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Rapaport TradeWire May 5, 2016
May 5, 2016 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
May 5, 2016
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Polished market slow with April 1 ct. RAPI
-0.3%; 0.30 ct. -1.3%. Steady U.S. demand raises expectations for Las Vegas
shows. Chinese jewelry sales steady during May Day holiday but Hong Kong hurt
by fewer tourists. Hong Kong 1Q polished imports -13% to $4.2B, exports -8% to
$3.2B. U.S. March jewelry sales +4% to
$4.1B but retail consolidation deepens as JBT reports 323 jewelry businesses closed
in 1Q. India
March polished exports +4% to $1.8B, rough imports -5% to $1.4B. Lucara
1Q revenue +71% to $51M, profit +185% to $17M. Lesedi la Rona 1,109 ct. rough
sale expected to exceed $70M ($63,120/ct.) at Sotheby’s London on June 29. Pawnbrokers Cash America
and First Cash to merge.
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| Diamonds |
1,176,437 |
| Value |
$8,016,696,801 |
| Carats |
1,270,409 |
| Average Discount |
-28.55% |
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
Every aspect of this auction is unprecedented. Not only is the rough superlative in size and quality, but no rough even remotely of this scale has ever been offered before at public auction.
David Bennett, worldwide chairman of Sotheby’s jewelry division, on the upcoming auction of the 1,109-carat Lesedi La Rona in June
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MARKETS
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United States: Polished trading
quiet. New York wholesalers filling orders but not buying for inventory. Steady
demand for 0.50 to 2.50 ct., G-J, VS2-SI2 RapSpec A2 diamonds…
Belgium: Activity muted with
trading cut short due to Thursday’s Ascension Day public holiday. Concern
demand is weaker than usual for this time of year…
Israel: Polished market
quieter than earlier in the year. Dealers focused on U.S. market with rising
expectations for upcoming Las Vegas shows…
India: Polished trading slowing. Dealers anticipate quieter market
through May school vacation period. Sentiment relatively positive with
expectations 2016 will be better than last year…
Hong Kong: Dealer and jewelry
wholesale markets quiet following May 1 Labor Day celebration. Retailers note
slight improvement in jewelry sales during the holiday but fewer Chinese
tourist arrivals...
Click here for deeper analysis
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INDUSTRY
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Diamond Prices Soften with Weaker Global Demand
Polished diamond trading
slowed in April due to sluggish demand at the start of a seasonally quiet
period. Sentiment weakened as the positive momentum from the first quarter
failed to gain traction. Supplies significantly increased due to high rough
sales and polished production in the first quarter.
The RapNet Diamond Index (RAPI™) for 1-carat,
GIA-graded diamonds slipped 0.3% in April. RAPI for 0.30-carat diamonds fell
1.3% and RAPI for 0.50-carat diamonds also declined 0.3%. RAPI for 3-carat
diamonds dropped 2.2%.
RAPI for 1-carat diamonds rose 1.2% in the first
four months of the year, but is still down 4.6% from a year ago.
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Fancy Blue Diamond Prices Outpace Yellows, Pinks
Fancy blue diamond prices outperformed their
yellow and pink counterparts in the first quarter, according to the Fancy Color
Diamond Foundation.
Prices of fancy blue gems rose 1.7% sequentially
in the three months compared with a 1.8% drop seen in fancy yellow stones.
Fancy pink diamonds nudged up 0.3%. Overall, fancy-color prices were down 0.1% over
the previous quarter.
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Lesedi La Rona Assigned $70M+ Auction Price Tag
The world’s second-largest gem-quality rough
diamond in history is expected to fetch “in excess of” $70 million at a Sotheby’s auction in London.
The 1,109-carat Lesedi La Rona, mined by Lucara
Diamond Corp. last November, will go under the hammer
at a standalone auction on June 29. The auction will be preceded by a
viewing at Sotheby’s New York on May 7 and at Sotheby’s London from June 18 to
28.
The Gemological Institute of America said the
rough diamond has “top color and transparency” and a “limpid” appearance
commonly associated with type-IIa gems.
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Singapore Diamond Investment Exchange Launches
Trading has started on the Singapore Diamond Investment
Exchange (SDiX), the world’s “first” commodity exchange for physically-settled diamonds.
The introduction on May 5 “represents the most significant change in global
diamond trading practices in hundreds of years,” according to SDiX.
The exchange is backed by investors including the Singapore
government’s sovereign wealth fund Temasek Holdings, veteran investor Jim
Rogers and Sun Tongyu, one of the founders of Alibaba.
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Jewelers Exiting U.S. Trade Soars in 1Q
U.S. jewelry business
closures surged 35% in the first quarter, according to data released by
the Jewelers Board of Trade (JBT).
