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Market Comments 11/13/2014
Nov 13, 2014 6:00 PM
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Polished markets cautious. Cutters offering lower prices to improve cash flow and buy high-price rough in order to maintain next year’s sight allocations. Liquidity situation significantly worsened by China’s restrictions on money transfers. Large turnout at Israel Diamond Week in NY. De Beers Nov. sight estimated at $550M with some rejections. Lucara 3Q profit nearly triples to $42M. Sotheby’s Geneva sells $95.8M (90% by lot) with Graff buying pair of oval, 20.05ct. and 20.06ct. D, IF, diamond earrings for $7.1M ($178,188/ct.). Christie's Geneva sells $150M (89% by lot) as Graff buys pear, 6.95ct., fancy vivid blue, SI2 and pear, 6.79ct., fancy pink, VS2 ear pendants for $15.8M.
Fancies: Fancy shape market steady with fair demand for excellent cuts and larger sizes. Market is spotty and selective. Good prices if you have a buyer but dealers are not buying for inventory resulting in significant discounts. Healthy U.S. demand maintaining price levels for commercial qualities. Curves (Pears, Ovals) doing better than Squares (Emerald, Princess) in larger sizes with Squares doing better in under the carat sizes. Far East becoming more aware of fancy shapes. Buyers selective regarding shape- and cut-quality with significant 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 was busy activity at the New York Diamond Dealers Club during Israel Diamond Week, with the large number of participants appeared more focused on building long-term supplier-buyer relationships than on closing immediate deals. There remains a lot of inventory on the market and buying is relatively sluggish for this time of the year. Buyers are filling orders, not building inventory. There is good demand for 1-carat to 1.50-carat, G-L, SI diamonds and stable demand for 0.25-carat to 0.60-carat, H-L, SI-I2 goods. Dealers at the Israel Week noted that there was relatively weak demand for melee, and 0.75-carat to 1-carat diamonds. In fancy colors, there is significant buyer interest for pinks and blues and some buyers for commercial-quality yellow diamonds. Expectations for the holiday season are cautiously upbeat.
Belgium: Sentiment in Antwerp is weak as suppliers continue to hold large inventories. Activity was slow this week with trading predominantly between locals. There is some demand for 1-carat to 2-carat, D-I, SI diamonds, and stable demand for goods larger than 3 carats. The market for commercial-quality fancy shapes is slow. European consumer demand is being driven by the high end as the middle class is waiting for Christmas promotions to set in. The trade is fairly optimistic for the holiday season with expectations that fourth quarter consumer demand will spur strong trading at the start of 2015. Rough buying is stable although dealers and manufacturers are complaining about high prices.
Hong Kong: Trading has improved slightly but remains slow. Diamond demand from retailers is relatively weak but expectations are rising for the upcoming holiday season. Buyers are still cautious given the ongoing market volatility and tight liquidity. There is stable demand for Gemological Institute of America dossiers but demand for 1-carat to 2-carat goods is weak due to uncertainty caused by inconsistent pricing by dealers. There is good demand for 4-carat and larger, G-L, VS-SI diamonds. Dealers and manufacturers are facing added pressure on liquidity as money transfers from China have become more difficult, sparking concerns that some Chinese buyers will default on payments.
India: The market has returned to normal operations following the Diwali break and trading is slowly picking up. Overseas buyers have returned as well, notably diamantaires from Israel looking for goods to satisfy U.S. holiday demand. Suppliers continue to face tight liquidity and are offering higher discounts, particularly for cash deals. Despite the prevailing buyer’s market, trading is order-specific with very few bulk purchases to build inventory. Demand for 0.30-carat to 0.40-carat and 1-carat diamonds has slowed. There is good demand for 0.50-carat to 0.70-carat, H-J, VS-SI goods and for 1-carat to 1.50-carat, G-I, VS-SI stones. In fancy shapes, demand for princess shapes is softening, but pears, marquise and oval shapes are moving well. Manufacturers note high rough prices and tight profit margins.
Israel: The market is quiet in Ramat Gan. Demand for big stones is stable but overall activity is slow and liquidity is tight. Many dealers traveled to the U.S. to participate in the Israel Diamond Week in New York and were encouraged by the busy activity on the trading floor. Expectations for holiday shopping in the U.S. are positive. There are a lot of goods in the market but dealers note that it’s difficult to find the right goods as demand is centered on specific categories. There is good demand for 0.50-carat to 0.70-carat, G-J, VS-SI diamonds, and steady demand for high-end large stones.
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