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Market Comments 12/25/2014
Dec 25, 2014 5:19 AM
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Diamond trading centers going on holiday. Dealers adjusting their expectations to meet new realities. Global demand is weak and there is an oversupply of diamonds throughout the distribution chain. Buyer’s market prevails with great opportunities for aggressive traders willing to take positions. Healthy U.S. market supporting the industry. U.S. sentiment improves as Dow surpasses 18,000, reaching record high after economy surges +5% in 3Q. U.S. Nov. jewelry sales +2% to $6.3B. India's Nov. polished exports +11% to$1.6B, rough imports +35% to $1.5B. The Rapaport Group wishes everyone a happy, healthy, prosperous and peaceful New Year.
Fancies: Ovals and Cushion great shapes for this holiday season with lots of U.S. demand and limited availability. Some fancy prices coming under pressure but very well cut stones are holding up better than rounds. Pears just OK with Princess relatively weak. U.S. holiday demand supporting market for commercial-quality fancies, especially for goods under the carat. Larger sizes very quiet with limited buying. Far East fancy demand weak. Buyers are very selective and insisting on excellent-shape proportions. Significant price differentials between excellent- and average-cut fancies. Off-make, poorly-cut fancies illiquid and very hard to sell, even at very deep discounts.
Global Comments
United States: The focus has been on retail as jewelers push to accommodate last-minute shoppers before Christmas. So far, there have been mixed reports from jewelers about the season with oval and cushion shapes noted as strong sellers. The wholesale trade is quiet with many taking vacation between Christmas and New Year’s with many concerned that prices will come under further pressure when they return. There are a lot of goods available on the market and a buyers’ market prevails for diamonds under 1-carat. There is stable demand for commercial-quality SI2-I2 goods, while there is select demand for large diamonds.
Belgium: Polished trading in Antwerp is quiet with most dealers on vacation during the Christmas to New Year’s period. Some suppliers kept a skeleton staff to accommodate last-minute requests from their retail partners before Christmas but most will be closed in the next week as the bourses officially close from December 25 to January 2. Similarly, rough trading has slowed and manufacturing has scaled down for the holidays, with some factory owners questioning whether to resume polishing in 2015 at current rough prices.
Hong Kong: The market is quiet with most diamantaires in holiday mode and many out of the city. Overall polished trading is slow with a few hot pockets of demand. There is good demand for below 1-carat, triple EX Gemological Institute of America (GIA) dossiers. In fancy shapes, there is stable demand for stones with good makes, specifically pears, ovals and emeralds. Most fancy buyers are quality-focused, with sharp differences in demand between excellent, good, and poorly-cut stones.
India: Trading is relatively quiet in Mumbai with very few foreign buyers in the market during the U.S. and European holiday season. Some Antwerp-based Indian buyers and bargain hunting Chinese buyers are looking for goods in Mumbai but overall trading is slow. Tight liquidity among manufacturers has intensified as payments from overseas have been delayed due to foreign currency devaluations in export markets. There are pockets of healthy demand, including for 0.30-carat to 0.40-carat, D-J, VVS-SI2 diamonds. There is good demand for 0.50-carat, G-J, VS-SI and there is good demand for 0.70-carat diamonds in all categories. Dealers note strong U.S. demand in fancy shapes for ovals and cushions, 0.30-carat to 0.90-carat, G-L, SI-I1 diamonds, while demand for pears is okay, but princess cuts remain weak. Manufacturers are hoping that the market picks up after January 15, when they expect retailers to start ordering goods to replenish inventory. Rough trading is quiet and manufacturing below capacity as inventory levels are relatively high.
Israel: The market in Israel is fairly slow, with some diamantaires away for vacation during the Jewish holiday of Hanukkah. Most are eyeing the U.S. shopping season with the hope that U.S. retailers will have healthy sales and return to the market to buy polished. There is good demand for 0.30-carat to 0.90-carat, D-H, IF goods, while demand is slow for goods above 1-carat, D-H, VVS goods. There is steady demand for 1-carat and larger, G-J, SI-I2 diamonds. Some dealers are shifting their focus to the Far East market as they hope to ramp up supply for the Chinese New Year in the coming month.
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