London, England: Chinese demand for platinum jewellery is soaring towards a record annual high thanks to a sharp drop in the precious metal's price, leading metals group Johnson Matthey forecast on Tuesday Nov 17.

In a key report on platinum, Johnson Matthey said the metal would trade US$1,280 ($1,775) and US$1,550 an ounce during the next six months - still a long way off a record high of US$2,301.50 reached in March 2008.

Following the eruption of the financial crisis in late 2008, platinum prices slumped to US$744.25 in October last year - the lowest level since 2003. Platinum stood at US$1,438 an ounce in London on Tuesday Nov 17.

"The lower platinum price has reignited demand in the Chinese jewellery sector, encouraging the industry to replenish and further build its stocks, particularly in the first half of 2009," Johnson Matthey said in its report.

"Improved profit margins have attracted new manufacturers and retailers into platinum jewellery while a lower retail price has driven consumer purchases higher.

"As a result, demand in China is forecast to leap by 900,000 ounces to a record 1.75 million ounces in 2009."

However net global platinum demand will fall by 4.4 percent to 5.92 million ounces in 2009, forecast Johnson Matthey, as less people buy cars.

Platinum and its sister metal palladium are used in the manufacture of catalytic converters that help to reduce pollutants released by vehicles' exhausts.

Platinum supplies are meanwhile forecast to rise 1.9 percent 6.06 million ounces in 2009 from 5.95 million ounces in 2008, said Johnson.