FEATURE White Metals ARABELLA RODEN explores how the white metals category is adapting to an unpredictable market, and what the future holds. Molten gold is poured. Image: SHUTTERSTOCK
WHITE METALS FEATURE | The White Side Facing Page (L to R): Roberto Coin, Cartier, Georg Jensen; Bulgari; Fope RECENT STATS White Metal Trends A s a jewellery category, white metals – platinum, palladium, silver, and white gold – are impacted not only by consumer demand, but by a complex interplay of macroeconomic factors. The disruption of the COVID-19 pandemic to global supply chains – particularly in the mining sector – as well as investor confidence and lowered demand from the automotive sector, have all led to some volatility in the white metals market. “Having suffered steep falls in early 2020 as result of the global COVID-19 outbreak, precious metal prices rebounded strongly in the second half of 2020 as the pandemic triggered stockpiling by investors looking to protect their wealth,” explains Richard Hayes, CEO The Perth Mint. “This, alongside supply deficits, pushed gold prices up by 25 per cent last year, while silver rose 47 per cent, and platinum and palladium by 11 per cent and 23 per cent, respectively.” Hayes notes that precious metal prices “again trended higher in early <strong>2021</strong> on a more optimistic economic footing, before retracing markedly” as a result of economic policy changes and the Delta variant of COVID-19. White metal jewellery demand has followed a similar pattern, with the initial shock of the pandemic waning around July of 2020 before a sustained period of growth, later interrupted in mid-<strong>2021</strong> by the Delta variant and associated lockdowns across NSW and Victoria. Still, as a diverse category comprising premium priced platinum, palladium and white gold and affordable silver, white metals have widespread appeal as well as a competitive advantage in the high-value bridal sector – though this too has experienced recurrent disruption as a result of the pandemic. Platinum progress Platinum prices reached a five-year high of $US1,266 per ounce in February <strong>2021</strong>, rising steadily following a plummet in March 2020 to the lowest level since 2003. Still, platinum prices remain significantly below that of gold, palladium, and rhodium – all components in the manufacture of white gold jewellery. Rhodium in particular has experienced a “phenomenal price movement” since January 2019, according to UK resources firm Johnson Matthey, rising from $US2,300 to $US29,200 per ounce in March <strong>2021</strong>; since May, it has plateaued at approximately $US15,000 per ounce. Chris Botha, innovation division manager at Palloys, observes, “Platinum pricing has had a continuous run for some time, and while it has slowed a little, jewellers will be weighing up the additional labour costs of $29,200 rhodium price per ounce ($US) in March <strong>2021</strong>, a record high and increase of 71% in three months Business Line 22% increase in demand for platinum from the jewellery sector, Q1 <strong>2021</strong>, compared with 2020 World Platinum Investment Council 20% of the world's silver demand comes from jewellery fabrication Metals Focus 223tn forecast platinum supply in <strong>2021</strong>, an increase of 16% World Platinum Investment Council $2,519 palladium price per ounce ($US) in May <strong>2021</strong>, an all-time peak Kitco working in platinum against rapidly having to purchase rhodium plating. “The rhodium market is very volatile and has seen steep increases in pricing over the last 18 months.” Like palladium, South Africa is the largest producer of rhodium. It accounts for 80 to 90 per cent of total global production, which was significantly reduced by temporary mine closures last year, with the overall ‘rhodium deficit’ – the gulf between supply and demand – more than doubling. The unprecedented upward pressure on rhodium prices is largely from the automotive sector, with manufacturers in China and Europe utilising the metal to reduce emissions. The automotive sector has also buoyed platinum prices, in tandem with jewellery demand and disrupted supplies, Hayes notes. The unprecedented upward pressure on rhodium prices is largely from the automotive sector, with manufacturers in China and Europe utilising the metal to reduce emissions" According to the World Platinum Investment Council, jewellery demand for the metal recovered by 22 per cent in the first quarter of <strong>2021</strong> when compared with the same period in 2020, driven by China and the US. In April <strong>2021</strong>, the Council predicted the overall platinum jewellery market would recover the ground lost in 2020, rising 13 per cent. Industry organisation Platinum Guild International (PGI) tracks demand for platinum jewellery across a number of retail chains in the key markets of the US, China, Japan, and India. Commenting on its first-quarter report, Huw Daniel, CEO PGI, noted that while jewellery demand could “slow in some markets as subsequent waves of COVID-19 cloud the outlook”, there had been “a renewed enthusiasm for platinum” within the jewellery industry. “<strong>Jeweller</strong>s are increasingly engaging with this precious metal, which has been effectively marketed as a metal of meaning and become important as consumers look for ways to symbolise and mark occasions in restricted and unprecedented times,” Daniel said. Indeed, platinum sales across PGI's key markets were driven by targeted campaigns promoting branded platinum collections. In India, historically a far stronger <strong>September</strong> <strong>2021</strong> | 37
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