Impala Platinum marketing executive Derek Engelbrecht has forecast that the jewellery industry will hold its own in 2009, despite the effects of the global economic downturn, particularly in the major jewellery markets of the US, Europe and Japan.

“The Chinese market is strong at the moment. “Sales this year versus last year on the Shanghai Exchange are 21% higher, and this is clearly a proxy for what is happening in that market.

“On the supply side, we do think South Africa will have a slight increase this year, but recycling will decline and the market will record a small surplus of 160 000 oz,” he notes.

“Last year, I said that there was an enormous pull from Japan, and that, in times of crisis, platinum will find its way to the market. “That is exactly what hap- pened – a lot of the metal was sent to Switzerland for refining and turned into a deliver-able profit.

“Now, with prices that have come off, the flow of the metal has dropped dramatically. As a result of all this, we still think the market in 2008 was balanced,” he adds.

High prices of platinum took a toll on jewellery demand in 2008, he says.

He adds that, last year, the Chinese market took advantage of lower platinum-group-metal (PGM) prices to restock. Engelbrecht notes that this will continue this year.

Northam Platinum CEO Glyn Lewis recently stated that the immediate outlook for the PGM market was uncer- tain.

But he hastened to add that the jewellery sector would experi- ence an increase in demand, as manufacturers and retailers sought to take advantage of lower, less volatile metal prices.

On the supply side, he remarked that the sharp decline in PGM prices had led to producers reconsidering the timelines of the new projects they were contemplating.

Further, the volumes of metal derived from recycling had contracted significantly.

“There is no doubt that 2009 will provide a challenging market for PGM producers and shareholders alike; thereafter, we believe, the demand for our basket of metals will show some recovery. “We remain cautiously opti-mistic that prices will trend higher in 2010,” Lewis concluded.

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