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Rapaport TradeWire September 15, 2016
Sep 15, 2016 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
September 15, 2016
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Positive atmosphere at Hong Kong show with trading slightly better
than low expectations. Buyers maintain cautious outlook for holiday season. Far
East retailers requiring less inventory as China expansion slows. Suppliers
holding prices to minimize losses from expensive rough. De Beers estimates 2015
global rough sales -30% to $13.7B, rough production -0.7% to 141M cts. with
value -10% to $17.5B, average price -8% to $124/ct. Insight report notes
millennials driving growth but diamond content in jewelry sales -2% to $24.7B
last year. Dominion 2Q sales -24% to $160M, loss of $33M vs. loss of $18M a
year ago. Richemont jewelry sales -16% in first five months, warns 1H profit
-45%.
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RapNet Data: September 15
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| Diamonds |
1,253,101 |
| Value |
$8,000,226,523 |
| Carats |
1,346,501 |
| Average Discount |
-30.22% |
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
We are still optimistic about China. It’s still a huge market for diamond consumption.
Kent Wong, managing director of Chow Tai Fook
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MARKETS
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United
States: Stable market with
dealers watching for trends from Hong Kong show. Buyers selective and pushing
for higher discounts…
Belgium:
Positive sentiment with
large delegation of Antwerp suppliers holding firm prices at Hong Kong show…
Israel:
Dealers relieved at
steady Hong Kong show following long, inactive summer…
India:
Polished market stable
with suppliers maintaining prices at Hong Kong show. Indian buyers looking for
bargains…
Hong
Kong: Busy activity with
steady traffic at Hong Kong show. Conservative Far East buyers limiting
inventory orders…
Click here for deeper analysis
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INDUSTRY
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Positive Atmosphere at Hong Kong Show
Sentiment
was positive but buyers were cautious in the opening days of the Hong Kong
Jewellery & Gem Fair. Traffic was steady and there was some buying activity
at the loose diamond section as buyers have been out of the market for so long,
exhibitors noted. Polished prices were relatively stable with manufacturers
defending tight profit margins. The finished jewelry exhibition, which began
Thursday at a separate venue, saw light traffic on the opening day. Retailers
maintain a cautious outlook for Far East diamond consumption this holiday
season.
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‘A Diamond is Forever’ Relaunched in China
De
Beers is relaunching its 'A Diamond is Forever’ marketing in China as the
company is targeting millennials this holiday season. Millennials spent more
than $25 billion on diamond jewelry across the U.S., China, India and Japan,
accounting for more than half the total retail value of diamond jewelry
purchases in those top four markets, according to its Diamond Insight Report
published this week.
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HRD Renames its Diamond Grading Reports
HRD
Antwerp rebranded its grading certificates as ‘Diamond Grading and Jewelry
Reports’ due to the legal connotations of using the term ‘certificate’ and to align
with common global industry terminology. The new documents also feature
durable and tear-proof paper and security features such as UV print,
micro-line structures, micro-text and a hologram. The reports will appear
on the market from October 3.
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De Grisogono Buys Rights to 813ct. Diamond
De
Grisogono, a Swiss jeweler, purchased the rights to the world’s most expensive
rough diamond, the Constellation. The company entered into a partnership with
Dubai-based Nemesis International, which bought the 813-carat diamond
from Lucara Diamond Corporation for $63 million in May. The Constellation was
recovered at the Karowe mine in Botswana in November and cutting and polishing
is scheduled to be completed by mid-2017.
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RETAIL & WHOLESALE
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Chow Tai Fook Braces for Short-Term Volatility
Chow
Tai Fook cautioned the jewelry market environment remains challenging even as
the company expects its sales slide to ease. The second half of calendar 2016
will be better than the first half because the jeweler is working off a low
base after last year’s sales slump, managing director Kent Wong told Rapaport
News. Chow Tai Fook’s revenue fell 12% to $7.3 billion (HKD 56.59 billion),
while profit slumped 46% to $384 million in the fiscal year ending March 31.
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Richemont Sales Slump Prompts Profit Warning
Richemont’s
sales dropped 14% at actual exchange rates in the five months ending August 31
due to a “difficult global environment,” the luxury group said. Sales slid 13% at
constant rates. Jewelry sales, including the company’s Cartier and Van Cleef
& Arpels brands, retreated 16% at actual rates and 15% at constant rates.
Operating profit will tumble 45% in the first half and net profit will be
impacted at a similar level, the company forecast.
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Tiffany Names Mark Erceg as New CFO
Tiffany
& Co. appointed Mark Erceg its new chief financial officer (CFO) effective
October 18. Erceg, whose most recent position was CFO at Canadian Pacific
Railway Ltd, replaces Ralph Nicoletti, who resigned in May to join another
company. His appointment comes amid declining sales as spending in key markets
tightened. Tiffany’s sales slid 6% to $932 million in the second quarter that
ended July 31.
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Frederick Goldman Hires Veteran to Oversee Quality
Frederick
Goldman appointed former Gemvara executive Noah Pearce as director of quality
engineering with a focus on bridal and fine jewelry. Pearce has more than 20
years experience in the industry, having served as director of quality
assurance and manufacturing at Gemvara, an online retailer which was recently acquired by
Warren Buffett’s Richline Group.
