Consumers falling out of love with platinum
Print Edition
CHINA’S penchant for luxury platinum jewelry is fading despite lower global prices, leaving world demand for the metal exposed to sharper decline.
The country is by far the biggest market for platinum jewelry, making up more than 60 percent of global manufacturing use for the white metal last year. However, a close to double-digit drop in Chinese platinum jewelry demand is expected this year, GFMS analysts said ahead of the industry gathering London Platinum Week, which started yesterday.
That follows a 7 percent drop in Chinese buying last year that fed into a 4 percent decline in global demand for jewelry made from the metal.
Consumer behavior in China has shown a marked change, with spending on luxury goods suffering as economic growth has slowed significantly.
“It’s not as if consumers aren’t spending money, but they’re not spending it on jewelry in the way they used to,” said Philip Klapwijk, director of Hong Kong-based Precious Metals Insights.
“Consumers’ discretionary purchasing power is being spent on other things — white goods, and certainly tourism. More Chinese tourists are going abroad, and that also means during important public holidays, fewer people are visiting department stores.”
Carmakers who use platinum in catalytic converters, are the biggest overall buyers of the metal, accounting for 40 percent of global demand. But when broken down on a regional basis, Chinese jewelers are the biggest single consumers of platinum, buying 1.5 million ounces of it last year.
Clean-up weighs
Also affecting the luxury sector is a crackdown on corruption, launched by Beijing in 2012. That has also made officials reluctant to be seen to be buying expensive jewelry.
While jewelry sales overall are down, gold is proving a strong competitor against platinum in terms of market share, with white gold in particular a popular alternative.
In terms of marketing, retailers have focused more on gold in recent years, since a sharp price drop in early 2013 drove physical gold sales to record highs.
A slide in platinum prices to below US$1,000 an ounce last year for the first time since 2009 has not had a commensurate effect, however.
While the white metal has been trading below the price of gold on global markets since the start of last year, that has not been reflected at the consumer level in China.
“Unlike gold products that are sold by weight ... our platinum jewelry is sold at fixed price,” said a spokesman for Chow Tai Fook, China’s largest jewelry retailer. “Thus we do not see any significant impact on the demand ... in relation to the platinum price.”
In part, the lack of price elasticity is due to the higher cost of working platinum into jewelry.
Price visibility for platinum among consumers tends to be patchier than for gold, which is often bought as an investment.
However, this awareness is rising, leading some consumers to question the value of buying platinum jewelry without more of a discount, analysts said.
“Consumers ... fully understand the markup structure and where the metals are trading on a spot basis, so when they could see no — or only moderate — movements in the retail price when platinum was trading at such low levels it was seen as overpriced,” according to Cameron Alexander, a market analyst at GFMS.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
