India’s Q2 Platinum Jewellery Demand +48%
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.”