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Italy jewelry export set for new fall after 2011 drop

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Jewelry export from Italy, Europe’s top producer and exporter, is set fall by about 12 percent this year as it did in 2011, as a debt crisis in Europe and concerns about the global economy sap demand, a senior industry official said.

Jewelry demand is one of the main drivers on world precious metal markets and is keenly watched by investors for price trends.

Italy’s jewelry export fell by at least 12 percent last year as consumers around the world cut on spending in the face of uncertain economy amid the euro zone sovereign debt crisis which now risks engulfing Greece, Stefano de Pascale, director of the Italian goldsmiths’ federation Federorafi, told Reuters.

“The start of 2012 was not great. The situation is extremely complicated. The latest developments in Greece have a very heavy impact on the general economy and even bigger impact on the consumption of non-essential goods such as jewelry,” he said.

“Estimates for 2012 go towards a projection of a similar fall as in 2011, of a similar percentage,” de Pascale said in a telephone interview ahead of a major jewelry trade fair, VicenzaOro, in northern Italy beginning on Saturday.

Italy’s jewelry industry, which sells about 70 percent of its production abroad, used to dominate global markets, but its market share has fallen in the past decade hit by fierce competition from China, India and Turkey. The 2008/09 global economic crisis also dealt a heavy blow.

While demand remains depressed in Europe, there have been signs of a modest recovery in demand for Italian jewelry in the United States - the biggest western jewelry consumption market - as the U.S. economy picks up growth, de Pascale said.

Jewelry demand in the Middle East and North Africa has also been slowly recovering as the political situation in many countries there stabilizes after last year’s shocks, he said.

India and China, the world’s biggest gold consumers, remain virtually closed for jewelry exports from Italy and other European countries due to high duties and other trade barriers, he said.

Jewelry export from Italy fell by 14 percent in volume last year but jumped 10.5 percent in value on the back of rising precious metal prices last year, organizers of the VicenzaOro fair said on Saturday.

Sales to Switzerland, the main export market for Italian jewelry by value, surged 75.4 percent to 1.2 billion euros last year, VicenzaOro said in a statement, based on Italy’s statistics agency ISTAT and industry data.

However, export flows to Switzerland have been boosted by “factors not directly linked to jewelry,” the statement said, without providing more details. Industry experts said there was a considerable contribution of sales of recycled pieces for refining in Switzerland to the total figure.

Italian jewelry export to the United States dropped by nearly 15 percent in volumes and were flat at 466 million euros last year, the fair organizers said.

Prices

Gold prices, which have slowed their bullish pace and were up about 1.5 percent so far this year after a 10 percent rise in 2011, were still prohibitively high for many consumers and thus hit mass-market jewelry segment hardest, he said.

“The high-end, branded jewelry is doing better, they do not depend so much on the metal and have higher margins. But they do not make sales volumes,” de Pascale said.

Facing weak consumer demand, jewelry manufacturers have been reducing their precious metal stocks to minimum levels, often working with metal supplied by clients or buying just metal to fulfill received orders, he said.

That considerably cuts consumption of gold and other precious metals by Italian jewelers, he said.

Gold demand for Italian jewelry fabrication dropped 19 percent to 93.8 tons in 2011 - less than a fifth of the 1998 peak, according to metals consultancy Thomson Reuters GEMS.

The jewelry fair runs on May 19-23 in Vicenza, a major jewelry manufacturing center in Italy.