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Rapaport TradeWire July 14, 2016
Jul 14, 2016 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
July 14, 2016
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Market seasonally quiet.
Prices stable but financial pressure mounting as polished inventory grows. Inventory
levels increased significantly in 1H amid aggressive rough buying and sluggish
polished demand. Profit margins and liquidity tightening as activity slowed in
July. Share placement values ALROSA at $7.5B as government reportedly sells
10.9% stake for $818M. Okavango 1H rough sales +23% to $284M, volume +35% to
1.75M cts., average price -9% to $162/ct. Petra, Ekapa merge Kimberley mining operations.
Belgium June polished exports -17% to $1.2B, rough imports -11% to $945M. Chow
Tai Fook 1Q China sales -13%, HK / Macau sales -22%.
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| Diamonds |
1,226,470 |
| Value |
$7,967,552,000 |
| Carats | 1,311,985 |
| Average Discount |
-30.19% |
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
The only way forward for diamond companies to attract affordable funding — given the current slim margins — is that companies acting in the so-called midstream become more corporate.
Pierre De Bosscher, director of De Bosscher Consulting, and former CEO of the Antwerp Diamond Bank (ADB)
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MARKETS
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United States: Trading quiet with many dealers still on vacation. Activity expected to remain slow through July / August summer period. Steady demand for better-quality, RapSpec A2 diamonds…
Belgium: Sentiment weak as dealers anticipate slow trading throughout 2H. Suppliers preparing for vacation before bourses officially close from August 1 to 22…
Israel: Polished trading slow ahead of August summer vacation. U.S. demand stable with some post-Vegas orders and goods sent on memo…
India: Manufacturer inventory rising as dealers avoid extra supply. Liquidity tight after strong rough buying in 1H. Some polished suppliers offering higher discounts looking to boost transactions and improve cash flow…
Hong Kong: Polished trading weak on slower consumer jewelry demand across Greater China. Major retailers consolidating stores after aggressive decade-long expansion…
Click here for deeper analysis
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FIVE-MINUTE INTERVIEW
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Stuller Hedging its Bet on Synthetics
Rapaport News caught up with Stanley Zale, vice-president of diamonds and gemstones at Stuller, to discuss some of the bold moves Stuller has made this year and the group’s perspective on the retail jewelry market.
Click here to read the interview |
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INDUSTRY
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Sarine Sees Market Turnaround
Sarine
Technologies, a supplier of equipment used in diamond manufacturing, expects
second-quarter revenue to jump as improved market sentiment boosted sales of
its mapping systems. Sales increased to more than $20 million in the second
quarter that ended June 30, implying a surge of at least 39% over a year ago.
The company expects to report higher profit when it releases full results for
the period in the coming month.
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Okavango 1H Rough Sales Soar
Okavango
Diamond Company’s sales jumped 23% to $284 million in the first half after the
volume of rough supplied grew 35% to 1.75 million carats – its highest level since sales began in late 2013. The average price achieved across its auctions
fell 9% to $162 per carat during the period. The Botswana parastatal said rough
prices recovered in the first quarter but eased back since then as demand has
softened.
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Belgium Diamond Trade Slumps in June
Belgium’s
diamond trade declined in June with polished exports down 17% to $1.15 billion
and polished imports declining 12% to $1.22 billion. Rough imports fell 11% to
$945.3 million and rough exports slid 16% to $959.8 million, reversing a surge
in May. Belgium’s June net diamond account swung to negative $64.4 million
versus positive $62.7 million a year earlier, meaning total imports of rough
and polished exceeded exports during the month.
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Rio Tinto Unveils Red Diamond Coin
Rio Tinto unveiled
the first coin that features a rare red diamond from its Argyle mine in Western
Australia. Known as the Kimberley Treasure, the coin has a price tag of
$762,280 (AUD 1 million) and is being touted by the miner as an investment
piece. The coin is made from one kilogram of 99.99% fine gold and features a
radiant-cut, 0.54-carat red diamond from the Argyle mine.
