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* Auto sector use rose 20 pct in 2012 on higher auto output
* Jewellery demand stagnating, one-sixth of China's in 2012
By Risa Maeda
TOKYO, May 13 (Reuters) - Demand for platinum from Japan'scar industry rose 20 percent in 2012 thanks to a recovery inproduction but both look set to fall back this year, platinumspecialist and refiner Johnson Matthey Inc said in itsannual report.
Japanese car manufacturers account for around 10 percent ofthe world's gross platinum demand and about a half of thecountry's own demand. They used a total of 600,000 ounces lastyear, helped by a recovery from the country's 2011 tsunami.
Demand for palladium in autocatalyst use also rose 15percent to 785,000 ounces last year, helping to raise thecountry's total palladium demand by 9 percent to 2,055,000ounces during the same period.
"Japanese production of gasoline cars and light trucks isexpected to decline this year following the impressive growth in2012," Johnson Matthey said in the report.
Unlike in Europe, where platinum is mainly used for dieselengine vehicles, gasoline cars built in Japan still use platinumin the catalyst mix.
In 2012, Japan's overall platinum demand fell 13 percent,outpacing a 0.6 percent decline in global demand due to thebroad weakness of the capital market in platinum bars, whichallows investors to use platinum as a tradable asset.
Japanese gross platinum demand accounted for more than 20percent of global gross platinum demand in 2008, but that fellto 14 percent, or 1,140,000 ounces, last year as the appetitefor the metal in other economies including China grew rapidly.
Johnson Matthey didn't provide detailed forecasts on Japan'splatinum demand for 2013, including how far the country'sautocatalyst use will likely fall.
Japan's main auto industry body has said it expects vehiclesales in Japan to drop 11.7 percent year-on-year in 2013 toabout 4.74 million units.
The Japanese government's massive stimulus programme hashelped push the yen down by around 16 percent against the dollarso far this year, however, and that may prop up car exports.
The world's best-selling carmaker Toyota Motor Corp said this week it will maintain production levels at 3 millionvehicles a year in Japan.
STAGNANT
Jewellery demand in Japan has stagnated in recent years fromwhen it was a top platinum jewellery market in the 1980s and in2012 accounted to less than one-sixth of China's 1,950,000ounces.
As for the platinum bar market, Japanese investors tend tobuy in a falling price environment and sell on price upturns, atendency which was also seen in 2012, the report said.
Their investments fell to 100,000 ounces from 250,000 ouncesa year earlier as a rally in the yen price of platinum towardthe end of 2012, aided by the falling yen, gave some investors achance to sell.
Platinum prices in Tokyo hit an almost three-yearhigh of 5,300 yen per gram in February. They are now about 7percent below that level.
