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Rapaport TradeWire February 4, 2016
Feb 4, 2016 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
February 4, 2016
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All eyes on China as next week’s Spring
Festival sets pace for jewelry sales. Polished trading improving as U.S.
jewelers replenish stock following holiday season. Cutters increasing production
after estimated $1B of rough enters the market in Jan. Concern that new
polished supply may exceed demand. Shortages supporting prices as Jan. 1ct. RAPI
+0.9%. LVMH 2015 jewelry & watch sales +19% to $3.7B, profit +53% to $482M.
Titan 3Q sales +17% to $504M, profit +18% to $33M. Letšeng 4Q rough sales -5%
to $64M, average price -1% to $2,117/ct. Belgium 2015 polished exports -9% to
$13.1B, rough imports -25% to $11.1B.The Rapaport Group wishes all our
friends a happy Chinese New Year.
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| Diamonds |
1,080,600 |
| Value |
$7,955,958,970 |
| Carats |
1,237,170 |
| Average Discount |
-27.81% |
www.rapnet.com
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| The RapNet Diamond Index (RAPI) is the average price for the top 25 diamond qualities (D-H, IF-VS2). It is based on the 10 best priced diamonds for each quality. |
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Get Current Price List | Subscribe to Rapaport | Join RapNet |
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QUOTE OF THE WEEK
The global diamond industry took a beating this year.
Ari Epstein, CEO of the Antwerp World Diamond Centre, on Belgium’s drop in rough and polished exports in 2015
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MARKETS
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United States: Jewelry retailers holding
relatively large inventory with a lot of goods on memo. Positive sentiment with
interesting designs at Miami Antique Show, Arizona Centurion Jewelry Show and
AGTA GemFair in Tuscon...
Belgium: Dealers relatively positive
and polished prices firm following De Beers January reduction in rough prices. Short-term
outlook positive but some concern about possible excess supply when new
polished enters the market...
Hong Kong: Diamond dealer and
wholesale jewelry markets quiet with most businesses closed for the Chinese New
Year Spring Festival that begins on Monday (Feb 8). Hong Kong wholesale market
expected to shut down for the week and China for most of February...
India: Polished trading slows slightly
as Hong Kong and Chinese wholesale buyers close for Chinese New Year vacation.
Domestic Indian demand cautious as weak rupee (-2.6% from Jan. 1 to 68/$1)
weighs on sentiment...
Israel: Positive sentiment continues
after relatively good start to the year. Steady demand and shortages for
RapSpec A2+ (3X, none) diamonds...
Click here to continue reading
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INSIGHTS
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Rough Market Enthusiasm
Demand for rough diamonds
improved significantly in January, leaving many to wonder if the sudden upturn
is sustainable. Manufacturers demanded more rough than was available as miners
De Beers and ALROSA limited their respective supplies amid continued
uncertainty in consumer demand…
Click here to continue reading
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INDUSTRY
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Polished Diamond Prices Rise in January
Polished diamond prices rose
in January as shortages continue to support the market. U.S. demand is steady
after a reasonably good holiday season, while China’s wholesale market slowed
as the focus shifted to retail for the Chinese New Year Spring Festival
starting on February 8.
The RapNet Diamond Index (RAPI™) for 1-carat,
GIA-graded diamonds rose 0.9% in January. RAPI for 0.30-carat diamonds advanced
4.7% and RAPI for 0.50-carat diamonds grew 4.5%. RAPI for 3-carat diamonds fell
0.5%.
RAPI for 1-carat diamonds fell 4.4% from a year
ago as manufacturers sought to reduce excess inventory in 2015.
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Belgium’s 2015 Polished Exports -9%
Belgium’s polished diamond
exports dropped 9.4% to $13.07 billion in 2015 as the global trade “took a
beating” during the year, according to the Antwerp World Diamond Centre (AWDC).
By volume, exports fell 7.1% to 6 million carats, while the average price
dipped 2.4% to $2,251 per carat.
