Original article appearing on JCK Online.

While the global supply of platinum is forecast to be in deficit by 240,000 ounces in 2008, and demand overall expected to fall by 2.3 percent for the year, demand for platinum jewelry, specifically, may rise in 2009 if prices stabilize.

These were among the findings presented by Johnson Matthey at its Platinum 2008 Interim Review, Tuesday in New York.

In 2008, the rising price of platinum-topping $2,200 an ounce in the first half-had a negative impact on jewelry manufacturing. As prices rose, recycling of old platinum jewelry, especially in China and Japan, further depressed net demand. But as dismal news from the financial sector hit in the third quarter, prices of precious metals, including platinum, dropped significantly. At press time, the spot price of platinum was $824 an ounce, while gold dropped back to $741 after topping $1,000 an ounce earlier in the year.

The bigger drop in platinum prices compared to gold prices could be attributed to the fact that platinum is predominantly an industrial metal, while gold is more of a financial metal, explained Timothy Murray, U.S. general manager of precious metals marketing for Johnson Matthey North America.

A number of factors contributed to the decline in platinum supply in 2008, many of which are related to issues in South Africa, such as lack of skilled labor, bad weather and flooding at some mines, and power supply. While supplies from South Africa should recover somewhat in 2009, power supply issues could affect further development and exploration. Industrial demand for the metal also is likely to drop further, and investment demand isn't likely to increase significantly.

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