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Market Comments 8/27/2015
Aug 27, 2015 6:00 PM
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Polished
trading cautious as financial markets tumble. De Beers restarts generic
marketing spend to restore U.S., China holiday sales growth, drops prices 8-10%
at $250M Aug. sight. Cutters hope cheaper rough will enable profitable 4Q
season but trading is still restrained. Signet 2Q sales +15% to $1.4B, profit
+7% to 62M. Tiffany 2Q sales flat at $991M, profit -16% to 105M. Chow Sang Sang
1H sales -1% to $1.2B, profit +39% to $94M. India’s July polished exports -18%
to $1.5B, rough imports -43% to $1.1B. Global 2014 rough production +4% to
$14.5B, volume -4% to 124.8M cts., average price +8% to $116/ct. Dominion 2Q
sales -24% to $210M, Ekati production +15% to 924,000 cts.
Fancies: Demand soft. Pears, Ovals and Cushions steady, Princess, Hearts slow. Prices for curves improving slightly. U.S. demand supporting market for commercial-quality fancies, especially for sizes under 1-carat. 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.
United States: Polished trading is stable amid some
concern that quality goods are becoming harder to replace as manufacturing slowed
in the last few months. Jewelry wholesalers note rising demand for
custom-design jewelry fueling interest in better-quality diamonds; Lower-quality
goods aren’t in demand despite lower prices and availability. There is steady
demand for 1-carat to 2-carat, G-J, VS2-SI2 laboratory-graded diamonds.
Retailers say sales have slowed to typical August levels and are in line with
2014. Meanwhile, wholesalers and retailers are gearing up for the busy 4Q with better
sales as consumer sentiment has improved from last year.
Belgium: While dealers slowly return from the summer
break, they’re in no rush to enter the market. There’s some anticipation activity
will pick up from September 1 as in previous years. Still, dealers have subdued
expectations for the mid-September Hong Kong Jewellery and Gem Fair.Far
East demand is weak and the market is being supported by steady U.S. along with
some European demand.Rough trading is cautious as dealers gauge whether
the rough price reductions at this week’s De Beers sight will be enough to
stimulate demand and profits.
Hong Kong: Polished trading is slow, dampening expectations
for the upcoming show. The local stock market plunge and the yuan depreciation have
cast a pall over the region. Some international companies are questioning
whether it’s worth maintaining a physical presence in Hong Kong given the
slowdown in jewelry wholesale and retail activity. That said, there’s stable
demand for 1-carat to 2-carat, D-F, VS-SI, triple EX diamonds, but overall,
inventory levels remain relatively high.
India: Manufacturers remain cautious despite
reports that De Beers reduced its rough prices by up to 10 percent at this
week’s sight. Rough demand improved slightly on news of the cuts but polished
dealers aren’t yet seeing an effect on polished prices. Manufacturers are keeping
production to maintenance levels. Polished trading is cautious as domestic
Indian and Chinese demand feel the effects of a weaker rupee (to above 66/$1)
and a depreciated yuan, respectively. U.S. buyers are in the market looking for
goods. Suppliers want cash from Chinese buyers after recent payment delays and Asia’s
financial market turmoil. Demand has improved for 0.30-carat to 0.40-carat,
D-H, VS-SI, triple EX goods and interest is steady for 1-carat, D-H, VS-SI,
triple EX diamonds. There’s improving demand for fancy shapes, particularly
pears and ovals.
Israel: The mood in the Israel Diamond Exchange was muted
by news of two significant local bankruptcies. More businesses are insisting on
cash payments for goods, particularly from Far East. There is steady U.S.
demand for 1-carat, D-H, VS-SI goods, while dossiers remain weak. Dealers are
prepping for next week’s Israel International Diamond Week, which is expected
to provide a sense of the market before the more-important Hong Kong Show.
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