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Market Comments 7/23/2015
Jul 23, 2015 6:00 PM
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Diamond markets slow as dealers take summer vacation. Shortages due to significant decline in manufacturing increasing demand for recycled diamonds, especially larger sizes. Few new goods expected for Christmas. De Beers July sight much lower than expected at $200M with some 65% of goods rejected. Namibia gov’t to sell 15% of Namdeb production outside of De Beers in new 10-year supply deal. ALROSA 1H production +13% to 18M cts., prices -6%, sales -22% to $2.1B. India June polished exports -2% to $1.9B, rough imports -11% to $1.5B. Swiss watch June exports +3% to $2B. James Riley resigns as Gem-A CEO.
Fancies: Demand soft. Pears, Ovals and Cushions steady, Princess, Hearts slow. Prices for curves improving slightly. U.S. demand supporting market for commercial-quality fancies, especially for sizes under the carat. 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 New York diamond market is relatively quiet and dealers seem happy to wait out the slow summer period. Buyers are looking for goods, sensing that suppliers might need to sell at discounted prices to raise liquidity. However, there’s no urgency to buy and demand is mostly focused on filling existing order requirements. Trading has shifted slightly to the recycled market where dealers note they can find better deals than for new polished production. Jewelers are expected to delay holiday purchases by as much as possible, although some note that it’s becoming increasingly difficult to find the right goods for inventory. Retail demand is being driven by engagement and wedding jewelry sales during the ongoing summer wedding season.
Belgium: The market is slow and some dealers have taken an early vacation before the official summer break begins next week. There is good demand for 1-carat, D-J, IF-SI2, X3 diamonds with Gemological Institute of America (GIA) grading reports, while demand is weak for 3-carat to 5-carat goods. Bank credit remains a concern for local diamantaires as the lenders in general have adopted a cautious attitude toward the trade. Rough trading is quiet with De Beers boxes trading at or below list price with generous credit terms.
Hong Kong: Polished diamond trading is stable but relatively quiet. There is steady demand for 1-carat to 1.49-carat, F-G, VS-SI, X3 diamonds, while demand for large sizes above 3 carats is slightly low. Consumer demand in Mainland China is better than in Hong Kong although jewelers are active in the city. Some expect a spike in gold jewelry demand after the gold price fell to a near 5-year low this week. Still, jewelers are pushing gem-set jewelry which offers them better margins than their gold products. Hong Kong retailers note that tourist arrivals from Mainland China have slowed in the past few months.
India: Polished trading is stable but subdued as many U.S. buyers are on vacation. Dealer sentiment is weak and there’s little liquidity in the market. While there is some preparation for the India International Jewellery Show (IIJS) taking place August 6-10, expectations for the event are low as local polished diamond demand is cautious. Some expect that lower gold prices may influence strong gold jewelry buying at the show as jewelers start to prepare for the November Diwali season. There is steady demand for 1-carat to 3-carat, G-H, VS-SI X3 diamonds, while demand remains weak for 0.40-carat goods in all qualities. Demand for fancy shapes has slowed slightly. Manufacturers have shifted their focus away from production of dossiers toward sizes above 1-carat. Rough trading is slow with weak demand for De Beers boxes following last week’s small sight.
Israel: Trading in Ramat Gan remains quiet but stable. There are steady orders from large retailers, which are becoming difficult to fill. There are supply concerns regarding better color and clarity diamonds in most sizes due to decreased rough purchases, lower manufacturing levels and a lack of new polish on the market. There is good demand for fine quality diamonds, including high-end melee, and reduced manufacturing has resulted in shortages in these goods. There is stable demand for 1-carat to 2-carat, G-J, VS2-SI2 diamonds. Demand remains slow for 0.30-carat to 0.40-carat, D-H, IF-SI2 diamonds. Some companies are looking to capitalize on tight liquidity in India to purchase goods at higher discounted prices on RapNet. Many dealers are going on vacation soon, with bourse services available during shortened hours from July 28 to August 4.
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