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Rapaport TradeWire January 30, 2015
Jan 29, 2015 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
Jan. 30, 2015
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Polished demand improving but prices under pressure. Confidence is weak ahead of the Chinese New Year as markets look to the U.S. for support. Rough weak and discounted as cutters cut back following De Beers 4% price reduction at $450M Jan. sight. De Beers 2014 production +5% to 32.6M cts. ALROSA 2014 production -2% to 36.2M cts., with prices +7% and sales over $5B. Letšeng 4Q sales -10% to $68M, average price -16% to $2,140/ct. Petra Diamonds 1H production -2% to 1.6M cts., sales +16% to $215M. India’s Titan Company 3Q sales +9% to $475M, profit +15% to $31M. Hong Kong’s 2014 polished imports +9% to $19.6B, polished exports +13% to $13.7B.
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RapNet Data: Jan. 29
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| Diamonds |
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1,409,443 |
| Value |
$8,017,029,664 |
| Carats |
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1,397,149 |
| Average Discount |
-29.2% |
www.rapnet.com
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Get Current Price List | Subscribe to Rapaport | Join RapNet |
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QUOTE OF THE WEEK
Nation state actors, cybercriminals and hacktivists are increasingly targeting U.S. retailers on a scale never seen before. In the face of these cyberattacks, retailers are committed to fostering and enhancing customer trust, which is why we support a federal data breach law to provide consumers the clear communication they deserve and give businesses a single, national standard when cybercriminals defeat defenses and steal sensitive data.
Nicholas Ahrens | RILA
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Careers@Rapaport
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The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants and entry-level positions for our offices in New York, Antwerp and Mumbai. View jobs now.
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INDUSTRY
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De Beers Sight Valued at $450M
De Beers first sight of 2015 closed with an estimated value of $450 million and it
reflected a softer rough market with significant price adjustments that were made
across the board, pushing overall rough diamond prices down by an estimated 4%.
Still,
there were no significant changes in box assortment qualities. Sightholders said that
a sizable number of boxes were deferred, representing about 20% of the overall sight
value.
De Beers temporarily relaxed sightholder allocation rules ahead of the January sight,
allowing them to defer up to 25% to either the February or March sight without a
penalty.
Sightholders reported that no ex-plan goods were made available during this
sight.
Market sentiment toward the rough market was uniformly negative, with the current price
correction expected to continue until the end of the first quarter.
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KP Chair Meets With Antwerp
Bernardo Campos of Angola, the 2015 chair of the Kimberley Process (KP), paid a visit
to Antwerp and met with senior management of the Antwerp World Diamond Centre (AWDC),
which operates as administrative support for the global body. Campos and AWDC leaders
discussed KP affairs and set the administrative agenda for the coming year.
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RETAIL & WHOLESALE
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Titan's Profit +15%
Titan Company Ltd. reported that sales increased 9.2% year on year to $475.4 million
(INR 29.225 billion) in the third quarter that ended on December 31. Company expenses
rose 9.1% to $434.3 million and profit after taxes jumped 15.2% to $31 million.
Titan's watch segment sales declined 1.9% year on year to $72 million; however, jewelry
segment sales jumped 11.2% to $381.8 million. Revenue from other segments, such as
eyewear and engineering, improved 14.8% to $21.7 million.
The firm's jewelry brand, Tanishq, held two successful launches during the quarter to
boost jewelry sales with “affordable Tanishq” and a new “wedding” campaign.
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RJL's Profit +32%
Renaissance Jewellery Ltd. (RJL) reported that revenue increased 15.9% year on year to $69
million (INR 4.21 billion) in the third quarter that ended on December 31. The
manufacturing firm's expenses jumped 15.9% to $65 million and profit surged 31.6% to
$3.6 million.
Similarly, Renaissance Jewellery's results were equally as strong for the first three
quarters of its fiscal year. Revenue rose 11.1% to $141 million, expenses jumped 10.7%
to $134 million and profit increased 24.2% to $5.1 million.