Total polished imports to Belgium declined 8.4%
to $12.65 billion during the year as net polished exports, representing exports
minus imports, dived 31% to $415.8 million. Rough imports slumped 25% to $11.13
billion and rough exports declined 27% to $11.5 billion. Net rough imports,
representing imports minus exports, went from negative $744.3 million to
negative $371.6 million during the year.
Belgium’s 2015 net diamond account, representing
total polished and rough exports minus total imports, declined 41% to $787.4
million.
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Forevermark's Lussier Appointed DPA Chairman
Stephen Lussier, chief executive officer of De
Beers Group’s Forevermark brand, has taken over as chairman of the Diamond
Producers Association (DPA) from Jean-Marc Lieberherr.
Lieberherr, who until recently was the
managing director of Rio Tinto’s diamond division, became the DPA’s first
chairman in October 2015, shortly after the body was set up. He stepped down
from the role following his departure from Rio Tinto in January.
Lussier, a vice-president of
marketing at De Beers, was the vice-chairman of the DPA under Lieberherr. Jim
Pounds, an executive vice-president at Dominion Diamond Corporation, will
revolve into Lussier’s former role at the DPA.
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International Grown Diamond Association Launched
More than 10 lab-grown diamond producers, distributors
and retailers have partnered to launch the International Grown Diamond
Association (IGDA), claiming the group is the "first" industry body for the
synthetics sector.
The association aims to represent the grown diamond
industry, promote it as a new choice and educate consumers about
their qualities and applications.
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Shmuel Schnitzer Elected IDI Chairman
Former Israel Diamond Exchange
president Shmuel Schnitzer has been elected chairman of the Israel Diamond
Institute Group of Companies (IDI).
Schnitzer recently completed
his fourth term as IDE president and replaces Moti
Ganz, who served three terms as chairman of the IDI, a non-profit company representing
institutions in the diamond industry.
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RETAIL & WHOLESALE
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U.S. Jewelry Sales +2% in 2015
U.S. jewelry sales from all retail outlets increased 2% to $66.41 billion in 2015. Watch sales advanced 2.6% to $8.72
billion compared with the previous year, according to provisional figures
released by the Bureau of Economic Analysis. Sales of jewelry and
watches combined totaled $75.14 billion, a 2.1% increase over 2014.
In the final month of 2015, jewelry sales increased 2% year on year to $13.27 billion, according to Rapaport News
estimates. Watch sales increased 2.6% to $1.76 billion. Jewelry and
watch sales combined increased 2.1% to $15.03 billion.
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LVMH’s 2015 Jewelry Sales +19%
LVMH Moët Hennessy Louis Vuitton reported watch
and jewelry revenue grew 19% to $3.69 billion (EUR 3.31 billion) in 2015
over the previous year on stronger Bulgari results and a successful refocusing
of TAG Heuer. Taking into account exchange-rate fluctuation and with a
“comparable structure,” sales in the jewelry and watch division advanced 8%.
Profit from recurring operations in the watches
and jewelry division surged 53% to $481.8 million while the operating
margin improved by 2.9 percentage points to 13.1%.
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Christie’s Jewelry Sales Drop
Christie’s jewelry sales from live auctions and
ecommerce slumped to $624.1 million in 2015 from $754.7 million that the
auction house reported in the previous year. Jewelry revenue declined at a
faster rate than the company’s flagship art business.
Art sales dipped 5% in to $7.4
billion (GBP 4.8 billion) but still achieved the second highest total in
company history.
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Titan’s 3Q Revenue +17%
India-based jeweler Titan
Company reported revenue increased 17% year on year to $504.6 million (INR
34.26 billion) in the third quarter that ended December 31 as retail sales
improved during the festive season.
The strong result was mainly because of
20% growth in jewelry sales to $415.3 million from a year ago, Titan’s
managing director Bhaskar Bhat explained. Watch sales increased 8.2% to $70.5
million. Profit after tax during the quarter jumped 18% to $33.2 million.
