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Market Comments 7/24/2014
Jul 24, 2014 6:00 PM
By Rapaport
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Polished trading sluggish as weak Mumbai IIJS show loses appeal for diamond traders. Indian market hopeful new Modi government will boost economic growth and Diwali jewelry sales. Manufacturer margins and liquidity under pressure as rough prices increase in spite of declining polished prices. July De Beers sight estimated at $775M with 1%-2% price rise. ALROSA 1H production -7% to 15.9M cts., sales +13% to $2.7B, prices +6%. Global 2013 rough production +11% to $14.1B, volume +2% to 130.5M cts., average price +9% to $108/ct. India’s June polished exports -1% to $1.5B, rough imports +16% to $1.6B. Frederic Cumenal to replace Michael Kowalski as Tiffany CEO in April 2015.
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: There is stable demand for polished diamonds from wholesale and retail jewelers although few are buying to build inventory. Sentiment in the general retail market is cautious due to a relatively weak first half of the year, although many anticipate a stronger second half and a decent Christmas shopping season. Jewelers with a strong focus on bridal are seeing steady sales. Diamond dealers are sensing weakness in overseas markets and are looking for discounted polished ahead of the summer vacations in Belgium and Israel. There is steady demand for commercial-quality, SI and lower clarity diamonds.
Belgium: Polished trading is slow but stable with many businesses wrapping up activities ahead of their summer vacations. The Antwerp bourses will close for three weeks from Monday, July 28. Having endured a relatively quiet month, they’re hoping trading will improve when they return toward the end of August. Rough trading was stable following the De Beers July sight with premiums firm on the secondary market.
Hong Kong: Far East polished demand is seasonally slow with many dealers traveling during July. There is some activity but the volume of deals taking place has dropped, as it tends to do in July and August. There is steady demand for Gemological Institute of America (GIA) dossiers below 1-carat, G-J, VS-SI goods while demand for 3-carat, D, IF-VVS goods has slowed. Among fancy shapes, there is stable demand for hearts, ovals and pears.
India: Polished trading is slow and the India international Jewellery Show (IIJS) that took place this past week fell below expectations. There were steady sales of gold jewelry at the show while studded-jewelry sales were slower and loose diamond trading even slower. Activity in the Bharat Diamond Bourse is stable with few foreign buyers in the market at this time. Local dealers are still focused on the export market as domestic demand from retail buyers remains cautious. There is some expectation that domestic activity will improve in the coming months before the October Diwali festival. There is steady demand for lower-color goods. Demand for pointer-size GIA dossiers is stable although a bit slower than before. Rough trading is firm as manufacturers ramp up polished production before Diwali, but liquidity is tight and profit margins are low in the manufacturing sector.
Israel: Activity in the bourse is quiet. Trading is mainly focused on supplying the U.S. market with steady demand for SI and lower clarity diamonds. Demand for 1-carat and larger, better-quality goods has slowed. There are fewer foreign buyers in the bourse than usual due to the political situation and due to the seasonal slump of the global market. Rough trading is stable.
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Tags:
Rapaport
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