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Rapaport TradeWire January 12, 2017
Jan 12, 2017 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
January 12, 2017
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Diamond demand uncertain as U.S. jewelers
report weak holiday sales. Signet disappoints as Nov.-Dec. sales -5% to $1.9B with
fewer transactions, higher average price, and technical glitches on ecommerce
channel. Mall traffic slow with department stores discounting heavily to
attract customers. Macy’s, J.C. Penney jewelry outpaces sluggish overall
performance. Rising expectations for Chinese New Year after Chow Tai Fook 3Q
retail sales +7% in China, -6% in Hong Kong. Steady rough demand expected at
next week’s De Beers sight as manufacturers raise production for 1Q stock
replenishment. ALROSA 2016 sales
+26% to $4.5B. U.S. Nov. polished imports -2% to $1.6B, exports +25% to $1.7B.
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| Diamonds |
1,258,800 |
| Value |
$7,663,568,584 |
| Carats |
1,343,922 |
| Average Discount |
-29.95% |
www.rapnet.com
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| The RapNet Diamond Index (RAPI™) is the average asking price in hundred $/ct. of the 10 percent best priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet - Rapaport Diamond Trading Network. |
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Get Current Price List | Subscribe to Rapaport | Join RapNet |
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QUOTE OF THE WEEK
Signet’s holiday faced a perfect storm of retail pressure from jewelry-industry trends, competitor promotions, Sterling ecommerce execution, U.K. macro factors and weak mall traffic.
Nomura analyst Simeon Siegel
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MARKETS
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United
States: Polished market stable
as dealers return from Christmas break. Diamond trading expected to improve as
jewelers replenish stock sold during holiday period…
Belgium: Trading quiet as dealers
return from vacation. Cautious mood after polished prices softened in December
and as banks restrict funding to local traders…
Israel:
Stable market with
steady Far East demand ahead of Chinese New Year season. U.S. demand slow as
buyers return from holiday…
India: Sentiment weak. Holiday sales to U.S. slower
than usual with estimates of small decline. Steady demand for 0.30-1.50 ct.,
VS1-SI2, RapSpec A3 diamonds but D-F, IF weaker…
Hong
Kong: Diamond trading slow
with manufacturers and wholesalers closing for Chinese New Year holiday. Retail
sentiment improving ahead of the Jan. 28 festival with growth in mainland China
expected from last year’s low base…
Click here for deeper analysis |
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FIVE-MINUTE INTERVIEW
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Undisclosed Synthetics Reaching Epidemic Levels
Joseph Kuzi, director of
Diamond Services, warns that undisclosed
synthetics are more widespread than the industry realizes. As technology
advances and production of lab-grown diamonds increases, the trade must raise
its vigilance about the issue if it is to protect the future of the natural
diamond industry, Kuzi emphasized in a recent interview with Rapaport News...
Click here to continue reading
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INDUSTRY
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Sarine Sales Jump Indian Liquidity Hurdle
Sarine Technologies expects fourth-quarter revenue grew
significantly as sentiment improved in the Indian diamond manufacturing sector.
The company projected sales surpassed $18 million during the final three
months of 2016, which would imply a 45% jump from a year ago. Sentiment in
India was strong during the quarter despite the impact of demonetization on
liquidity levels, Sarine explained.
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India Approves Diamond-Futures Trading
The Securities and Exchange Board of India (SEBI) gave
its in-principle approval to trading in diamond futures. Transactions on the
Indian Commodity Exchange (ICEX) are expected to launch in March once certain additional regulatory
approvals have been obtained. Investors will
be able to trade in three categories of diamond futures: 0.30 carats, 0.50
carats and 1 carat. India’s government gave its go-ahead to the plans in
September.
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Households Unaware of 80% Rise in Jewelry Value
Vintage jewelry gained more than 80% in value in the past
decade, with many owners not realizing how much money they are sitting on,
U.K.-based auction house Bonhams said. Jewelry from the Art Deco period in the
1920s and 1930s and pieces from the Belle Epoque era from 1890 to 1915 have
appreciated 88% since 2006, the company said, citing Art Market Research.
