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Market Comments 1/29/2015
Jan 29, 2015 6:00 PM
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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.
Fancies: Ovals and Cushion doing well with good U.S. demand and limited availability. Some fancy prices coming under pressure but fine cut stones are holding up better than rounds. Pears OK. Princess relatively weak. U.S. demand supporting market for commercial-quality fancies, especially for goods under the carat. Larger sizes quiet with limited buying. 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: The market is quiet as diamond dealers stayed clear of 47th Street during the blizzard that hit Manhattan this week. Regardless of the weather, trading is slow as jewelry retailers have refrained from making large orders to replenish inventory sold during the Christmas shopping season. There is steady demand for I1 to I2 clarity goods, while overall demand for 1-carat diamonds has softened slightly. Buyers are traveling to India and Israel to look for goods and are pushing for higher discounts as suppliers are under pressure to raise cash. Retail activity is focused on Valentine’s Day with some promotional activity for fashion and bridal jewelry.
Belgium: Sentiment is weak and dealers are lacking confidence in Antwerp. There is steady demand for diamonds below 1-carat, H-K, SI diamonds, with good demand for 0.50-carat to 0.70-carat diamonds. Demand is slightly weak for 3-carat and larger, D-I, IF-VVS diamonds. There are some shortages apparent for certain categories following the decline in polished production during the past few months. Rough trading is weak as dealers and manufacturers expected sharper prices cuts at last week’s De Beers sight.
Hong Kong: Polished trading continues to improve ahead of the Chinese New Year (February 19). While trading is expected to improve in the coming weeks ahead of the lunar festival, expectations are relatively low for jewelry sales during Golden Week. Diamantaires are hoping that positive holiday results will translate to stronger demand at the March Hong Kong show, which takes place shortly after the New Year celebrations conclude. There is steady demand for 0.50-carat to 1-carat, H-K, VVS-SI diamonds, and stable demand for 2-carat to 3-carat, D-M, VS-SI diamonds.
India: A buyer’s market prevails in Mumbai. There are a lot of U.S., Israeli and domestic Indian buyers looking for goods but pushing for lower prices. Far East demand is relatively weak. There is steady demand for Gemological Institute of America (GIA) dossiers below 1-carat. Dealers note that there are some shortages starting to develop in specific categories, such as 1-carat, VVS2-VS diamonds. Manufacturers have maintained low polished production, and have reduced their intake of rough. Some manufacturers have shifted their operations to focus on piqué goods to satisfy U.S. demand. There are continued rumors about undisclosed synthetic diamonds being mixed in parcels raising concern, particularly among Far East buyers.
Israel: The market in Ramat Gan is quiet. Overall demand is soft and dealers are hoping that the upcoming International Diamond Week (February 8-12) will boost trading activity. U.S. demand continues to shore up the market, while the Far East remains weak ahead of the Chinese New Year and subsequent Hong Kong show. The market for large diamonds is relatively quiet and dealers are waiting for better offers. Demand for fancy shapes is steady with good demand for pear and marquise shapes. Large manufacturers are cautious about the rough market following the De Beers January sight.
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