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Rapaport TradeWire July 7, 2016
Jul 7, 2016 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
July 7, 2016
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Diamond
markets weak as U.S. dealers take vacation. Polished prices softening with June
RAPI 1 ct. -0.5%, 0.30 ct. -1.6%, 0.50 ct. -0.4%, 3 ct. -2.4%. Yuan currency cut
to 5-year low (6.69/$1) may impact Chinese jewelry imports and tourist
spending. Global 2015 rough production -4% to $13.9B, volume +2% to 127.4M
cts., average price -6% to $109/ct. Dominion lowers 2016 Ekati production plan -16%
to 4.7M cts after $19M fire damage. Petra sells 121.26 ct. Cullinan rough for
$6M ($49,480/ct.) to Nemesis International and Golden Yellow Diamonds. U.S. May
polished imports +2% to $3.1B, polished exports -1% to $1.4B.
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| Diamonds |
1,206,152 |
| Value |
$7,961,138,543 |
| Carats | 1,293,426 |
| Average Discount |
-29.78% |
www.rapnet.com
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| The RapNet Diamond Index (RAPI™) is the average asking price in hundred $/ct. of the 10 percent best priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet - Rapaport Diamond Trading Network. |
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Get Current Price List | Subscribe to Rapaport | Join RapNet |
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QUOTE OF THE WEEK
Manual methods of cutting, polishing, manufacturing and designing of gems and jewelry need to be substituted with high-end machines and software.
D.S. Rawat, secretary general of the Associated Chambers of Commerce & Industry of India, calls for better working conditions in the country's gems and jewelry trade.
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MARKETS
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United States: Market quiet with
dealers on vacation and NY Diamond Dealers Club closed from July 1 to 11. Some
U.S. buyers in India and Israel looking for bargains during slow period…
Belgium: Sentiment relatively
weak. Some improvement since Hong Kong show but polished prices continue to
soften. Suppliers trying to hold out until August vacation period…
Israel: Polished trading slow.
Dealers uncertain about future raise expectations for bourse initiatives to
improve trading. Difficult to compete with Indian suppliers on commercial goods
as prices soften and profit margins tighten…
India: Sentiment relatively
weak since Hong Kong show. Trading slow during summer months with few foreign
buyers in Mumbai. Domestic Indian demand cautious with subdued expectations for
IIJS Mumbai show (August 4 to 8)…
Hong Kong: Market remains
challenging with retailers consolidating on sluggish consumer sentiment and
slower tourist traffic. China better than Hong Kong but Chinese buyers cautious
as yuan currency weakens to five-year low (6.69/$1)…
Click here for deeper analysis
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RAPAPORT STATEMENT
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Diamond Prices Slide in June
Polished diamond prices fell in June and sentiment softened after relatively weak Las Vegas and Hong Kong shows. Steady U.S. demand is supporting the market but overall demand is sluggish. Brexit, the U.S. election and continued weakness in China’s luxury sector are fueling uncertainty...
Click here to read statement
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INDUSTRY
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Russia Gains as Global Diamond Output Falls
Global rough
diamond production fell 4.2% to $13.88 billion in 2015 recording its first
annual decline in three years, Kimberley Process data showed. Output by volume
increased 2.1% to 127.4 million carats, while the average price of production
dropped 6.2% to $108.96 per carat. Russia extended its lead over Botswana
as the world’s largest producer.
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ABN AMRO Sees Rough Prices Declining
Rough diamond
prices are likely to fall as “fragile” consumer demand for jewelry does not
justify higher prices, ABN AMRO said in a report. A surge in rough prices so
far this year is not sustainable and may have resulted from traders’
opportunistic behavior, the researchers explained.
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Shrenuj Defends Position After Asset Seizure
Shrenuj &
Co is seeking legal advice to challenge an order obtained by ICICI Bank to
seize its assets and prevent senior management from leaving India. ICICI in May
appointed a receiver on Shrenuj Far East Limited, the diamond manufacturer’s Hong Kong subsidiary. The bank then pursued an order to add Shrenuj’s Indian
inventory to its control. Shrenuj assured the Bombay Stock Exchnage the
situation will not significantly affect the business.
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U.S. Polished Imports Rise
U.S.
polished diamond imports increased 2.3% year on year to $3.09 billion in May, typically
the country's strongest month when goods arrive for the Las Vegas shows.
Polished exports declined 1.1% to $1.37 billion, leaving net polished imports
5.1% higher at $1.72 billion. The U.S.
net diamond account jumped 11 percent to $1.82 billion for the month.
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RETAIL & WHOLESALE
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Tanishq Gains in Gold-Buying Season
Titan
Company expects its flagship Tanishq brand gained market share during the
Akshaya Tritiya weekend in May, traditionally a time for buying gold. Sales
grew while some competitors declined as much as 30%, the company said. The brand
had a decent June fiscal quarter despite losing 15 trading days due to a nationwide jewelers’ strike. Stricter rules about presenting
identity cards when buying jewelry also impacted sales, Titan
said.
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Birks Group Returns to Profit
Birks Group
swung to a profit of $5.4 million in fiscal 2016 versus a loss of $8.6 million the previous year. Comparable store sales advanced 3%
even as total revenue fell 5.2% to $285.8 million, weighed by the strengthening of the U.S. dollar against its Canadian counterpart. The performance was driven by new
store designs, new collections and marketing campaigns, Birks explained.