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RETAIL & WHOLESALE
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Chow Tai Fook Revenue Falls
Chow Tai
Fook’s sales continued to decline in the first fiscal quarter that ended June
30 due to weak consumer sentiment in Hong Kong and Macau and a drop in tourist
arrivals from Mainland China. In Hong Kong and Macau, retail revenue plunged
22% and same-store sales slid 20%. The group’s retail sales in Mainland China
fell 13% and same-store sales slumped 17%.
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Famed Jeweler Tivol Dies at 92
Legendary
jewelry retailer Harold Tivol, chairman of Kansas City-based Tivol, died aged
92, The Kansas City Star reported. Born in Kansas City, Tivol
started his career working in his father Charles Tivol's store and later took
over the reins. He oversaw the company’s growth and received prestigious
accolades including the American Gem Society’s Triple Zero award.
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MINING
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ALROSA Share Sale Raises $818M
Russia
raised approximately $818 million (RUB 52.2 billion) from its sale of a 10.9% stake in
ALROSA, The Wall Street Journal reported. The government priced the
shares at RUB 65 each, a discount of 3.8% to the closing price at the time of
the sale. The Russian Direct Investment Fund, Russia’s sovereign wealth fund,
and its co-investors bought about half of the shares on offer, the report said.
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Petra, Ekapa Combine Kimberley Operations
Petra
Diamonds and Ekapa Mining agreed to merge their operations in South Africa's
Kimberley region in a bid to extend mining in the historic diamond-mining area.
As part of the deal, Petra’s Kimberley Underground mines, Ekapa’s tailings
operations, the Kimberley Miners Forum and the Kimberley Mines tailings
operations have been combined. The venture is 75.9% owned by
Petra and its Black Economic Empowerment partners with the remaining 24.1% held
by Ekapa Mining.
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Stornoway Raises $63M Ahead of Renard Production
Stornoway
Diamond Corporation raised $63.3 million (CAD 82.7 million) after shareholders
exercised their rights to purchase warrants before they expired on July 8. The
funds will be used to complete construction of the Renard mine where ore
processing is scheduled to start in September and commercial production is
projected for December. The Ottawa-located mine has probable reserves of 22.3 million carats and a 14-year projected
lifespan.
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Rockwell Back in the Black After Restructuring
Rockwell
Diamonds swung to a profit of $438,000 (CAD 570,000) in its first fiscal
quarter from a loss of $4 million (CAD 5.2 million) a year earlier. The
improvement followed a strategic review that saw the company sell its Angola operation
and place one of its South Africa mines on care and maintenance. Rough diamond
sales surged 46% to $9.3 million (CAD 12.1 million) and costs were cut by 25%.
Rockwell expects rough prices to remain stable but trading to slow during the
ongoing “historically quiet” second fiscal quarter.
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Record Angola Diamond Lifts Lucapa Sales
Lucapa
Diamond Company‘s revenue spiked to $26.2 million versus $2.9 million a year
earlier having sold a 404-carat diamond recovered at the Lulo mine in Angola
for $16 million (AUD 22.5 million). The average price of the company’s total sales
soared to $5,686 per carat during the period, compared with $976 per carat a
year ago. Excluding the 404-carat stone, the average price achieved was $2,421
per carat.
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ALROSA’s Nyurba Unit Unearths 214-Ct. Diamond
ALROSA
recovered a 214.65-carat diamond from Nyurbinskoye placer deposit, the second
such special stone found in the area in the past two months. The company said the
diamond measures 42.11mm x 34.26mm x 16.07mm, is translucent with a grey hue
and classified it as a 4 black clivage/makeable grey rough diamond. The Nyurbinskoye placer
deposit is located near the Nyurbinskaya mine, where ALROSA found a 241-carat
diamond with similar characteristics in June.
