China '09 platinum jewellery demand seen at record-JM

* China platinum demand for jewellery seen up by 900,000 oz

* Platinum replaces white gold due to low price difference

* Platinum demand for catalysts up in China, down in Japan

TOKYO, Nov 17 - Chinese demand for platinum jewellery is forecast to more than double to a record 1.75 million ounces in 2009, boosted by a decline in the price of the metal this year, Johnson Matthey PLC said on Tuesday.

China's robust appetite for platinum jewellery contrasts with Europe and North America, where demand for the metal has declined, reflecting tough economic times.

"The lower price has encouraged Chinese manufacturers, wholesalers and retailers to replenish their stocks, particularly in the first half of 2009," the refiner said in its 2009 interim review.

The Chinese jewellery sector is expected to consume 900,000 ounces more platinum this year compared to 2008.

"Although we expect industry restocking to slow in the second half of 2009, consumer purchasing should still maintain demand at close to record levels," it said.

Platinum's popularity has been at the expense of competing white gold jewellery.

"The low price differential between gold and platinum has also allowed platinum to recapture market share from white gold jewellery," JM said.

Platinum is down about 40 percent from the record high of $2,290 per ounce hit in March 2008. Gold, in contrast, has topped an all-time high above $1,130 per ounce.

The flip side of platinum's lower price has been a decline in the proportion of recycled metal used in jewellery manufacturing in China, which fell to below 10 percent at the start of this year due to less economic incentive to recycle.

This was down from a peak of 50 percent in early 2008.

Recycling volumes have grown, however, as metal prices have climbed, and the amount of platinum recovered from old jewellery is expected to amount to 300,000 ounces.

Net demand for platinum for jewellery is also expected to rise in Japan, although by a more modest 255,000 ounces to 310,000 ounces.

"Platinum retains a strong position in the jewellery market in Japan and the fall in its price - in absolute terms and relative to gold - has increased the weight of the metal sold this year," it said.

The amount of recycled metal in Japan is forecast to fall to an estimated 230,000 ounces this year.

As in China, demand for platinum has partly replaced interest for white gold.

In contrast to the jewellery sector, demand for platinum for use in catalytic converters is expected to fall this year due to a decline in automobile production following the economic crisis that began in late 2008.

Platinum purchases by Japanese automakers for domestic production is expected to fall 23.8 percent from 2008 to 465,000 ounces.

China, on the other hand, is expected to see a rise in demand for platinum for use in catalysts.

"Chinese light duty vehicle production is expected to climb from 8.3 million units in 2008 to 10.6 million units the year, making China the largest vehicle market in the world," JM said.

"Although diesel market penetration remains low in the light duty vehicle sector, total platinum demand is expected to climb by 16.2 percent to 215,000 ounces."