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MINING
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Dominion Loss Widens After Ekati Fire
Dominion
Diamond Corporation’s net loss widened 82% to $32.9 million in the three months
that ended July 31. A fire at the Ekati mine in Canada during the quarter
resulted in a plant closure and an estimated $15 million in repairs. Operations
are expected to resume September 21. Diamond sales slumped
24% to $160 million. Separately, Dominion hired Matthew Quinlan as
chief financial officer from CIBC World Markets.
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Rockwell Diamonds CEO Resigns
James
Campbell resigned as chief executive officer of Rockwell Diamonds amid a review
of the company’s operations. He’ll be replaced by Tjaart Willemse, a former De
Beers operations manager who will continue to assess Rockwell’s management
structures and operating plans. A strategic review in August found the recently
acquired to
Remhoogte mine is operating below plan, while construction of the new
plant at Wouterspan is behind schedule and costing more than projected.
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DiamondCorp Cuts Loss at Lace Mine
DiamondCorp’s
pre-tax loss narrowed to $328,000 (GBP 247,221) in the first half from $4.2
million a year earlier, driven by favorable foreign-exchange rates. The company
cautioned sales may lag in the coming months because of operational issues at
its Lace mine in South Africa. DiamondCorp is preparing to hold its first
sale in Antwerp on September 17 but will offer fewer diamonds than expected as
production at Lace was disrupted by flooding in August.
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Firestone Pulls Sale of BK11 Mine to Tango
Firestone
Diamonds’ sale of the BK11 mine in Botswana fell through after Tango Mining
failed to meet the purchase conditions by September 9. The deal was
initially scheduled to close in September last year, but Firestone extended the
deadline four times to enable Tango to finalize the requisite funding. This
time, it said the agreement has finally lapsed and the deal will not
proceed.
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Merlin Diamond Mine to Resume Operations
Merlin
Diamonds will restart production at its mine in Australia’s Northern Territory
in October after the provincial government approved its mining plan. The
Merlin mine has an indicated and inferred resource of 4.3 million carats and an
11-year life span. Merlin said it has started pumping out water from the Kaye
pit in preparation for mining.
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GENERAL
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Apple Discontinues 18k-Gold Luxury Smartwatch
Apple’s
$17,000 gold smartwatch failed to make it to the company’s latest product range,
signaling the technology giant has retreated from the luxury timepiece
category. The Apple Watch Series 2 is available in lightweight aluminum,
stainless steel cases or ceramic. As the 18-karat gold version is no longer
available, the ceramic timepiece is now the most expensive in the collection,
starting at $1,249.
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Jadeite Bangle Headlines Sotheby's HK Auction
A
“highly important” green jadeite bangle is slated to be the most valuable item
at Sotheby’s jewelry auction in Hong Kong next month, drawing an estimate of up
to $9 million (HKD 70 million). The vivid emerald-green bangle is a rare
example of “jadeite of the best quality,” Sotheby’s said. Its lower estimate is
$6.5 million.
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Natural Color Diamond Association Opens in U.K.
The
Natural Color Diamond Association (NCDIA) will launch a U.K. branch to
facilitate networking among members of the trade and increase the public’s
awareness about colored diamonds. The first meeting will take place November 10
at the London campus of the Gemological Institute of America (GIA). David
Warren, Christie's senior international jewelry director, will deliver a talk
on colored diamonds the auction house has put under the hammer over the years.
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ECONWATCH
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Diamond Industry Stock Report
U.S. retail and industry stocks mainly fell, led by Sotheby's (-7.5%), in a week that saw the Dow Jones index drop 2.7%. European industry share prices mostly declined, headed by Richemont (-6%) on disappointing results that prompted a profit warning. Gitanjali Gems (+42%) led generally stronger Indian stocks, while Rockwell (-14%) suffered the heaviest drop of the major diamond miners after its CEO resigned. Mining stocks otherwise showed a mixed performance.
View the detailed industry stock report
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Sep 15 (11:15 GMT) |
Sep 9 (10:50 GMT) |
Chng. |
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| $1 = Euro |
0.89 |
0.89 |
0.00 |
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| $1 = Rupee |
67.00 |
66.42 |
0.58 |
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| $1 = Israel Shekel |
3.78 |
3.75 |
0.03 |
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| $1 = Rand |
14.29 |
13.88 |
0.41 |
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| $1 = Canadian Dollar |
1.32 |
1.29 |
0.03 |
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| Precious Metals |
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Chng. |
| Gold |
$1,321.47 |
$1,347.40 |
-$25.93 |
-1.9% |
| Platinum |
$1,034.75 |
$1,095.75 |
-$61.00 |
-5.6% |
| Silver |
$19.00 |
$19.91 |
-$0.91 |
-4.6% |
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| Stock Indexes |
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Chng. |
| BSE |
28,412.89 |
29,045.28 |
-632.39 |
-2.2% |
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INDIA MARKET REPORT
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Polished Trading Activity
Polished market stable
with suppliers maintaining prices at Hong Kong show. Indian buyers looking for
bargains. Melee market okay with pockets of good demand. Polished production
steady before Diwali break despite low manufacturing margins. Better to buy
polished than manufacture rough.
Read the Polished Diamond Trading Report |
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