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GENERAL
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De Beers Launches Beneficiation Program
De Beers has
partnered with the South African government and the country’s diamond-cutting
industry to launch the ‘Enterprise Development Project for Diamond
Beneficiators’ project. The company will supply rough to five
historically disadvantaged South African diamond cutters and help them develop
to possibly become De Beers accredited buyers and eventually sightholders.
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JCK Show to Move Back to The Venetian in 2019
The JCK and
Luxury shows in Las Vegas will return to the Sands Expo and Convention Center
in 2019. The shows were until 2010 located at the Sands, which is part of The
Venetian and The Palazzo resorts, but were moved to the Manadalay Bay hotel
complex. The shows, which typically take place in early June, will
remain at Mandalay Bay for the next two years.
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Antwerp Fair Opens Doors to Foreign Exhibitors
Belgium’s
diamond industry is inviting overseas companies for the first time to
participate in the Antwerp Diamond Trade Fair. The eighth edition of
‘BrilliAnt’ will take place from January 29 to 31 at the Antwerp Diamond
Kring’s trading hall. Organizers will consider applications on a first-come,
first-served basis and will only accept companies which are members of a bourse
affiliated with the World Federation of Diamond Bourses.
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Israel Changes Format for Diamond Week
The next
edition of the International Diamond Week in Israel will see a new format, with the Israel Diamond Exchange (IDE) aiming to attract people from a
wider range of bourses around the world. Trading will take place on the floor
of the bourse in Ramat Gan from Monday, February 13, to Wednesday, February 15,
while the final day on Thursday, February 16, will be left
open for individual meetings, free tours and other activities organized by the
IDE.
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ECONWATCH
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Diamond Industry Stock Report
Jewelry retailers led the increases as most stock indices tracked by Rapaport News climbed this week. Signet (+8.2%) recovered some lost ground after its share price plunged in the previous two months as did Tiffany (+4.6%). The major Hong Kong retailers made similar gains despite Chow Tai Fook (+5.8%) reporting a continued slide in its sales during its first fiscal quarter.
View the detailed industry stock report
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Jul 14 (13:01 GMT) |
Jul 7 (13:01 GMT) |
Chng. |
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| $1 = Euro |
0.90 |
0.90 |
0.00 |
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| $1 = Rupee |
66.87 |
67.39 |
-0.52 |
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| $1 = Israel Shekel |
3.85 |
3.88 |
-0.03 |
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| $1 = Rand |
14.25 |
14.65 |
-0.41 |
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| $1 = Canadian Dollar |
1.29 |
1.29 |
0.00 |
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| Precious Metals |
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Chng. |
| Gold |
$1,321.75 |
$1,361.70 |
-$39.95 |
-2.9% |
| Platinum |
$1,085.55 |
$1,087.50 |
-$1.95 |
-0.2% |
| Silver |
$20.08 |
$19.92 |
$0.16 |
0.8% |
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| Stock Indexes |
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Chng. |
| BSE |
27,942.11 |
27,201.49 |
740.62 |
2.7% |
| Dow Jones |
18,372.12 |
17,918.62 |
453.50 |
2.5% |
| FTSE |
6,699.81 |
6,552.62 |
147.19 |
2.2% |
| Hang Seng |
21,561.06 |
20,706.92 |
854.14 |
4.1% |
| S&P 500 |
2,152.43 |
2,099.73 |
52.70 |
2.5% |
| Yahoo! Jewelry |
969.25 |
940.97 |
28.28 |
3.0% |
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INDIA MARKET REPORT
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Polished Trading Activity
Manufacturer inventory rising as dealers avoid extra supply. Liquidity tight after strong rough buying in 1H. Some polished suppliers offering higher discounts looking to boost transactions and improve cash flow. U.S. trading quiet during vacation period. China steady, Hong Kong slow. Domestic Indian demand sluggish. Manufacturing stable but rough demand declined since De Beers June sight.
Read the Polished Diamond Trading Report |
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