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Tiffany in Deal to Sell Fragrances
Tiffany & Co. has
announced a licensing deal with global beauty company Coty to sell fragrances
at the jeweler’s stores and other select luxury retailers. The two companies will
develop, produce and distribute Tiffany fragrances for men and women.
Founded in Paris in 1904, Coty’s portfolio
includes well-known fragrances, color cosmetics and skin and body care products
sold in more than 130 countries and territories.
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Richemont Buys Remaining 40% of Roger Dubuis
Switzerland-based luxury group
Richemont acquired the 40% of watchmaker Roger Dubuis it did not already own,
Reuters reported.
"We now own 100% of Roger Dubuis," the
news agency cited Richemont spokeswoman Sophie Cagnard as saying. Richemont and
Roger Dubuis declined to comment on the sale price, the report said January 22.
Richemont purchased a 60% stake in 2008 for an undisclosed amount.
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Amazon’s Profit Disappoints
Amazon reported sales surged
22% year on year to $35.7 billion in the fourth quarter that ended December 31.
Excluding the unfavorable impact of exchange-rate fluctuation, sales surged 26%.
Sales were within guidance of $33.5 billion to $36.75 billion issued ahead of
the holiday quarter but profit reportedly fell short of many
analysts’ expectations.
Net income for the quarter more than doubled to
$482 million with diluted earnings per share of $1 compared to 45 cents a year
earlier. Analysts estimated the retailer would earn $1.56 a share during the
quarter, The New York Times reported.
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BaubleBar Gets $20M Funding
Online jewelry retailer
BaubleBar has raised $20 million of new funding from investors, according to a
report by technology news site TechCrunch.
The ecommerce outfit, known for its ‘fast
fashion’ approach to jewelry that involves reacting quickly to trends, closed
on funding from existing investors Accel Partners, Greycroft Partners, Burch
Creative Capital and Aspect Ventures and new investors including Hubert Burda
Media and DSW, according to the report.
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MINING
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ALROSA’s 2015 Production +6%
ALROSA’s production increased
6% year on year to 38.3 million carats in 2015. The company sold 30 million
carats of diamonds in 2015, which was 24% below the 39.5 million carats sold in
2014, according to Rapaport records. Revenue from rough sales are expected to
be at least $3.4 billion.
In the final quarter of 2015, ALROSA’s
production decreased 18% year on year to 8.6 million carats. The company sold
7.1 million carats during the period, including 4.1 million of gem-quality
diamonds at an average price of $166 per carat.
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Gem Diamonds’ 4Q Letšeng Sales Drop
Gem Diamonds sold $64.3
million worth of stones from its Letšeng mine in Lesotho in the fourth quarter
that ended December 31. The figure was 5% below the $67.7 million reported by
the company a year earlier. The average price achieved, including carats
extracted at rough value for polishing, fell 1.1% year on year to $2,117 per
carat from two Letšeng tenders held during the period.
The company sold 30,357
carats during the quarter, 4% fewer than a year before. Production from the mine increased 14% to
29,100 carats.
For 2015 as a whole, sales from Letšeng
decreased 15% $236.3 million compared with 2014.
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BlueRock Approves Acquisition of Diamond Resources
BlueRock Diamonds has approved
the purchase of Diamond Resources from Tawana Resources. Diamond Resources is a
non-trading company which holds the ‘rehabilitation guarantee’ required in
relation to the Kareevlei project in South Africa, which BlueRock acquired from the same
seller in 2013.
BlueRock, which is quoted on the Alternative
Investment Market of the London Stock Exchange, also purchased an intercompany
loan of $1.3 million (ZAR 21.5 million) owed by Diamond Resources to Tawana
which is expected to be eliminated on consolidation in the company's accounts. BlueRock
paid $43,556 for the shares in Diamond Resources and the loan, a statement
said.
