American platinum jewellery demand surged by 64% YoY

Global platinum jewellery demand contracted 5% YoY

 During Q3’21 platinum demand struggled to maintain the momentum of the first half, as the increasing shortage of key components (including semi-conductors), together with constraints on some raw materials, saw dramatic downwards revisions in the automotive market. 

In addition, at times during the quarter the optimistic market tone subdued as the rise in Covid-19 cases prompted localised restrictions, serving as a reminder that economies remain fragile in this post-peak-pandemic era.  

The negative impact on investor sentiment due to lower autocatalyst demand, was compounded by contagion concerns following news that Ever Grande might default on its debt obligations, as well as by growing expectations that interest rates would rise earlier than previously expected, to offset rising inflation. Changing forward market conditions, meanwhile, encouraged outflows of platinum from NYMEX depositories.  

All these factors resulted in hefty net disinvestment (-246 koz), in a marked contrast to the exceptionally strong positive investment figure (+962 koz) of Q3’20. Weaker recycling supply was offset by steadily improving mine supply, bolstered by accelerated inventory processing which saw total supply increase 7% (+138 koz) year-on-year to 2,049 koz. 

Consequently, the market balance shifted to a surplus of 592 koz in contrast to the deficit of 704 koz in Q3’20. A review of trade-flows and Metals Focus’ field research suggests that a sizeable portion of this surplus has likely been absorbed by Chinese inventories, at least partly serving speculative purposes.  

During Q3’21, global platinum jewellery demand grew compared to Q2’21 but contracted 5% (-27 koz) year-on-year to 483 koz, with divergent trends seen across different markets. European fabrication continued its recovery, with a 25% (+13 koz) year-on-year rise (+19% on pre-pandemic Q3’19), due to economies re-opening, weddings taking place and booming sales for high-end brands. 

North American demand surged by 64% (+41 koz) year-on-year and was up 28% on Q3’19, thanks to jewellery capturing a larger share of consumer expenditure, given still limited options for travel and other discretionary spending, retailers’ enthusiasm in stocking the metal and the economic recovery. 

Although somewhat better in Q3’21, Chinese platinum jewellery fabrication maintained the downward trend from the previous quarter, falling 30% (-76 koz) in Q3’21 as gold jewellery demand continued to enjoy both retail and consumer support.  

In Japan, platinum jewellery also struggled, shedding 20% year-on-year (-19 koz), as for much of the quarter the country was in a state of emergency. Similar to China, a preference for yellow alloys displaced platinum. Anecdotal evidence suggests that demand at the retail end fared better than fabrication, suggesting inventory drawdowns over the period. 

TV and online shopping continued to perform extremely well, providing some offset to weak “bricks and mortar” sales. Indian jewellery fabrication doubled to 17 koz in Q3.21. This strength was primarily due to positive consumer sentiment as Covid-19 caseloads declined and vaccination rates improved. This renewed optimism has led to re-stocking by retailers ahead of the festive season and inventory build-up for key jewellery shows. 

However, despite the impressive percentage growth, quarterly fabrication remains below 2019 levels.