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U.S. Valentine's Day Gift Intentions
While slightly more than half of the U.S. adult population celebrates Valentine's Day, 91% of that segment intend to make a gift purchase, according to the National
Retail Federation (NRF) and Prosper Insights & Analytics. The average budget for gifts, cards, jewelry and dining out came to $142.31, with men at
$190.53 and women at $96.58.
Of those who celebrate, 21.1% (or 1 in 10 of all adults) plan to make a jewelry gift purchase, with the
average amount expected at $172.38, up $10 from one year ago. However, the survey
observed that only 11.9% of shoppers expected to visit a jewelry store to make a
purchase. Top gift buying destinations included online (25.1%), discount stores
(35.2%) and department stores (36.5%). Aside from jewelry, most popular gifts this
year were very similar to previous surveys: candy (53.2%), greeting cards (51.4%),
flowers (37.8%) and an evening out (35.1%).
The group observed that Valentine shoppers of 25 to 34 years of age will outspend other age groups
at an average of $213.04, while 35 to 44 year olds will spend an average of $176.21 and
18 to 24 year olds will spend an average of $168.95.
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CaratLane Raises $31M
CaratLane raised $31 million from Tiger Global toward technology development and
for expanding its presence to offline stores. CaratLane had previously raised $15 million
from Tiger Global in May 2013 and $6 million in June 2011. CaratLane launched in 2008
and offers various jewelry items and loose diamonds to consumers, as well as a "try on at home"
option.
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Rio Tinto’s Select Diamantaires for 2015
• Crossworks Manufacturing Ltd.
• CTF Diamond Trading Company Ltd
• Diambel N.V.
• Dianco B.V.B.A.
• Diarough N.V.
• Dimexon Diamonds Ltd.
• E. Schreiber, Inc.
• Gemmata N.V.
• Hari Krishna Exports Pvt Ltd
• IDH Diamonds N.V.
• Interjewel Pvt. Ltd.
• KP Sanghvi & Sons
• L&N Diamonds Ltd.
• Laurelton Diamonds
• Sheetal Group
• Signet Direct Diamond Sourcing Ltd
• Venus Jewel
| Core Sales Dates |
Invitation Sales |
| Jan. 14-20 |
Feb. 19 - Mar. 2 |
| Feb. 16-20 |
Apr. 28 - May 11 |
| Mar. 26 - Apr. 1 |
July 9-17 |
| Apr. 27-30 |
Sept. 24 - Oct. 5 |
| June 1-5 |
Nov. 16-25 |
| July 6-10 |
| Aug. 18-24 |
Tender Sales |
| Sept. 21-25 |
Apr. 7-22 |
| Oct. 26-30 |
Oct. 12-28 |
| Dec. 14-18 |
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Borhanjoo Joins Venus Jewel
Venus Jewel appointed Mahiar Borhanjoo as its managing director of Venus Jewel
International. He will be focused on creating new business ventures and growing the
global portfolio of Venus Jewel. Borhanjoo joins the firm with a wealth of industry
experience, having spent the past six years as the executive sales director and senior
vice president of sales at De Beers. He praised Venus Jewel for its ethics and
transparency, passionate employees and executives and the use of cutting-edge
technology.
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GIA Updates Colored Stone, Pearl Reports
The Gemological Institute of America (GIA) will issue revised colored stone and pearl
reports and launch Report Check enhancements on February 1. GIA improved gemstone
images and the language used to reflect current gemological terminology. Report Check
for colored stones and pearls will feature a new treatments tab, providing consumer-
friendly gemological information using text, graphics and images about any treatments
detected. GIA’s colored stone and pearl reports now feature a layout in portrait
orientation and there will be one form – a Gemological Report – used for colored stones
and pearls.
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IJT's Attendance Sets Record
The 2015 International Jewellery Tokyo (IJT), which was held January 21 to 24, reported that 1,130 participating exhibitors and a record 26,820 trade buyers attended the event. IJT was hosted by Reed Exhibitions Japan Ltd. and the Japan Jewellery Association. Organizers concluded that a strong stock market and an optimistic economic forecast for Japan are leading to strong performance for the gem and jewelry sector this year. In support of that notion, they confirmed that already 83% of exhibiting space for IJT 2016 has been booked.
