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Market Comments 5/14/2015
May 14, 2015 6:00 PM
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TRADE ALERT: GIA recalls 424 grading reports for diamonds treated to temporarily improve their color by up to three grades. Buyers are cautioned not to buy these diamonds based on their GIA grading reports. Markets stabilizing. Sentiment improves amid better expectations for Vegas shows. Shortages developing but rough prices have not come down sufficiently to enable profits and new polished is being manufactured. Rough demand stable after $470M De Beers sight. Sotheby’s jewels sells $161M (94% by lot) with cushion, 8.72ct., fancy vivid pink, VS2 sold for $16M ($1.8M/ct.), Christie’s sells $98M (77% by lot) with rectangular-cut, 5.18ct., fancy vivid pink sold for $11M ($2.1M/ct.).
Fancies: Ovals hot, Princess not. Cushions steady, Pears improving, Hearts slow. Good demand and firm prices for very large, top quality fancy shapes. Prices for curves improving slightly. 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: Sentiment has improved among New York-based diamond dealers and there are rising expectations for the Las Vegas shows at the end of the month. Buyers are slowly becoming less selective due to shortages in the market. Overall demand is stable. There is good demand for 3-carat to 7-carat, D-G, IF-VS diamonds. Activity in the retail jewelry sector is stable but quiet, which is usual for this time of the year. There is good demand for commercial-quality jewelry for the bridal market.
Belgium: Polished demand is stable and the mood has improved in Antwerp. Dealers note that there are shortages in select categories as a result of reduced manufacturing in the past few months. There is steady demand for GIA dossiers and good demand for 1-carat to 5-carat, J-M, VS-SI stones. Polished dealers are optimistic about the U.S. and expect the Las Vegas shows to raise sentiment in the diamond market for the second half of the year. Activity in the rough market remains quiet as many trading partners in India are closed for India’s summer vacation.
Hong Kong: The market in Hong Kong remains quiet. Many local dealers are worried that trading will remain subdued for longer than in other centers, extending into the fourth quarter. There is steady demand for triple EX goods but overall demand is sluggish. Demand from Mainland China is cautious as slower economic growth continues to take its toll. Recent retail sales data fell below expectations. China’s central bank cut interest rates again to stimulate economy growth. However, economic observers have expressed doubts about whether the new monetary stimulus can boost consumption.
India: The market is stabilizing as supply shortages emerge due to reduced manufacturing. U.S. demand is helping to support local diamantaires while other markets remain weak. There is some caution among dealers amid rumors that some smaller companies and traders have declared bankruptcy. There is stable demand for 0.70-carat to 1.50-carat, VVS diamonds. There is also steady demand for 1-carat, F-J, SI diamonds. In fancy shapes, pears, cushions and emerald cuts are moving well. There are some shortages for princess cuts in specific categories, but overall demand for princess cuts is fairly weak. Manufacturers complain that rough is still unprofitable despite recent price cuts at De Beers.
Israel: Polished dealers are regaining confidence, but trading is still relatively slow. There is steady demand for 0.30-carat to 0.99-carat, D-H, IF-VS diamonds as well as for 1-carat, G-H, VS-SI goods. Dealers are shocked by the recent GIA announcement that several Israeli companies have been using temporary color treatments to boost their certificate grades. Supply shortages are leading to unmet demand in higher-quality goods. Demand is being driven by U.S. buyers, while demand from China remains weak due to the slowing economy there. Demand from other Far East countries is stable. Israeli diamantaires are also looking to Latin America as a source of potential growth. There is good demand for pears and ovals among the fancy shapes, with nice cuts hard to find.
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