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Market Comments 2/19/2015
Feb 19, 2015 6:00 PM
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Chinese New Year looking sheepish as luxury demand slows. Polished buyers are price sensitive and waiting for Hong Kong show. Liquidity remains very tight. GIA backlog eases as diamond cutters reduce rough purchases and production. Sightholders anticipate flat De Beers prices at next week’s small sight. De Beers 2014 revenue +11% to $7.1B, rough sales +12% to $6.5B, earnings +74% to $923M, rough prices +5%. Petra Diamonds 1H revenue +16% to $215M, profit +38% to $39M. Gitanjali 3Q revenue +25% to $554M, profit +90% to $15M. India’s Jan. polished exports +5% to $1.8B, rough imports -32% to $851M. Leo Schachter tops Israel’s 2014 diamond exporter list with exports -12% to $288M.
Fancies: Ovals and Cushion doing well with good U.S. demand and limited availability for larger sizes. Prices for curve-shapes improving slightly. Straight-shape fancies not hot. Prices for 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 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: Sentiment improved slightly in New York as U.S. jewelers have reported decent Valentine’s Day sales. Trading in the Diamond Dealers Club is steady and focused on filling order-specific demand. There is stable demand for 1-carat diamonds, while demand for larger stones is soft. Buyers are looking for highly discounted goods in the trading centers, with good demand for SI-I2 clarity diamonds. Jewelers are focused on bridal and engagement pieces. Still, consumer spending has yet to pick up significantly in the general retail market. Many Wall Street economists believe that lower gas prices will spur improved consumer spending in the coming months.
Belgium: The market in Antwerp is slow as diamantaires worry about tightening bank credit. Local dealers have low expectations for the March Hong Kong show. A small delegation that attended the recent Diamond Week in Israel reported good opportunities to buy under 1-carat, VS-SI diamonds. In Antwerp, there is weak demand for dossiers as Hong Kong buyers are closed for the Chinese New Year. Dealers note relatively weak demand for 0.50-carat to 0.70-carat sizes, while demand for D-E color diamonds are soft across the board. There is good demand for 1-carat, VVS, triple EX, GIA-graded diamonds, while demand is soft for 2-carat to 3-carat goods. In fancy shapes, ovals are hot and there is good demand for pears.
Hong Kong: Businesses have closed for the Chinese New Year and there is very little wholesale diamond trading taking place. All government offices are closed until Monday, February 23. Many traders are expected to come back within a week to finalize preparations in advance of the March Hong Kong show. The show will take place March 2 to 8, with separate dates and venues for loose diamonds and diamond jewelry.
India: Diamond trading has slowed with volatile foreign exchange rates affecting confidence. Local diamantaires have low expectations for the upcoming Hong Kong show and overall polished demand is soft. Turnaround times at the GIA have declined as fewer goods are being sent for grading due to reductions in diamond manufacturing. In fancy shapes, there is good demand for ovals and pears. Rough trading is cautious ahead of next week’s De Beers sight, and following reports that ALROSA reduced its rough prices at the February contract sale.
Israel: The market is relatively stable and sentiment is neutral. Polished demand from the Far East and Russia is soft, while U.S. demand is good and continues to improve. There is stable demand for 0.30-carat to 1-carat, D-H, IF-VS diamonds, while demand is soft for 1-carat to 2-carat, D-H, VVS-SI diamonds. There is steady demand for SI-clarity diamonds in all sizes. Rough trading is stable with dealers focused on sourcing goods at the tenders and auctions where prices are currently more attractive than at contract sales.
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