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Market Comments 4/23/2015
Apr 23, 2015 6:00 PM
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Polished trading quiet with many sellers refusing low offers. Manufacturers significantly reducing production as sales volume remains low and Indian market heads for vacation. Miners increasing rough production despite weak 1Q sales. ALROSA’s 1Q production +6% to 8.4M cts., De Beers +2% to 7.7M cts., Rio Tinto’s +14% to 4.2M cts. Graff Diamonds 2014 retail sales +30% to $922M, profit +41% to $180M. Sotheby’s NY sells $65.1M (79.9% by lot) with emerald, 100.20ct., D, IF diamond achieving $22.1M ($22,459/ct.). Luk Fook 4Q same-store sales -20%. Chow Tai Fook 4Q sales -9%, gem-set jewelry same-store sales -6%. Lazare Kaplan 3Q revenue -32% to $9.8M. ALROSA appoints Andrey Zharkov as president. HRD Antwerp appoints Peter Macken as CEO.
Fancies: Prices for Pears and Ovals improving with healthy demand for very fine cuts. Square shapes slow. Prices for fine-cut fancy shapes holding up better than rounds. 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: Jewelry retailers are selling although there is deep concern about middle-income earners that account for the bulk of the U.S. consumer market. Bridal remains the mainstay for the industry and jewelers who are able to adapt to selling to millennials – the core consumer group getting married – are doing well. Competition from the Internet and new ways of selling is challenging retailers. Diamond trading is stable, albeit relatively quiet. The U.S. remains the strongest market for the diamond trade with good demand for piqué diamonds. There is concern about liquidity in the large manufacturing centers.
Belgium: Activity in Antwerp is slow and sentiment is weak. There are very few new diamonds coming to the market due to the lack of manufacturing in recent months and dealers note that shortages in some categories are becoming apparent. There is steady demand for pointer-size goods below 1-carat with good demand for 0.30-carat to 0.99-carat, D-H, VS–SI2 diamonds. Rough trading is quiet but stable with dealers giving generous credit terms for De beers and ALROSA boxes on the secondary market.
Hong Kong: Polished trading is quiet but stable as most prefer to hold their prices stable rather than sell aggressively at lower prices as they did before. Suppliers are not in a rush to sell if the price is not right, but there is also no urgency to find goods among buyers. There is a reported shortage of nice goods in the market, specifically 1-carat to 2-carat, VS-SI goods and in J-M, IF-VVS diamonds. Jewelry retail sales are weak as there are fewer tourists in Hong Kong while gem-set jewelry sales in Mainland China are steady.
India: Trading is sluggish as the spring / summer vacation has begun. Many small and medium size manufacturers have closed their factories or reduced their operating hours as they seek to avoid unnecessary inventory build-up during the break. There is good U.S. demand for piqué goods, and steady demand for 0.25-carat to 0.40-carat, D-I, VS1-VS2 diamonds. Demand for fancy shapes has slowed but piqué-quality fancies are steady. Large manufacturers would rather hold goods than reduce prices, while dealers are under pressure to raise liquidity levels. Rough trading is quiet as prices remain firm for primary contract supply.
Israel: Trading is quiet as the bourse and businesses closed early in the week for Israel’s Independence Day holiday. Dealers and manufacturers are maintaining low inventory levels as rough prices are high and polished demand is weak. There is steady demand from the U.S., which continues to be the mainstay for the Israeli market. Far East demand is cautious and European demand weak. Demand for fancy shapes is stable with good demand for ovals and pears, while nice, fine-cut fancy shape diamonds are difficult to source.
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