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GENERAL
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Marketing Panel to be Held at IDWI
The Israel Diamond Exchange (IDE) will host a
marketing panel discussion on February 15 at 4 p.m. featuring high-profile figures from the diamond and
jewelry industry at the upcoming International Diamond Week.
Panelists at the event will be Jean-Marc Lieberherr, former
chairman of the Diamond Producers Association (DPA); Alex Popov, chairman of
the World Diamond Mark Foundation (WDM); Patricia Syvrud, executive director of
the World Diamond Council; and renowned jewelry designer Stephen Webster, who
is also the guest of honor at the International Diamond Week in Israel.
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Jewelry Industry Summit Unveils Speaker List
The Jewelry Industry Summit has released its
roster of speakers who will participate in the three-day forum on
sustainability and responsible sourcing.
The event will be held at the Fashion
Institute of Technology in New York from March 11 to 13.
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DEF Unveils New Officers, Board Members
The Diamond Empowerment
Fund (DEF) has announced a new slate of officers and new board
members.
Phyllis Bergman, chief executive officer of
Mercury Ring, continues as president for 2016. Ed Hrabak, chief operating
officer of Signet Jewelers, has been elected vice president. Yancy Weinrich,
group vice president of JCK, was elected secretary and Rich Slomovitz, chief
financial officer of Rush Communications, remains treasurer.
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ECONWATCH
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Diamond Industry Stock Report
Mining stocks continued to perform strongly this past week,
led by ALROSA (+11%) and Anglo American (+9.9%). U.S. retail stocks generally
grew in value, headed by J.C. Penney (+11.5%). In the Far East, performances
were mixed, with ValueMax Group (-5.3%), Sarine (-4.8%) and Chow Sang Sang
(-4.5%) all declining. Indian stock mostly had a tough week, with drops led by
Goldiam International (-11.4%).
View the detailed industry stock report.
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Feb. 4 (10:40 GMT) |
Jan. 28 (12:45 GMT) |
Chng. |
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| $1 = Euro |
0.89 |
0.92 |
-0.022 |
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| $1 = Rupee |
67.69 |
68.20 |
-0.5 |
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| $1 = Israel Shekel |
3.91 |
3.96 |
-0.05 |
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| $1 = Rand |
15.86 |
16.30 |
-0.44 |
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| $1 = Canadian Dollar |
1.37 |
1.41 |
-0.04 |
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| Precious Metals |
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Chng. |
| Gold |
$1,146.21 |
$1,119.68 |
$26.53 |
2.4% |
| Platinum |
$888.99 |
$881.23 |
$7.76 |
0.9% |
| Silver |
$14.77 |
$14.38 |
$0.39 |
2.7% |
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| Stock Indexes |
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Chng. |
| BSE |
24,338.43 |
24,469.57 |
-131.14 |
-0.5% |
| Dow Jones |
16,336.66 |
15,944.46 |
392.20 |
2.5% |
| FTSE |
5,923.65 |
5,942.66 |
-19.01 |
-0.3% |
| Hang Seng |
19,183.09 |
19,195.83 |
-12.74 |
-0.1% |
| S&P 500 |
1,912.53 |
1,882.95 |
29.58 |
1.6% |
| Yahoo! Jewelry |
993.20 |
996.92 |
-3.72 |
-0.4% |
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INDIA MARKET REPORT
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Polished Trading Activity
Polished trading slows slightly
as Hong Kong and Chinese wholesale buyers close for Chinese New Year vacation.
Domestic Indian demand cautious as weak rupee (-2.6% from Jan. 1 to 68/$1)
weighs on sentiment. India tops Nielsen global ranking of consumer confidence. Demand
from U.S. and Israeli dealers steady with some inventory buying. Good demand
for 0.30-2ct., D-J, VS-SI, RapSpec A2 (3X, none) diamonds with some shift
toward lower-priced 3VG goods. Shortages supporting prices as new polished
production entering the market at a slow pace. Large Surat factories raising
manufacturing levels and small cutters returning as rough becomes affordable.
Read the Polished Diamond Trading Report
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