In­dia’s Q2 Plat­inum Jew­ellery De­mand +48%

Solitaire - - BULLETIN -

Growth in plat­inum jew­ellery de­mand in In­dia ac­cel­er­ated by 48% year-on-year in the sec­ond quar­ter of 2017, ac­cord­ing to Plat­inum Guild In­ter­na­tional (PGI), as cited in the 12th Plat­inum Quar­terly re­port re­leased by the World Plat­inum In­vest­ment Coun­cil (WPIC).

The re­port noted that PGI’s mar­ket­ing ef­forts are help­ing drive the rapid growth in plat­inum jew­ellery de­mand, al­though this very high growth rate is flat­tered by a com­par­i­son to a dif­fi­cult sec­ond quar­ter in 2016 when the jewellers’ strike re­duced de­mand. The WPIC said it con­tin­ues to sup­port lo­cal in­vest­ment mar­ket­ing ef­forts in In­dia, with a num­ber of lo­cal part­ner­ships.

PGI said that the in­tro­duc­tion of the new Goods and Ser­vices Tax (GST) from July 1st caused a rush to buy jew­ellery at the end of June to take ad­van­tage of the lower prices. This has pulled some sales from Q3 2017 into Q2 2017. The full ef­fects of the GST are yet to be seen; the tax is 1-2% higher than pre­vi­ously, but hav­ing a stan­dard­ised na­tion­wide tax could im­prove sup­ply chain ef­fi­cien­cies for larger re­tail­ers, it added.

The re­port also showed that world­wide sec­ond-quar­ter plat­inum jew­ellery de­mand was 620 koz, flat year-on-year and 3% lower quar­ter-on-quar­ter. How­ever, this masked in­trigu­ing re­gional dy­nam­ics, with a fall in Chi­nese de­mand off­set by In­dia and the US.

The Na­tional Bu­reau of Sta­tis­tics of China re­ported sales of gold, sil­ver and jew­ellery re­cov­ered 3.1% year-on-year in Q2 2017. How­ever, much of the gain was driven by gold in­vest­ment prod­ucts. PGI re­ported that China’s plat­inum jew­ellery re­tail sales were down 6.6% in Q2 2017. Some re­tail­ers main­tained or in­creased the

num­ber of pieces sold, but as they were sell­ing more lighter-weight pieces with good crafts­man­ship and higher mar­gins, it re­sulted in fewer ounces be­ing sold than the value of re­tail sales might sug­gest.

In Q2 2017, jew­ellery re­cy­cling was up 7% year-on-year to 150 koz with in­creases be­ing seen in Ja­pan, and also in China where the chal­leng­ing jew­ellery mar­ket and the search for mar­gin by smaller and in­de­pen­dent jewellers have re­sulted in some of the jewellers re­mov­ing their plat­inum dis­plays, caus­ing more metal to be re­cy­cled.

In the full year 2017, jew­ellery con­sump­tion is fore­cast to slip 1% to 2,590 koz (-15 koz) as a de­crease in China, which is the largest plat­inum jew­ellery mar­ket, out­weighs gains in all other re­gions.

There have been up­ward re­vi­sions to the jew­ellery de­mand fore­cast in In­dia and Ja­pan af­ter strong H1 2017 per­for­mances, with In­dia be­ing less im­pacted by de­mon­eti­sa­tion than an­tic­i­pated and Ja­pan hav­ing healthy im­prove­ments in high-end plat­inum jew­ellery sales and an im­prov­ing econ­omy which is ex­pected to con­tinue in the sec­ond half of the year.

WPIC said In­dia saw strong H1 2017 fab­ri­ca­tor de­mand, but H2 2017 is likely to be only mod­estly higher as the in­tro­duc­tion of the GST could hold back sales growth in the sec­ond half be­cause jew­ellery prices are ex­pected to be higher and the GST’s in­tro­duc­tion pulled for­ward some sales into Q2 2017. The tax change is un­likely to change the ben­e­fit to re­tail­ers of higher mar­gins achieved on sales of plat­inum jew­ellery com­pared to gold jew­ellery.

Rel­a­tively sta­ble eco­nomic growth in the US and Europe is sup­port­ing the fore­cast for steady growth in plat­inum jew­ellery de­mand. China’s con­sump­tion is ex­pected to de­cline by 8% this year. The re­tail jew­ellery en­vi­ron­ment con­tin­ues to be chal­leng­ing, but cus­tomer traf­fic has re­cov­ered some­what and with the wed­ding sea­son com­ing up in H2 2017, re­tail­ers are op­ti­mistic that trade will im­prove, par­tic­u­larly those with new prod­uct launches and pro­mo­tions planned for the sec­ond half. How­ever, the broad Chi­nese econ­omy is pre­dicted to see slower growth in the sec­ond half of the year, which could pro­long the dif­fi­cult trad­ing en­vi­ron­ment.

Jew­ellery re­cy­cling is set to fall 18% in 2017 af­ter a 21% gain in 2016 which was due to Chi­nese de­stock­ing. To­tal jew­ellery re­cy­cling is now pro­jected to be 515 koz this year as the level of re­cy­cling in H1 2017 was slightly higher than ex­pected.

In­dia saw strong H1 2017 fab­ri­ca­tor de­mand, but H2 2017 is likely to be only mod­estly higher as the in­tro­duc­tion of the GST could hold back sales growth in the sec­ond half be­cause jew­ellery prices are ex­pected to be higher and the GST’s in­tro­duc­tion pulled for­ward some sales into Q2 2017.”

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