Of the 380 companies that left the industry, the
maximum number was in the “ceased-operations” category, which is defined as
companies closing down business for reasons other than financial difficulty or
consolidation. The number of such closures soared 34% to 323, data showed.
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Diamond Slump Hits Botswana’s Growth
Standard & Poor’s
(S&P) cut its outlook for Botswana to negative on concern a slump in the
diamond industry could be structural rather than cyclical.
The country is highly exposed to the performance
of the diamond sector as it represents just under a third of Botswana's gross
domestic product, about a third of its fiscal receipts and more than two thirds
of exports, according to an S&P report.
The decision to revise the outlook from stable
comes as data released by the Bank of Botswana showed the nation’s rough
diamond exports slumped 17% year on year to $817.6 million in the first quarter
of 2016.
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Hong Kong’s 1Q Polished Diamond Imports Slump 13%
Hong Kong’s polished imports
dived in the first quarter after shipments from its key supplier markets –
India, Israel and Belgium – slumped.
Imports of polished stones dropped 13% to $4.23
billion in the three months to March 31 as deliveries from India, Hong Kong’s
largest diamond trade partner, retreated 12% to $1.88 billion. Shipments from
the municipality’s second largest source, Israel, plummeted 18% to $543
million, while imports from Belgium nosedived 21% to $454.4 million.
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India’s Polished Exports +4% in March
India’s polished diamond
exports increased 4.3% year on year to $1.83 billion in March, according to
provisional data provided by the nation’s Gem & Jewellery Export Promotion
Council (GJEPC). By volume, polished exports surged 25% to 3.5 million carats.
Polished imports slumped 52% to $260.8 million, leaving net polished exports
up 30% to $1.56 billion.
Rough diamond imports fell 5.3% to $1.39 billion
and rough exports increased 0.5% to $156.3 million, leaving net rough imports
6% lower at $1.24 billion.
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RETAIL & WHOLESALE
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Blue Nile’s Revenues Fall on Dip in Engagement Sales
Blue Nile’s sales declined 3.2% in the first quarter as the
online retailer suffered from a “challenging environment” and a slump in
engagement sales.
Sales fell to $103.1 million, with U.S. sales of engagement
jewelry decreasing 7%. However, non-engagement sales increased 4%. Profit fell 9% to $1.1 million.
Separately, Blue Nile said it has stopped shipping to South Dakota in response to a new state law on sales tax that it claims is unconstitutional.
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U.S. Jewelry & Watch Sales +4% in March
U.S. jewelry and watch sales from all outlets
climbed 4.2% year on year to an estimated $4.65 billion in March, according to
provisional data from the U.S. Department of Commerce.
Jewelry sales in March increased 4% to $4.11
billion, according to Rapaport News estimates,
marginally below the February growth rate of 4.5%. Watch sales rose 5.3% to an
estimated $545 million. Both categories have now enjoyed 11 months of
successive growth after five consecutive drops in late 2014 and early 2015.
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Cash America, First Cash in Pawnbroker Merger
Cash America International
and First Cash Financial Services, two leading U.S. pawnshop businesses, have
agreed to merge.
The combined group, to be known as First Cash,
will be one of the largest retail pawn stores in Latin America and the U.S.,
with more than 2,000 locations across four countries, the companies said.
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Multi-Million Dollar Diamonds For Sale at Sotheby's Geneva
Sotheby’s unveiled highlights
of its upcoming auction in Geneva that will feature more than 10 diamonds and
gemstones estimated at $1 million or higher.
Headlining the May 17 Magnificent Jewels &
Noble Jewels sale is the ‘Unique
Pink,’ expected to fetch up to $38 million (CHF 36.5
million). In addition, a pear-shaped, 7.32-carat, fancy vivid blue, internally
flawless diamond ring will go under the hammer for an estimated $15 million to $25
million.Other notable gems on offer
include a marquise, 6.64-carat, fancy intense blue, surrounded by other fancy
intense blue and D-color white diamonds, expected to sell for $10 million to
$14 million.
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Kering’s Luxury Sales Climb 3% in 1Q
Kering, the owner of high-end jewelry brands
Boucheron and Pomellato, reported luxury sales rose in the first quarter on a
stronger retail performance in Western Europe, Japan and emerging markets.
Revenue from the Paris-based group’s luxury
brands – which also include Gucci and Yves Saint Laurent – advanced 2.8% year
on year to $2.07 billion (EUR 1.8 billion), or an increase of 2.6% assuming
comparable structure and exchange rates. Revenue
growth from jewelry brands was “positive.”
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Charles & Colvard’s Sales Soar
Charles & Colvard, the creator of diamond
substitute Moissanite, posted its highest quarterly revenue figure for nearly a
decade thanks to a supersized purchase by its biggest customer.
