Your SlideShare is downloading. ×
The platinum jewellery in China
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

The platinum jewellery in China

812
views

Published on

Objective Capital's Precious Metals, Diamonds & Gemstones …

Objective Capital's Precious Metals, Diamonds & Gemstones
Investment Summit 2011
Ironmongers' Hall, City of London
6 April 2011
Speaker: Rupen Raithatha, Johnson Matthey

Published in: Business, Economy & Finance

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
812
On Slideshare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
11
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. PRECIOUS METALS,DIAMONDS & GEMSTONESINVESTMENT SUMMIT The platinum jewellery market in China Rupen Raithatha – Investment & Economic Analyst, Johnson MattheyIRONMONGERS’ HALL, CITY OF LONDON ● WEDNESDAY, 6 APR 2011www.ObjectiveCapitalConferences.com
  • 2. A Look at the Pt JewelleryMarket in ChinaRupen Raithatha, 6th April 2011 Market Research
  • 3. Market ResearchAgenda slide1 Overview of the Pt Market2 Snapshot of the Global Pt Jewellery Market3 The Importance of Jewellery Demand4 The Chinese Market5 Market Potential
  • 4. Market Research Platinum Demand & Supply 7000 7000 • Market has grown 6000 6000 over time 5000 5000Demand/Supply (000 oz) Demand/Supply (000 oz) 4000 4000 • ….but always a fairly tight market 3000 3000 2000 2000 • Jewellery and 1000 1000 Investment expected to be 0 0 more price elastic 1975 1980 1985 1990 1995 2000 2005 2010 Autocat Net Chemical Electrical Glass Petroleum Other Investment Jewellery Supply
  • 5. Market Research The Rise of China 2,200 2,000 • Japan for so long the 1,800 largest jewelleryJewellery Demand (000 oz) 1,600 market 1,400 1,200 1,000 • Eclipsed by China 800 since the early 2000’s 600 400 200 0 1975 1980 1985 1990 1995 2000 2005 2010 Japan China Europe + N America
  • 6. Market Research Autocatalyst & Jewellery as % of Total Demand 60% • Jewellery tends to 50% offset softer autocat% of Total Demand demand 40% 30% • Plays a crucial role in the market 20% 10% 0% 1975 1980 1985 1990 1995 2000 2005 2010 Autocat Jewellery
  • 7. Market Research Jewellery as % of Total Demand Vs Price 60% 1800 • As expected, 50% 1500 jewellery is% of Total Demand responsive to price 40% 1200 Price ($/oz) 30% 900 20% 600 10% 300 0% 0 1975 1980 1985 1990 1995 2000 2005 2010 Autocat (lhs) Jewellery (lhs) Price (rhs)
  • 8. Market ResearchChina Jewellery Demand 1995-2010 12,000 • Counter-intuitive 10,000 demand functionPrice (RMB/oz) • Income effect 8,000 • Lack of market 6,000 maturity • Consumer surplus 4,000 2,000 • However, since 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2002….. Demand (000 oz)
  • 9. Market ResearchChina Jewellery Demand 2002-2010 12,000 2008 11,000 2010 • Signs of a mature 10,000 2007 market or is thePrice (RMB/oz) 9,000 2006 price effect 8,000 2009 outweighing the 7,000 2005 2004 income effect 6,000 since 2002? 2003 5,000 2002 4,000 1,000 1,200 1,400 1,600 1,800 2,000 Demand (000 oz)
  • 10. Market ResearchWeekly Pt Purchasing on theShanghai Gold Exchange (2010-March 2011) 1500 2,150 • SGE users are good 1250 2,050 at buying into price 1000 1,950 dips SGE Price ($/oz) Volume (kg) 750 1,850 500 1,750 250 1,650 0 1,550 10 11 20 20 Volume Price
  • 11. Market ResearchCurrent and Historic Pt Market Penetration 2 16 • Japan mid-90’s peak several times greater 1.75 14 Consumption oz/000 capita (Japan) than any other market 1.5 12Consumption oz/000 capita(Europe/N America/China) 1.25 10 • ….but China has 1 8 potential to grow…. 0.75 6 0.5 4 0.25 2 0 0 1975 1980 1985 1990 1995 2000 2005 2010 Europe (lhs) N America (lhs) China (lhs) Japan (rhs)
  • 12. Market ResearchSome Caveats• Japan unique circumstances – the ‘perfect storm’ • Restrictions on buying/selling Au until mid-70s • Pt price close to Au price • Relatively low Pt price in absolute terms • ‘Bubble’ economy • Strength of the ¥ • Relatively high Pt content per piece • Successful marketing • Unlikely that per capita consumption in China will come close to Japan’s peak• Has Pt price volatility damaged perception of Pt as a store of wealth?• Strong competition from non-jewellery luxury sector
  • 13. Pt:Au Ratio Jan - 0 0.5 1 1.5 2 2.5 Jan 75 - Jan 77 - Jan 79 - Jan 81 - Jan 83 - Jan 85 - Jan 87 - Jan 89 - Jan 91 - Jan 93 Pt:Au Price Ratio -Pt:Au Ratio Jan 95 - Jan 97 -Parity Jan 99 - Jan 01 - Jan 03 - Jan 05 - Jan 07 - Jan 09 -11 • equal. Market Research Japan’s peak came when Pt and Au about
  • 14. Market ResearchNevertheless, potential for furthergrowth remains strong….• China in 2011 is on an earlier point on the growth path than Japan in mid-90s• Efforts to increase domestic consumption as a proportion of GDP• High savings ratio• Rate of urbanisation• Marketing to 2nd and 3rd tier cities• Stronger RMB over time will soften any rise in the US$ price• Size of population• Chinese demand has come when Pt price > Au – seen as the primary metal by many
  • 15. A Look at the Pt JewelleryMarket in ChinaRupen Raithatha, 6th April 2011Rupen.Raithatha@matthey.com+44 (0)1763 25 63 22 Market Research

×