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MINING
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Large Cullinan Diamond Fetches $6M
Petra
Diamonds sold a 121.26-carat rough diamond for $6 million in June. A joint venture between Nemesis International and
Golden Yellow Diamonds bought the diamond for $49,480 per carat. The diamond was recovered at
the Cullinan mine in South Africa. |
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Dominion Cuts Ekati Forecast, CFO to Leave
Dominion Diamond
Corporation lowered its production guidance at the Ekati mine for this fiscal
year to 4.7 million carats from 5.6 million carats previously planned. The mine’s processing plant is
shutting for three months following a fire with repairs estimated at $19.3
million.
The miner also announced the departure of chief financial officer Ron
Cameron, effective July 15. Cara
Allaway, currently vice-president
group controller, will temporarily fill the role until Dominion finds a
permanent replacement.
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De Beers Allowed to Flood Snap Lake
De Beers received
permission to flood the tunnels of the Snap Lake mine in Canada’s Northwest
Territories after suspending operations due to poor market conditions.
The company is considering whether to sell, close, re-open or continue
suspension at the mine, which it put onto care and maintenance in December. The
mine yielded 1.2 million carats in 2015 but hasn't made money since production began in 2008, according to a Reuters report.
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Lucapa Weighs Floating on London’s AIM
Lucapa
Diamond Company is considering a listing on London's Alternative Investment
Market. The move comes after the company said it is expanding its operations
and seeking the kimberlite source of large stones recovered at its Lulo
alluvial mine in Angola. Lucapa said the UK’s Brexit vote has not impacted investor
interest in the possible listing.
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Gemfields to Hike Ruby Output
Gemfields
has secured $65 million of debt financing which will be used to ramp up ruby
production and for general expenses. The loan facilities will enable Gemfields
to expand its Montepuez operations in Mozambique to 20 million carats a year after
recovering 8.4 million carats in the fiscal year that ended June 30, 2015.
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GENERAL
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London Bourse 'Well Placed' to Cope With Brexit
The London
Diamond Bourse (LDB) said it is in a strong position to cope with Brexit
because of its access to a bonded warehouse enabling duty-free trading.
However, the dive in the pound’s value – falling to a 31-year low against the
dollar this week – makes life harder for London dealers
because they buy diamonds in dollars and sell in sterling, said Victoria McKay, LDB’s chief operating officer.
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Report Cites Poor Pay in India Gem Trade
India’s
gem and jewelry industry is suffering from a labor shortage driven by
rock-bottom pay and dangerous working conditions, according to a report by the
Associated Chambers of Commerce & Industry of India and the Thought
Arbitrage Research Institute. Salaries in India’s gem and jewelry sector are
half of those in other industries as they stand at an average of $3,740 (INR 252,000) per
year versus $7,550 in pharmaceuticals, $7,330 in capital goods and $6,574
in electronics, the report said.
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Trump Ring Fetches $300K at Auction
A Harry
Winston engagement ring given by Donald Trump to Marla Maples in 1991 sold for
$300,000, or $40,268 per carat, at an auction in New York. The emerald-cut,
7.45-carat diamond ring went to an unnamed private collector. The selling price
was at the low end of the pre-sale estimate set by Joseph DuMouchelle, the
Birmingham, Michigan-based auction house that sold the ring.
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ECONWATCH
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Diamond Industry Stock Report
Birks Group (+574%) skyrocketed from a relatively low base after reporting positive results. U.S. retail stocks were otherwise generally stable. In the Far East, Chow Sang Sang (+11%) and Luk Fook (+14%) jumped. Peregrine Diamonds (+15%) was the strongest of the mining stocks after promising findings from an assessment at its Chidliak Diamond Project in Canada.
View the detailed industry stock report
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Jul 7 (13:01 GMT) |
Jun 30 (12:01 GMT) |
Chng. |
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| $1 = Euro |
0.90 |
0.90 |
0.00 |
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| $1 = Rupee |
67.39 |
67.51 |
-0.12 |
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| $1 = Israel Shekel |
3.88 |
3.85 |
0.03 |
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| $1 = Rand |
14.65 |
14.81 |
-0.15 |
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| $1 = Canadian Dollar |
1.29 |
1.30 |
0.00 |
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| Precious Metals |
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Chng. |
| Gold |
$1,361.70 |
$1,317.28 |
$44.42 |
3.4% |
| Platinum |
$1,087.50 |
$1,001.26 |
$86.24 |
8.6% |
| Silver |
$19.92 |
$18.38 |
$1.54 |
8.4% |
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| Stock Indexes |
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Chng. |
| BSE |
27,201.49 |
26,999.72 |
201.77 |
0.7% |
| Dow Jones |
17,918.62 |
17,694.68 |
223.94 |
1.3% |
| FTSE |
6,552.62 |
6,357.09 |
195.53 |
3.1% |
| Hang Seng |
20,706.92 |
20,794.37 |
-87.45 |
-0.4% |
| S&P 500 |
2,099.73 |
2,070.77 |
28.96 |
1.4% |
| Yahoo! Jewelry |
940.97 |
947.06 |
-6.09 |
-0.6% |
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INDIA MARKET REPORT
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Polished Trading Activity
Sentiment relatively
weak since Hong Kong show. Trading slow during summer months with few foreign
buyers in Mumbai. Domestic Indian demand cautious with subdued expectations for
IIJS Mumbai show (August 4 to 8). Sellers willing to compromise on price able
to sell as buyers push for deeper discounts. Manufacturing steady after
rough buying slowed slightly in June. Jewelers concerned post-Brexit gold rally
will slow sales and add to costs.
Read the Polished Diamond Trading Report |
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