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| Platinum (continued) |
| JEWELLERY |
The platinum price rose 35% from US$1,135 at the
beginning of January to US$1,530 at the end of
December. In this exacting environment, demand for
jewellery fabrication remained remarkably resilient in
Europe and Asia. These increases, however, were
insufficient to make up for declines in Japan and North
America and overall offtake of metal fell 2% in 2007 to
1.60 million ounces. |
|
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| Japan |
 Japanese demand for new platinum in jewellery
fabrication declined 15% in 2007 to 305,000 ounces.
This was largely due to increased recycling of old
jewellery metal. Overall, the retail jewellery market in
Japan has been growing since 2005, with growth in dollar
terms 2% higher in 2007. High metal prices continued to
impact the market with lower-carat gold jewellery
gaining market share. The number of platinum jewellery
pieces sold accounts for 20% of the market while white
gold's share is 30%. Platinum remains the metal of choice
in the bridal market, with a 93% market share. |
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| THANKS DAYS PLATINUM |
 With its aging demographics, the number of Japanese weddings is in decline – an important segment for
platinum with over 90% of engagement rings and over 80% of wedding rings sold being in platinum. Thus
there is a challenge to identify potential growth opportunities in this key platinum jewellery market. PGI, in
discussion with the Japanese trade, looked for an occasion that would have the potential to generate
additional business, year round, and would have a strong meaning to the Japanese consumer and the
jewellery industry.
The suggested answer lay with the 3.6 million 'baby boomers', a key generation that is approaching
retirement – they have been part of the Japanese success story and devoted their lives to their work and
are retiring at 60 from now to 2015.
The Japanese tradition of long hours, and often a long commute home, means that many businessmen see
little of their wives in the week, and with the occasional habit of evenings out with their colleagues, owed
their wives both apologies and thanks for their patience and support over many years. This wish to thank
their spouse was combined with their desire to look forward to their future years together.
Out of this came the idea of 'Thanks Days Platinum', a unique gift from the husband to his wife based on
designs based on twinned rings in platinum – one set with diamonds. The overall concept was thoroughly
researched and found a welcome response, especially from the wives, but also from their husbands too and
from the jewellery industry.
PGI then developed an integrated marketing programme, including a TV commercial featuring a famous
actor/singer, that builds on the 'Thanks Day' theme with the actor running through his regrets in his thoughts
as he returns home from his retirement party. Arriving home his wife has prepared a special dinner and is
surprised and delighted to be given a 'Thanks Days' platinum ring. They then toast their future together.
The campaign was successfully partnered with leading manufacturers, and special point-of-sale material was
placed in over 1,800 jewellery counters across Japan. The campaign has been strongly endorsed by the industry
and is rapidly acquiring acceptance by many patient and supportive Japanese wives and their husbands. |
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| USA |
| Platinum demand for jewellery fabrication in the USA
fell marginally to 235,000 ounces in 2007. High metal
prices are negatively affecting retail sales, particularly the
mid-market segment. The high-end bridal sector
continues to perform well. Coupled with the fall in retail demand, manufacturer purchases were further impacted
by an increase in imports from lower-cost countries,
particularly Asia. |
| |
| Europe |
Demand for platinum from European jewellery
manufacturers increased by 15,000 ounces to 205,000
ounces in 2007. The four major platinum jewellery
fabricating countries in Europe are Italy, Germany,
United Kingdom and Switzerland. Platinum jewellery
continues to retain its market share in the UK despite
higher prices. UK hallmarking statistics for the third
quarter of 2007 show that the number of pieces
hallmarked was up 16% on the same quarter the
previous year. However, in weight terms the increase
was just 2%. The average weight per item fell by almost
a gram from quarter 2 to 8.3 g. Foreign imports have
steadied following a decline in recent quarters, but it
appears that these manufacturers have reduced the
weight of their product more so than UK counterparts
in response to declining sales. For the first three
quarters of 2007, platinum demand at 97,000 ounces
was 2% higher year on year by weight.
Italian and German jewellery fabricators manufacture
most of their platinum jewellery for export. However,
domestic demand in both countries is increasing,
especially in the bridal market, due to successful
marketing by Platinum Guild International (PGI). |
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| China |
| As in Japan, the high price for platinum continues to
encourage recycling of old jewellery, decreasing
purchases of new metal. However, in 2007, demand for
platinum jewellery at the retail level was strong,
necessitating increased manufacturing. Net demand for
platinum for jewellery manufacture in China increased
by 20,000 ounces in 2007 to 780,000 ounces. |
| |
| India |
| The Indian market has been targeted by the PGI given
its burgeoning economy. The PGI is working closely
with leading players in this market and remains positive
about its potential as the Indian economy grows and the
retail jewellery market goes through major changes.
Information from the jewellery industry in India shows a significant increase in sales of platinum off a low base
in the first six months of 2007. |
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| INVESTMENT |
| Following 2006's net disinvestment, positive platinum
demand in the investment sector was 75,000 ounces in
2007. This follows the launch of two exchange-traded
funds (ETFs) in 2007, which more than made up for
some disinvestment mainly in Japan where, in the period
January to April, the price of platinum was well above
5,000 yen upon encouraged sales of large platinum bars
by investors in Japan. |
| |
| Exchange-traded funds |
| ETFs are designed to enable investment in specific
commodities without the investor having to take
physical delivery of the product. These funds are
however backed by physical metal and as such are
considered investment demand. In April 2007, ETF
Securities launched five ETCs in platinum, palladium,
gold, silver and a basket of these commodities on the
London Stock Exchange. In May, the Zurich Cantonal
Bank launched three white precious metal contracts. |
| |
| INDUSTRIAL |
| Industrial demand for platinum rose by 2% in 2007 to
an estimated 1.9 million ounces, with strong offtake
from electrical, chemical and petroleum making up for
lower demand from the glass industry. |
| |
| Chemical |
| Use of platinum in catalysts for the manufacture of
speciality silicones represents the largest portion of the
chemical segment. Speciality silicones are used for
adhesives in the paper and construction industries.
