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Market Comments 7/10/2014
Jul 10, 2014 6:00 PM
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Polished prices coming under increased pressure as some Indian cutters reduce 1ct. and larger prices due to weak demand, oversupply and cash flow requirements. Mumbai IIJS show will provide important indication of price movements. Rapaport Melee Index +1% in 2Q. India proposes to raise polished import duty to 2.5%, extends diamond import credit cycle from 90 to 180 days. Dominion buys Fipke Holdings 10% stake in Ekati for $67M. De Beers sells 26% of S. Africa sales unit to BEE partner. Chow Tai Fook 1Q revenue -32% as Chinese gold rush slows, gem-set jewelry sales +2%. U.S. May polished imports -3% to $3.1B, polished exports +33% to $2B. Israel’s 1H polished exports +6% to $3.6B.
Fancies: Fancy shape market steady with fair demand for excellent shaped and larger polished sizes. Cutters are moving to fancy shapes because of significantly high rough prices for identical quality round diamonds. Curves (Pears, Ovals) are doing better than Squares (Emerald, Princess) in larger sizes with squares doing better in under the carat sizes. Increasing demand for 30-point Princess cut. Far East markets becoming more aware of fancy shapes. Buyers very selective regarding shape- and cut-quality with extreme price differentials between excellent- and average-cut fancies. Off-make, poorly-cut fancies illiquid and hard to sell even at very deep discounts
Global Comments:
United States: Polished trading is seasonally quiet with many wholesale traders still on their annual summer vacations. There is interest from buyers for specific items but tight liquidity is hindering sales and so diamond trading is expected to remain slow for the rest of July. There is good demand for SI and lower clarity goods. Retail jewelers report steady activity with bridal sales driving growth and good demand for engagement rings with 0.30-carat to 1-carat, G-H, SI- center stones.
Belgium: The market is quiet but there is a feeling of stability. There is steady demand for polished below 1-carat but manufacturing profit margins remain pressured for these goods due to high rough prices and slow grading times at the Gemological Institute of America (GIA). There is no urgency for goods and dealers are prepared to wait until after the summer break later in July to assess market conditions. Rough trading is cautious ahead of next week’s De Beers sight.
Hong Kong: The polished market is quiet, which is typical for July. Demand from Mainland China is slow and dealers are looking for lower-quality diamonds to meet consumers’ tighter budgets. As a result, there is steady demand for SI-clarity diamonds. In the retail jewelry market, demand for gold products has slowed, impacting activity at the major jewelry stores. Gem-set jewelry sales are stable.
India: Polished trading is quiet with fewer overseas buyers in the market – partly due to summer vacations in the U.S. Local demand is stable but many buyers are waiting for next week’s India International Jewellery Show (IIJS), as suppliers are hoping the event will boost trading. Finished jewelry is expected to sell more strongly than loose diamonds at the show. Diamond buyers suspect that some suppliers are pressured by tight liquidity and so they are asking for higher discounts, particularly for goods above 1-carat and VS and better clarity stones. There are also increased memo sales for larger diamonds. Demand for commercial-quality GIA dossiers is stable. Rough prices are firm with dealers expecting a stable July De Beers sight.
Israel: The market is quiet with subdued overseas demand during the U.S. July summer vacation period. Local dealers are looking for goods in India, sensing that some Indian manufacturers are under pressure to sell their goods off in order to generate cash flows. Demand for better-quality VVS-VS diamonds is slow while demand for SI2-I3 clarity goods is strong.
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