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Gem-A Hosts Corp. Social Responsibility Courses
The Gemmological Association of Great Britain (Gem-A) opened enrollment for a corporate social responsibility course that offers six lessons developed in conjunction with Branded Trust and the educational arm of CIBJO. The course is offered online at csr.gem-a.com and was tailored to the industry professional to provide a foundation for incorporating ethical practices into any size of business, no matter where its function resides in the supply chain.
The lessons incorporate video, course notes, module tests and a final written essay. Part of the series involves expanding on several dimensions of the business case that will lead to improved business performance and increased awareness of the different techniques and tools that are available to assist in implementing a social responsibility program.
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MINING
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ALROSA's Sales +8%
ALROSA's diamond production fell 2% year on year to 36.21 million carats in 2014. The
company sold 27.74 million carats of gem-quality rough at an average price of $171 per
carat and 11.83 million carats of industrial-quality rough at an average price of $12
per carat. ALROSA noted that its rough diamond prices rose 7% on average during the
year. Total sales rose 8.3% year on year to $5.05 billion, with $4.9 billion in rough
diamond sales.
ALROSA anticipates diamond production will increase 5% to 38 million carats in 2015. Sales
volume will grow 1% to 40 million carats, with 2 million carats being sold out of
existing inventory.
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De Beers Production -8%
De Beers rough diamond production fell 8% year on year to 8.366 million carats during
the fourth quarter of 2014; however, production for the full year rose 5% to 32.605
million carats. Production during the quarter at Debswana, De Beers Botswana
subsidiary, fell 6% to 5.989 million carats across the Orapa, Jwaneng, Damtshaa and
Letlhakane mines. In Namibia, Namdeb’s production increased 7% to 496,000 carats, while
De Beers Canada saw production decline by 18% to 479,000 carats from the Snap Lake and
Victor mines. Production from De Beers Consolidated Mines (DBCM) in South Africa
dropped 19% to 1.402 million carats from the Kimberley, Venetia and Voorspoed mines.
For the full year, Debswana’s production grew 7% to 24.237 million carats with solid
increases at both Orapa and Jwaneng. Namdeb’s production rose 7% to 1.886 million
carats, while production at De Beers Canada fell 6% to 1.848 million carats. Production
at DBCM fell 2% to 4.634 million carats.
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Petra's Sales +16%
Petra Diamonds' production fell 2% year on year to 1.601 million carats during the
first half that ended on December 31, while the weight of diamonds sold fell 1% to
1.402 million carats. Company revenue rose 16% to $214.8 million, boosted by $38.7
million in proceeds from two sales of large and exceptional diamonds. The average carat
price during the period rose 18% to $154; however, overall prices fell between 8% and
9%. Petra lowered its guidance for prices in the first six months of 2015 due to
seasonal softness, price pressures from short-term indigestion in the pipeline and
healthy polished inventory levels. Petra raised its full-year production guidance by
3% to 3.3 million carats.
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Gem Diamond's Sales -10%
Gem Diamonds' sales fell 10% year on year to $67.7 million from its high-value
Letšeng mine in Lesotho in the fourth quarter that ended on December 31. The company
sold 31,614 carats of diamonds, up 6% year on year, while production fell 10% to 25,525
carats. Letšeng’s sales achieved an average price of $2,140 per carat during the
quarter, which was down 18% from the third quarter and 16% below the fourth quarter of
2013. Thirteen exceptional rough diamonds sold for more than $1 million each, including
a 112.60-carat white diamond that sold for $5.8 million and a 90.40-carat white diamond
that sold for $4.2 million.
Sentiment in the rough and polished markets was cautious in the second half of 2014 due
to constrained liquidity, which exerted downward pressure on rough diamond prices.
However, Letšeng’s high-value rough production remained relatively resilient during the
period.
