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Palladium price threat for China jewellery
Allan Seccombe
Posted: Tue, 25 Apr 2006

[miningmx.com] -- RISING palladium prices could dent soaring Chinese demand for the metal in jewellery, something already seen in platinum where demand is down to a seven-year low, GFMS said on Tuesday.

Platinum prices of well above $1,000/oz have lopped 250,000 oz out of Chinese demand for the metal in jewellery fabrication, boosting the desirability of palladium, the GFMS Platinum & Palladium 2006 survey showed.

Platinum jewellery output fell 24% last year in China, the world’s leading platinum jewellery market. High purity palladium jewellery fabrication climbed 23%, according to the survey.

“Palladium’s use in white gold in China was higher last year, but it was the increase in the manufacture of palladium jewellery, which was the key driver behind the country’s near one-quarter rise in demand in 2005,” GFMS said.

“To put this into perspective, in just two years, Chinese demand for palladium in jewellery has risen nearly fourfold.”

Palladium use in jewellery has also risen in Europe and North America, predominantly in white gold, but there is some early stage palladium jewellery manufacturing, it said.
palladium prices are likely to have an adverse effect on demand
Palladium prices are trading around $360 an ounce versus last year’s average of $201.
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“China is an elastic market… Although palladium jewellery is on the up, current palladium prices are likely to have an adverse effect on demand this year,” said Peter Ryan, a senior GFMS consultant.

Other platinum jewellery markets have also experienced a declining trend, with Japan notching up the biggest fall behind China. Japanese platinum jewellery demand last year dropped to around half that recorded in 1999.

“At prevailing prices, we expect platinum jewellery demand to remain under pressure, with further losses probable,” Ryan said of the global outlook for 2006.