Editor’s Note
This article examines the current disconnect in the platinum market, where surging prices driven by investment demand contrast sharply with weak consumer spending on jewelry. It highlights a complex “split scenario” with implications for investors and industry observers.
The international platinum market is experiencing a “split scenario.” The latest report from Johnson Matthey, the world’s second-largest platinum group metals refiner, shows that while Chinese spot purchases have driven platinum prices to a two-year high, terminal jewelry consumption remains persistently sluggish, creating a serious disconnect between real demand and market heat.
Recent platinum prices have been on a rapid rise, with spot platinum prices exceeding $1,050 per ounce in March, reaching a new high since 2022. Johnson Matthey analysis indicates that large-scale purchases by Chinese buyers are the main driver—as platinum prices are only about half that of gold, jewelry manufacturers have been buying the dip to hoard inventory.
Despite a year-on-year decline of 8% in China’s platinum jewelry consumption in 2023 (Johnson Matthey annual report data), only a weak 1% recovery is expected for 2024. Manager Wang of a jewelry retailer on Nanjing’s Taiping South Road admitted frankly: “In the first five months of this year, store sales of platinum necklaces were still 15% lower than the same period in 2022. Young people now come into the store asking directly about gold discounts.”
Industry insiders worry that the current prosperity may be just a “false heartbeat.” Johnson Matthey warns that if weak consumption persists, the inventory piled up by manufacturers will backfire on the industry. This phenomenon is already showing signs in Shenzhen’s Shuibei Jewelry Wholesale Market: the inventory turnover cycle for platinum jewelry for some merchants has extended from 60 days to 90 days, with significantly increased financial pressure.
The World Gold Council’s Q1 2024 report shows that China’s gold jewelry consumption grew by 12% year-on-year during this period, forming a scissors gap with platinum’s downturn. Analysis suggests that amid economic uncertainty, consumers prefer gold’s safe-haven attributes. Furthermore, issues such as outdated platinum jewelry designs and inefficient recycling channels also constrain its appeal.
Johnson Matthey predicts that as South African mining supply gradually recovers, platinum prices may face pressure in the second half of the year. This price surge driven by hoarding ultimately needs real consumption to take over. Otherwise, when the tide recedes, what may be left on the beach is not just excess platinum, but also the anxiety of the entire industrial chain.
