Since the platinum contract on the Shanghai Gold Exchange (SGE) began trading on 15th August 2003, more than 10 tonnes of platinum have been transacted. Most of this has been bought by jewellers to feed the seemingly insatiable appetite Chinese consumers have for the metal. Some industrial consumers have also made use of this route to acquire platinum.

The traded volume has declined to an extent from the early euphoria of its opening day when 373 kilograms of platinum were traded - since then, trading has settled down to where this is around the average level of business a week.

At present, trading hours on the SGE are restricted to 1½ hours each morning and afternoon, the same as the hours for gold trading. Many jewellers would like to see longer trading hours introduced so as to give them greater flexibility in pricing and buying platinum – particularly with the current instability in the platinum price.

Nevertheless, the SGE platinum contract has been a positive development for the jewellery industry. One advantage of the SGE is that it offers a tax-free route for platinum into the country, helping jewellers to offer competitive products and releasing much-needed cash.

It also means that jewellery retailers can more easily buy their own raw materials -  some large retail companies are members of the exchange and can buy direct, while smaller companies can buy platinum from trading members of the SGE. Retailers provide metal to factories to toll-manufacture jewellery for an agreed labour charge, with the benefit that manufacturers no longer carry the price and credit risk and retailers have better control over delivery of new stock.