PRECIOUS METALS,DIAMONDS & GEMSTONESINVESTMENT SUMMIT         The platinum jewellery market in China         Rupen Raithat...
A Look at the Pt JewelleryMarket in ChinaRupen Raithatha, 6th April 2011                                  Market Research
Market ResearchAgenda slide1   Overview of the Pt Market2   Snapshot of the Global Pt Jewellery Market3   The Importance o...
Market Research               Platinum Demand & Supply                         7000                                       ...
Market Research                 The Rise of China                            2,200                            2,000       ...
Market Research           Autocatalyst & Jewellery as % of           Total Demand                    60%                  ...
Market Research            Jewellery as % of Total Demand Vs Price                    60%                                 ...
Market ResearchChina Jewellery Demand 1995-2010                 12,000                                                    ...
Market ResearchChina Jewellery Demand 2002-2010                 12,000                          2008                 11,00...
Market ResearchWeekly Pt Purchasing on theShanghai Gold Exchange (2010-March 2011)                1500                    ...
Market ResearchCurrent and Historic Pt Market Penetration                                2                                ...
Market ResearchSome Caveats•   Japan unique circumstances – the ‘perfect storm’     •   Restrictions on buying/selling Au ...
Pt:Au Ratio              Jan                  -                        0                            0.5                   ...
Market ResearchNevertheless, potential for furthergrowth remains strong….• China in 2011 is on an earlier point on the gro...
A Look at the Pt JewelleryMarket in ChinaRupen Raithatha, 6th April 2011Rupen.Raithatha@matthey.com+44 (0)1763 25 63 22   ...
Upcoming SlideShare
Loading in …5
×

The platinum jewellery in China

1,108 views

Published on

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
  • Be the first to comment

  • Be the first to like this

The platinum jewellery in China

  1. 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. 2. A Look at the Pt JewelleryMarket in ChinaRupen Raithatha, 6th April 2011 Market Research
  3. 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. 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. 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. 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. 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 ($/oz) 30% 900 20% 600 10% 300 0% 0 1975 1980 1985 1990 1995 2000 2005 2010 Autocat (lhs) Jewellery (lhs) Price (rhs)
  8. 8. Market ResearchChina Jewellery Demand 1995-2010 12,000 • Counter-intuitive 10,000 demand functionPrice (RMB/oz) • Income effect 8,000 • Lack of market 6,000 maturity • Consumer surplus 4,000 2,000 • However, since 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2002….. Demand (000 oz)
  9. 9. Market ResearchChina Jewellery Demand 2002-2010 12,000 2008 11,000 2010 • Signs of a mature 10,000 2007 market or is thePrice (RMB/oz) 9,000 2006 price effect 8,000 2009 outweighing the 7,000 2005 2004 income effect 6,000 since 2002? 2003 5,000 2002 4,000 1,000 1,200 1,400 1,600 1,800 2,000 Demand (000 oz)
  10. 10. Market ResearchWeekly Pt Purchasing on theShanghai Gold Exchange (2010-March 2011) 1500 2,150 • SGE users are good 1250 2,050 at buying into price 1000 1,950 dips SGE Price ($/oz) Volume (kg) 750 1,850 500 1,750 250 1,650 0 1,550 10 11 20 20 Volume Price
  11. 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. 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. 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. 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. 15. A Look at the Pt JewelleryMarket in ChinaRupen Raithatha, 6th April 2011Rupen.Raithatha@matthey.com+44 (0)1763 25 63 22 Market Research

×