Platinum Jewelry Demand to Rise in Asia, Johnson Matthey Says

By Aya Takada

Nov. 18 (Bloomberg) -- Platinum demand for jewelry in China and Japan, the two largest consumers, will probably rise next year regardless of a global recession after prices fell from a record and as metal recycling declines, Johnson Matthey Plc said.

``We are beginning to see people come back to the market because of a lower price,'' Rainaldo O'Meara, market research manager at the London-based company, said today in an interview in Tokyo. ``This may well continue into next year.''

Platinum jewelry demand in China will drop 22 percent to 610,000 ounces this year, the lowest in a decade, Johnson Matthey said in a report. Demand in Japan will shrink 78 percent to 40,000 ounces this year, the lowest in at least 10 years, after soaring prices discouraged buying from consumers and spurred them to sell the metal, Johnson Matthey said.

``One of the reasons for the severely low number is recycling,'' O'Meara said. Even if consumer purchases remain around current levels next year while low prices further discourage recycling, overall net demand will increase, he said.

Platinum for immediate delivery touched a record $2,301.50 an ounce on March 4 as South Africa, the world's biggest producer, cut output because of power shortages. Prices slumped to $744.25 on Oct. 27, the lowest since November 2003, amid concern falling auto sales will cut demand for the metal used in car catalysts.

Global total demand will fall 2.3 percent to 6.52 million ounces this year from last year, the second decrease in a decade, Johnson Matthey said in the report.

Platinum demand for car catalysts in China will increase 14 percent to 200,000 ounces this year, as the number of cars equipped with pollution-control devices will rise by about one million units from last year, O'Meara said.

``China is the fastest-growing market for platinum,'' he said. ``Although the forecast growth in some emerging economies has been reduced, they are still growing.''

To contact the reporter on this story: Aya Takada in Tokyo atakada2@bloomberg.net