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Market Comments 4/16/2015
Apr 16, 2015 6:00 PM
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Polished markets weak with very low trading volume. Polished prices relatively stable following recent corrections but dealers uncertain about the future. Miners keeping rough prices high but selling less goods. ALROSA rough prices +2% to+3% at April sale, but reportedly allows deferrals up to 40%. Dominion 4Q rough sales +3% to $241M. Belgium March polished exports -7% to $1.2B, rough imports +5% to $1.4B. Rapaport Melee Index -4% in 1Q 2015. Sotheby’s HK sells $37M (67% sold by lot). LVMH 1Q watch and jewelry revenue +19% to $765M. U.S. February specialty jewelry store sales -5% to $2.7B. Diamond community mourns the loss of Antwerp Diamond Bourse executive director Yves Diamant.
Fancies: Prices for Pears and Ovals improving with healthy demand for very fine cuts. Square shapes slow. Prices for fine-cut fancy shapes holding up better than rounds. U.S. demand supporting market for commercial-quality fancies, especially for sizes under the carat. Larger sizes stable. 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: Uncertainty prevails in New York as people find it difficult to understand steady rough prices while polished demand is weak. There is less slack in the polished market with fewer diamonds available due to reduced manufacturing. Dealers are resisting the impulse to sell cheaply to buyers hunting for bargains due to a tighter supply-demand dynamic. There is stable demand for 1-carat, D-I, VVS-SI goods. The supply of radiant cuts has increased in the local market, while the overall demand for fancy shapes is mixed. Cushion shapes above 5-carats are moving slowly.
Belgium: Diamantaires are returning slowly to the market after the Passover and Easter holidays. Demand is soft in most categories, especially dossiers. Local diamantaires are refusing to accommodate buyers hunting for bargains, despite the weak level of demand. Goods between 1-carat and 2-carat are moving slowly. The market for rough diamonds appears to be stabilizing, but diamantaires complain that at current prices most rough categories will barely yield a profit when polished.
Hong Kong: Trading is slow and demand order-specific, with most retailers avoiding inventory purchases. Many Mainland Chinese consumers have shifted their luxury shopping from Hong Kong to Europe to take advantage of the weak euro, which has hurt local retailers. Recently published macroeconomic indicators from China also suggest that economic growth is slowing in the region. Major retail jewelers report that inventory levels and average turnover time rose at the end of 2014. The People’s Republic of China recently announced that it will tighten restrictions on multiple-entry visas for Mainland Chinese seeking to enter Hong Kong, which will further discourage some luxury shoppers.
India: Activity is slow with few foreign buyers in the market. Trading in Mumbai between local diamantaires is seasonally slow as well, as the summer vacation period begins. Most diamantaires are expected to be back from vacation by mid-June. Fear of impending bankruptcies at large companies has led to caution in the market, but most of the rumors appear to be unfounded. There is some positivity in the market after ABN Amro announced IndusInd Bank would take over its diamond lending operations in India, preventing a further credit squeeze. Buyers are purchasing to fulfill client orders and are still avoiding purchases for inventory. There is steady demand for 0.30-carat to 0.40-carat, D-I, VS diamonds. Below 1-carat, there is good demand for triple EX goods. Good demand also exists for 1-carat, D-I, VS, stones. Demand is soft for cushion and princess cuts, but stable for all other fancy shapes. Rough prices appear to be holding steady after ALROSA raised prices at its most recent long-term contract sale, although the miner permitted its clients to defer a large amount of the goods on offer.
Israel: Traders have returned from the Passover holiday but local diamantaires are reluctant to hold goods. Many dealers are in a wait-and-see mode, hoping that a positive JCK Las Vegas show in May will generate more business. There is good demand from the U.S. market, while Far East demand is low but stable. Demand from other foreign markets is weak. There is good demand for diamonds between 0.50-carat and 1-carat, D-I, VS. Oval and Pear shapes with nice makes are hot but in short supply. Reports from the Rough Diamond Week at the Israel Diamond Exchange are mixed. Major diamond miners fully booked their show rooms but said the show had more buzz last year. Anecdotal reports from local diamantaires say that many people went to view the rough but few bought.
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