Jewelry from the post-war era jumped 70% in value.
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U.S. Diamond Trade Slows in November
U.S. polished diamond imports slipped 2% to $1.59 billion
in November, while polished exports grew 25% to $1.7 billion, government
data revealed. Rough imports more than doubled to $72.3 million, while exports jumped to $73.2 million from $19.8 million. The net
diamond account was negative $107.9 million compared with positive $248.9
million a year ago, as more diamonds left the country than came in during the
period.
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RETAIL & WHOLESALE
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Ecommerce Gains Leave Retail Stores in the Cold
Initial holiday sales data from across the retail sector pointed
to a tough season, with department stores reporting declines due to a shift
toward online shopping. Macy’s and J.C. Penney both posted revenue drops
but noted jewelry sales were relatively strong. Kohl’s holiday sales also fell.
Researchers at RetailNext backed up this verdict, reporting bricks-and-mortar
sales fell 10%, while ComScore said online sales jumped 12%.
Image: Kan Wu
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Signet Reports Bleak Holiday Season
Signet Jewelers’ sales fell 5.1% to $1.94 billion in November
and December as the company observed overall weakness in the jewelry market.
Ecommerce sales slipped 2.4% because enhancements to Signet’s online selling
platform failed to cope with the higher levels of holiday traffic. In-store
sales were more in line with the mid-single digit decline seen across the
jewelry industry over the holiday, the company said. Signet’s same-store
sales fell 4.6% during the period.
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Richemont Sales Hint at High-End Rebound
Richemont reported sales at its jewelry maisons jumped 9%
to $1.86 billion (EUR 1.75 billion) in the third fiscal quarter which included
the holiday season. The maisons, which comprise luxury brands Cartier and
Van Cleef & Arpels, drove an overall improved performance by the group, while
sales at its specialist watchmakers fell 2%. Group revenue advanced 6% to $3.29
billion, with sales in Asia-Pacific rising 10%, while the Americas grew 8%
and Europe climbed 3%.
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Chow Tai Fook Sales Signal China Recovery
Chow Tai Fook said retail sales in mainland China
increased 7% in the third fiscal quarter that ended December 31, while
same-store sales advanced 4%. However, revenue from Hong Kong and Macau fell 6%
with same-store sales down 2%. Gold sales outperformed gem-set jewelry in
both regions as gold prices rose during the period. The results signal a
turnaround from the double-digit declines reported in the past two years when the
jeweler was hit by a slowdown in China's economy and fewer tourist arrivals in
Hong Kong.
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Weak U.S. Sales Inhibit Michael Hill Growth
Australia-based Michael Hill reported group sales
increased 5.7% to $240.3 million (AUD 328.1 million) in the first fiscal half ending
December 31, despite its sluggish performance in the U.S. Global same-store
sales increased 1%. Sales generated at Michael Hill-branded stores in Australia
increased 3%, while revenue in Canada jumped 18%. Sales in New Zealand declined 1.3%. However, U.S. sales slid 5.9% as the company attempts to revive
growth there under new regional head Brett Halliday.
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MINING
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ALROSA Sales Rise as Rough Demand Returns
ALROSA’s diamond sales jumped 26% to $4.49 billion in
2016, reflecting a recovery in the rough market. The increase came despite a
slowdown in the final two months when India's demonetization policy impacted
liquidity for small rough diamonds. ALROSA's December sales totaled $176.3
million, with rough revenue of $173 million and polished sales of $3.3 million. This compares with combined sales of $255.2 million recorded in
November.
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Angola Mine Claims Highest-Value Diamonds
Lucapa Diamond Company claimed its Lulo mine in Angola
achieved the highest price per carat for any run-of-mine diamond production in
the world in 2016. Sales reached $51 million at an average price of $2,983 per carat, the
miner reported. The mine produced 269 ‘special’ rough diamonds, weighing 10.8
carats or more, compared with 86 a year ago. Total diamond output more than
doubled to 19,833 carats from 8,394 carats in 2015.