Over recent years, silicone producers have implemented
thrifting programmes on account of higher platinum
prices. Despite this, the increase in demand for silicones
has kept platinum demand level with previous years.
Platinum demand in the chemical sector has been
boosted by the construction of new para-xylene
capacity in Asia and the Middle East. Para-xylene is a key
ingredient in the production of purified terephthalic
acid, which is used to make polyester for fabrics and
polyethylene terephthalate chips used in making
beverage bottles. |
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| PALLADIUM AND THE CONTROL OF SPOILAGE IN FRESH PRODUCE |
 Most fruit and vegetables are affected by ethylene, a plant hormone that accelerates the ripening of fruit. If
uncontrolled, this can lead to a reduction in the post-harvest lifetime of the fruit through premature ripening,
disease and softening. Ethylene is an odourless, colourless gas that is often produced by plants and released
into the surrounding atmosphere. It can also be man-made. Ethylene control of the atmosphere in which
fresh produce is stored can therefore have a big impact on controlling spoilage, quality and shelf life, which
in turn helps reduce wastage of fresh produce.
Ethylene scavengers based on potassium permanganate (which can oxidise the ethylene to carbon dioxide
and water) are available commercially but had limitations. In a collaborative project, Anglo Platinum and
Johnson Matthey have discovered a novel ethylene scavenger technology based on palladium as a key active
ingredient. The technology is under development and has been named E+ (trademark pending).
Experiments that simulate the post-harvest storage conditions of avocados and bananas have demonstrated
that E+ effectively removes ethylene at temperatures in the range 5 – 12°C. These findings were published
in 2007 in an academic press.
It is anticipated that the fresh produce industry will discover the commercial use of E+ in extending the
shelf life and quality of a range of fruit, flowers and vegetables. This would provide a significant new
application for palladium. |
| |
| Electrical |
| Strong growth in personal computer sales and consumer
electronic devices, coupled with increasing memory
capacity requirements, led to a 9% increase in platinum
demand in the electrical sector to 435,000 ounces.
Platinum is also used in thermocouples in the steel
industry. |
| |
| Fuel cells |
The principle of the fuel cell, or generating electricity
from a chemical fuel, was discovered in the 19th
century. However, interest in further development of
the technology has accelerated dramatically over the
last decade against rising environmental concerns. Fuel
cells do not burn fuel, so the system eliminates air
emissions associated with fossil fuel combustion
generators such as carbon monoxide, nitrous oxide and
hydrocarbons. Also, emissions of global warming gases
such as carbon dioxide (CO2) are far lower than for
electricity generated by other means, and rising concerns
over CO2 have renewed efforts and investment in the
fuel cell industry. The recent rise in the oil price has
added further impetus to fuel cell development.
Demand for platinum for fuel cells at present is very
small. However, this is expected to increase in the short
to medium term for portable fuel cell applications such
as in flashlights and power for laptop computers. In the
longer term, the commercialisation of fuel cell vehicles
will provide sustainable growth in this sector. |
| |
| Glass |
| Platinum demand for glass fabrication has declined from
the high of 410,000 ounces in 2006. Demand increases
substantially when capacity expansion occurs. Expansion
of glass-making facilities, particularly in Asia, over recent
years has been responsible for the growth in offtake in
both platinum and rhodium by this sector. Sales of liquid
crystal display televisions continued to grow in 2007.
Capacity increases for the production of this speciality
glass continued in 2007, albeit at a slower rate than in
2006. Platinum demand in this sector in 2007, although
15% lower than the previous year, is significantly higher
than historical levels. |
| |
| Petroleum |
| Demand for platinum from the petroleum industry
increased for the fourth consecutive year in 2007.
Strong economic growth in Asia and former Eastern
European countries has necessitated the construction
of new reforming and isomerisation capacity, boosting
demand for platinum in this sector. Security of energy
supplies is a crucial economic and political issue and
North America is moving towards increasing national
energy security by constructing new refineries.
Consequently, platinum demand in this sector increased
25% in 2007. |
| |
| Other |
| Other applications requiring platinum, although
individually small, together consume a significant amount
of the metal each year, and demand in 2007 remained
unchanged at 490,000 ounces. The largest contributor
to the increase was for non-catalytic automotive uses
such as oxygen sensors and spark plugs. As with
autocatalysts, demand for these components is
supported by emission legislation. As legislation
becomes more stringent, more oxygen sensors per
vehicle are required. The extended warranty period
required by US emission legislation has increased
demand for longer-life spark plugs. Platinum also plays
an important role in medical applications, such as
guidewires with coiled platinum tips used in locating
blockages in arterial disease and electrodes in
pacemakers. Platinum is used in the production of anticancer
drugs such as Cisplatin and Carboplatin, the
latter used in conjunction with Taxol to fight late-stage
cancers. Another anti-cancer drug, Oxaliplatin, was
developed later to treat prostate cancer. Platinum is
also used in an alloy with gold in the dental field. |
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