Sales soared 62% to $11.4 million in the three
months to March 31 as an undisclosed client bought $6.8 million of “Forever Classic” loose
jewels on top of the $6.4 million the purchaser spent in the whole of 2015. The sale also
strengthened Charles & Colvard’s balance sheet by reducing its inventory
and improving its cash position, the North Carolina-based company said.
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MINING
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Producers to Address Sustainability at Dubai Congress
Major diamond miners are expected to share views
on transparency, responsibility and sustainability in producing countries at
this month’s World Diamond Congress.
A panel discussion on the topic is scheduled for
May 19 at the 37th congress in Dubai. The congress will run from May 16 to 19.
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Lerala Mine in Botswana Back on Stream
Kimberley Diamonds said production restarted at
its Lerala Diamond Mine in Botswana after nine months of upgrading and
recommissioning.
First diamond sales are expected in June, the miner said. Production will be ramped up to full
levels “over the next several weeks.”
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Gemfields Sells Emeralds at Record Average Price
Gemfields achieved a record average price for
“higher-quality” rough emerald at an auction in Lusaka, Zambia.
The miner sold 470,000 carats for an average of
$70.68 per carat at the sale, which ran from March 30 to April 3. Total revenue
generated was $33.1 million.
Gemfields’ production of emeralds and beryl at
the Kagem mine in Zambia slumped 28% to 7.1 million carats in the first
quarter that ended March 31. Output of ruby and corundum from Montepuez surged
43% to 2 million carats.
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GENERAL
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Argyle's Largest Violet Diamond to Lead Rio Tinto Tender
The largest violet diamond recovered from Rio
Tinto’s Argyle mine in Western Australia is to go on sale at a tender this
year.
Violet diamonds are especially rare, as the mine
has produced only 12 carats of polished violet diamonds for the tender in 32
years, Rio Tinto said.
The oval-shaped, 2.83-carat polished diamond,
known as the ‘Argyle Violet,’ will lead Rio Tinto’s 2016 Argyle Pink Diamonds
Tender. The sale will start with private trade viewings in June and travel to
Copenhagen, Hong Kong and New York.
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Ex-Vogue Creative Director to Lead Tiffany Ad Campaign
Tiffany & Co. unveiled a
collaboration with the former model and creative director of American
Vogue magazine, Grace
Coddington.
The company, which announced its move through a
cartoon animation on its social media pages, appointed Coddington as its
creative partner and “style visionary.”
Coddigton will direct her first brand
advertising campaign, Tiffany’s “Legendary Style” fall campaign, which will
feature several “iconic” collections.
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ECONWATCH
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Diamond Industry Stock Report
There were sweeping losses across the industry this past week. Rockwell Diamonds (-17%) led the decline among miners, with most other stocks falling by smaller margins. U.S. retail stocks mainly fell as market uncertainty continues. Almost every Indian industry stock price fell, headed by Classic Diamond (-11%), with European retailers suffering small losses and Hong Kong-based Chow Sang Sang (+2.9%) proving the only Far East stock to have made a significant gain.
View the detailed industry stock report.
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May 5 (12:40 GMT) |
Apr. 27 (09:15 GMT) |
Chng. |
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| $1 = Euro |
0.87 |
0.88 |
-0.01 |
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| $1 = Rupee |
66.56 |
66.42 |
0.14 |
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| $1 = Israel Shekel |
3.78 |
3.77 |
0.01 |
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| $1 = Rand |
14.97 |
14.41 |
0.56 |
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| $1 = Canadian Dollar |
1.28 |
1.26 |
0.02 |
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| Precious Metals |
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Chng. |
| Gold |
$1,277.28 |
$1,246.15 |
$31.13 |
2.5% |
| Platinum |
$1,054.25 |
$1,018.00 |
$36.25 |
3.6% |
| Silver |
$17.38 |
$17.34 |
$0.04 |
0.2% |
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| Stock Indexes |
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Chng. |
| BSE |
25,262.21 |
26,055.58 |
-793.37 |
-3.0% |
| Dow Jones |
17,651.26 |
17,990.32 |
-339.06 |
-1.9% |
| FTSE |
6,111.90 |
6,274.94 |
-163.04 |
-2.6% |
| Hang Seng |
20,449.82 |
21,361.60 |
-911.78 |
-4.3% |
| S&P 500 |
2,051.12 |
2,091.70 |
-40.58 |
-1.9% |
| Yahoo! Jewelry |
1,062.09 |
1,109.20 |
-47.11 |
-4.2% |
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INDIA MARKET REPORT
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Polished Trading Activity
Polished trading slowing. Dealers anticipate quieter market through May
school vacation period. Sentiment relatively positive with expectations 2016 will
be better than last year. Steady U.S. demand ahead of Las Vegas shows. Chinese
demand stable. Domestic Indian demand improving since jewelers strike ended. Manufacturing
levels stabilizing and rough trading slow as new polished enters the market.
Read the Polished Diamond Trading Report
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