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GENERAL
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Sotheby’s Combines Luxury Categories
Sotheby’s launched a luxury and lifestyle division
uniting its jewelry, watches, wine, cars and ‘experiences’ categories. The auction
house appointed seasoned auctioneer Marteen ten Holder managing director of the
new unit. Ten Holder (pictured) brings experience in each of
the categories to the role. He will move to New York from London, where he was
most recently managing director of Sotheby’s operations in Europe, the Middle
East, India and Africa.
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Dhamani Selected to Retail Argyle Pink Diamonds
Rio Tinto named Dubai-based jeweler Dhamani to its
exclusive list of ‘select ateliers’ for Argyle pink diamonds, granting it
access to the miner’s supply of rare stones. Dhamani launched a new line of
pink-diamond jewelry, the DPINK Collection, which mostly comprise diamonds from
Rio Tinto's Argyle mine in Australia. ‘Select ateliers’ are companies that Rio
Tinto has entrusted with retailing Argyle pink diamonds not sold through Rio
Tinto’s main annual tender.
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MJSA Raises the Bar for Bespoke Jewelry
Manufacturing Jewelers & Suppliers of America (MJSA)
has launched a program to improve the consumer experience when buying
custom-made jewelry. The group set up the Council of Custom Jewelers as part of
the initiative to advance the art of custom-jewelry design and consumers’
appreciation of it. MJSA will also establish a basic definition of custom
jewelry and promote a system for classifying custom-designed projects.
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ECONWATCH
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Diamond Industry Stock Report
Disappointing U.S. holiday sales prompted heavy losses among retail stocks, with Kohl's (-21%) enduring the biggest slide. JCPenney (-17%), Macy's (-16%) and Signet (-11%) also fell sharply after sluggish performances during the crucial season. Hong Kong retail gained on improved results from Chow Tai Fook (+6%) and signs of a recovery in the Chinese market. It was also a relatively strong week for European retail stocks as Richemont (+17%) reported promising results.
View the detailed industry stock report
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Jan 12, 2017 (12:53 GMT) |
Jan 5, 2017 (13:41 GMT) |
Chng. |
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| $1 = Euro |
0.94 |
0.95 |
-0.01 |
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| $1 = Rupee |
67.97 |
67.89 |
0.08 |
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| $1 = Israel Shekel |
3.82 |
3.85 |
-0.03 |
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| $1 = Rand |
13.46 |
13.62 |
-0.16 |
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| $1 = Canadian Dollar |
1.31 |
1.33 |
-0.02 |
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| Precious Metals |
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Chng. |
| Gold |
$1,204.73 |
$1,173.83 |
$30.90 |
2.6% |
| Platinum |
$986.80 |
$958.20 |
$28.60 |
3.0% |
| Silver |
$16.92 |
$16.57 |
$0.35 |
2.1% |
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| Stock Indexes |
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Chng. |
| BSE |
27,247.16 |
26,878.24 |
368.92 |
1.4% |
| Dow Jones |
19,954.28 |
19,942.16 |
12.12 |
0.1% |
| FTSE |
7,285.86 |
7,200.59 |
85.27 |
1.2% |
| Hang Seng |
22,829.02 |
22,456.69 |
372.33 |
1.7% |
| S&P 500 |
2,275.32 |
2,270.75 |
4.57 |
0.2% |
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INDIA MARKET REPORT
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Polished Trading Activity
Stable market with
steady Far East demand ahead of Chinese New Year season. U.S. demand slow as
buyers return from holiday. Domestic market still feeling effect of
demonetization. Major retailers with organized credit and electronic payment
facilities doing relatively well. Large manufacturers raising production as
U.S. post-holiday orders begin. Small factories feeling liquidity squeeze
remain closed. Steady production of dossiers and 1 ct., while manufacturing of
small goods is slow.
Read the Polished Diamond Trading Report |
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