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Market Comments 1/15/2015
Jan 15, 2015 6:00 PM
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Rough prices under pressure. Indian diamond cutters reducing polished production as dealer demand slows in all market segments. De Beers relaxes deferment policy as sightholders plan to refuse 25% of rough allocation. Next week’s sight expected to value at $400M to $500M. Low expectations for Chinese New Year season after Chow Tai Fook 3Q sales -10%. U.S. retailers report higher than anticipated inventory as Christmas sales disappoint. U.S. Nov. jewelry store sales -7% to $2.7B. Tiffany & Co. Nov.-Dec. sales -1% to $1B. Richemont 3Q sales +4% to $3.6B. Michael Hill 1H +4% to $227M. Birks 3Q sales +3% $98M. Visitor registration opens for The Diamond Show – Basel 2015.
Fancies: Ovals and Cushion doing well with good U.S. demand and limited availability. Some fancy prices coming under pressure but fine cut stones are holding up better than rounds. Pears OK. Princess relatively weak. U.S. demand supporting market for commercial-quality fancies, especially for goods under the carat. Larger sizes quiet with limited buying. 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 is improving in the U.S. market with India Diamond Week fostering increased trading in New York. Traders are eager to strengthen ties between New York and Mumbai and attendance at the event in the Diamond Dealer Club was similar to last year. There is steady demand for 0.50-carat to 1-carat, G-I, SI-I diamonds. Holiday season results for U.S. brick-and-mortar retailers were slightly disappointing and the major retailers are holding larger than anticipated inventory. As a result, post-holiday restocking orders are expected to come later than usual this year. Retailers are preparing for Valentine’s Day with a focus on bridal and lower price point fashion jewelry.
Belgium: Trading in Antwerp is beginning to pick up after a slow start to the year. There is a lot of old inventory on the market as manufacturers have reduced their polished production and are cautious about buying rough at current prices. There is steady demand for SI-clarity goods in all sizes, while demand for piqué goods is stable. European demand is improving which has helped increase market sentiment. However, diamantaires have low expectations for Far East demand ahead of the Chinese New Year. Manufacturers and rough dealers expect rough prices to soften at the upcoming De Beers and ALROSA sales.
Hong Kong: Dealer activity is returning to the Hong Kong market after a long holiday hiatus. Demand for the Chinese New Year has yet to materialize as the busy retail season is approaching and will begin on February 19. There is steady demand for 0.50-carat, G-H, VS-SI diamonds. Following a prolonged period of slow Far East demand in 2014 and persistent tight liquidity, there is some consolidation in the local trade with some diamantaires closing their Hong Kong offices to cut costs.
India: The market is waiting to see whether rough prices will decline at next week’s De Beers sight. Manufacturers anticipate a small sight with improved assortments. Polished buyers are cautious and looking to see if the anticipated correction in De Beers rough prices will impact the polished market. There is sluggish demand for Gemological Institute of America (GIA) dossiers as Chinese demand has slowed and retail inventories in the Far East remain relatively high. Diamantaires expect U.S. demand for piqué goods to improve in the coming weeks. Manufacturers continue to operate their factories at reduced capacity and have shifted production away from dossiers to larger size lab-graded goods and are also focusing on American quality piqué goods where they see consistent demand.
Israel: Polished trading activity is quiet in Ramat Gan with few foreign buyers in the bourse looking for goods. Diamantaires hope that post-holiday U.S. demand will awaken in February, but expect that January will continue to be a slow month. There is weak demand for dossiers as Chinese demand has not ramped up significantly ahead of the Chinese New Year. Local manufacturers remain cautious about the rough market and many are focused on sourcing polished rather than buying rough at current prices.
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