic material.
After 1945 demand was largely dormant until the Japanese market began to grow in the 1960s - assisted by a regulation which until 1973 prevented individuals in Japan from owning gold. By 1975,
demand for platinum had reached a peak of 1.2 million oz. (37 tons), over 85 per cent of it coming from Japan alone.
Enormous disruption was caused to jewelry demand by the volatile price conditions of 1979 and 1980, when platinum briefly traded at over $1,000 per oz. Manufacturing jewelers in Japan responded by cutting back production and also by reducing the unit weight of platinum jewelry. It took several years for demand to recover to earlier levels but since 1983, there has been continual growth in platinum jewelry fabrication world-wide.
In 1989 demand for platinum finally exceeded the peak of 1975, and in 1997 total demand for platinum in the jewelry industry reached a record 2.16 million oz. (69 tons).
Growing Diversity 1986-97
For 30 years or
so, Japan has been the mainstay of platinum jewelry fabrication. However, during the last 10 or 11 years, the markets for platinum jewelry have become steadily more diversified.
Fabrication and Consumption by Region -1997
We can characterize the world's platinum jewelry manufacturing regions by observing that Europe, the U.S., Japan and latterly China have all developed both a manufacturing base and a strong consumer base. A key point is that no
country or region has developed a strong consumer base without also having a robust and capable manufacturing base. This is true for platinum jewelry as a whole and also in terms of different categories of platinum jewelry, be it rings,
chain, bracelets, etc.
USA: The Story so Far...
In 1991 JM estimated U.S. platinum demand for jewelry production at 20,000 oz., a figure which had risen only slightly since the 1980s. Between 1991 and 1995 the
growth in the market was rather steady; - it was really from 1995/96 forward that the volume took off, culminating in last year's very steep increase to 160,000 oz. This figure represents an 8-fold increase in six years - very dramatic
growth indeed.
Platinum Versus Gold Jewelry -1997 Volume
Although we have seen very steady and profitable growth in the U.S. platinum jewelry market in the '90s, demand for platinum jewelry as a percentage of overall
demand for gold and platinum combined is still just a drop in the ocean.
As of 1997, platinum represents just .6% of total Gold & Platinum jewelry demand, which means of course that there is plenty of room for platinum to grow in the coming years.
Chain as a % of total Pt Demand
In Japan
chain accounts for 15 per cent of overall platinum jewelry demand, in China it's considerably higher at 45 per cent, while in Europe chain's share is 38 per cent. In the U.S. however, there is very little platinum chain demand - why is
this?
Bearing in mind the point made earlier that historically, no country or region has succeeded in creating good consumer demand without first of all building a manufacturing base to produce the product, this is surely the case
with regard to platinum chain in the U.S. - i.e., there are not enough platinum chain manufacturers in the U.S. Therefore, at the moment, there is neither sufficient quantity of platinum chain nor sufficient range of styles being
manufactured domestically. In fact, most of the platinum chain currently being sold in the U.S. is imported from Italy.
Opportunities
As should be evident by now, Johnson Matthey believes there are a number of
opportunities coming to the fore in the U.S. platinum jewelry market as we head into the millennium.
Product:
We will soon see the platinum jewelry market in the U.S. move beyond bridal product, particularly into chain,
but also into earrings, bracelets, etc.
This will occur as today's younger consumers of platinum, who perhaps start out with a platinum engagement ring or wedding band, seek to broaden and expand their platinum jewelry wardrobe. This we believe will naturally fuel the burgeoning demand for non-bridal platinum jewelry items in the U.S. Already in the trade press we are beginning to see articles on platinum's expansion into non-bridal product categories. This of course presents an obvious opportunity for manufacturers, one which to date has mostly been taken up by Italian, not U.S., manufacturers.
Demographic:
Platinum's appeal to date has largely been to young, affluent, urban consumers. As the platinum advertising message spreads, so also will the consumer base expand into "Middle America," i.e. the great
middle-class American public.
Geographic:
In tandem with demographic expansion we will see greater geographic penetration of the U.S., particularly into the mid-west and south, the two main regions of the country which are
perhaps considered the geographic laggards in terms of new product adoption.
Volume Growth:
As a result of new product lines in platinum jewelry and with additional geographic and demographic expansion, I believe that we
will see the market practically double in the next 3 years from 160,000 oz. in 1997 to 300,000 by the millennium.
V5N3
The Growth in International Demand for Platinum Jewelry
Kieran Conlon
Johnson Matthey
This is an abbreviated version of the original work. For full technical details, please consult the original paper.