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Lucapa Secures Bridge Loan
Lucapa Diamond Company Ltd. secured a $15 million bridge financing facility for the
Lulo diamond concession in Angola. The 12-month financing bridge is subject to the
satisfactory completion of due diligence, investment approvals, security and customary
legal documentation. Lucapa and the loan provider have agreed to enter into an
exclusivity period of 40 days to complete those requirements.
Since December, Lucapa has been evaluating a number of debt-financing proposals to
fund efficiency and technology improvements for the first phase of alluvial diamond
mining at Lulo.
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Dominion Sizes Up Jay
Dominion Diamond Corporation completed a prefeasibility study on its Jay kimberlite
pipe deposit, which is located within the buffer zone joint-venture property of the
Ekati diamond mine in Canada’s Northwest Territories. The study evaluated Jay as a
stand-alone open-pit operation that would supply ore to an existing processing plant at
its full capacity of approximately 4.3 million dry metric tonnes per year for
approximately 11 years beyond the current projected closure of Ekati in 2020. Jay would
require construction of a water retention dike encircling the pipe, allowing the
isolated area to be dewatered ahead of the start of pre-stripping and mining
operations, the report noted.
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IMR Estimate Rises for CH-6
Peregrine Diamonds Ltd. increase the inferred mineral resource (IMR) estimate for the upper
250 meters of the CH-6 kimberlite pipe by 15% and reported between a 23% and 26%
increase in the estimate of additional kimberlite tonnage. In addition, tonnage
estimates rose 35% to 51% for CH-7 and by as much as 56% for CH-44 kimberlite pipes.
The CH-6, CH-7 and CH-44 kimberlite pipes are located on the Chidliak project on
Baffin Island, 120 kilometers from Iqaluit, the capital of Nunavut, Canada.
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STATS
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Hong Kong
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2014 $Mil. |
%Chng. |
| Polished imports |
$19,592 |
9% |
| Polished exports |
$13,744 |
13% |
| Net imports |
$5,848 |
0% |
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| Rough imports |
$2,179 |
13% |
| Rough exports |
$2,311 |
-9% |
| Net imports |
($132) |
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| Net diamond account |
$5,716 |
9% |
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ECONWATCH
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Diamond Industry Stock Report
Gold resumed volatile trading, shedding $44 per oz. this week. U.S. retailers nearly all lower, led by Blue Nile (-6%), which reports next week. Far East mainly higher; Europe all higher led by LVMH (+5%). Indian shares mixed as Goenka (-14%) led declines and Ren. Jewellery (+20%) gained. Mining shares mixed with ALROSA (-2%) off its high last week, Kennady (-22%) brought the index down, but Peregrine (+50%) surged ahead. View the detailed industry stock report.
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Jan. 29 |
Jan. 22 |
Chng. |
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| $1 = Euro |
0.882 |
0.882 |
0.000 |
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| $1 = Rupee |
61.78 |
61.39 |
0.4 |
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| $1 = Israel Shekel |
3.93 |
3.95 |
-0.02 |
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| $1 = Rand |
11.56 |
11.40 |
0.16 |
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| $1 = Canadian Dollar |
1.26 |
1.24 |
0.02 |
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| Precious Metals |
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| Gold |
$1,258.00 |
$1,302.20 |
-$44.20 |
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| Platinum |
$1,219.00 |
$1,280.00 |
-$61.00 |
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| Stock Indexes |
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Chng. |
| BSE |
29,681.77 |
29,006.02 |
675.75 |
2.3% |
| Dow Jones |
17,416.85 |
17,813.98 |
-397.13 |
-2.2% |
| FTSE |
6,810.60 |
6,796.63 |
13.97 |
0.2% |
| Hang Seng |
24,595.85 |
24,522.63 |
73.22 |
0.3% |
| S&P 500 |
2,021.26 |
2,063.15 |
-41.89 |
-2.0% |
| Yahoo! Jewelry |
1,306.72 |
1,276.16 |
30.56 |
2.4% |
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INDIA MARKET REPORT
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Polished and Rough Trading Activity
Trading activity is steady with many overseas buyers visiting India. The market is also positive ahead of the Chinese New Year shopping festival. Read the full report.
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