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Rapaport TradeWire August 25, 2016
Aug 25, 2016 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
August 25, 2016
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Far East markets waking
up with increase in activity as dealers prepare for Hong Kong show. Far East
demand for larger 3 to 8 ct. stones getting more attention with D-F,
IF-VVS goods becoming more interesting after price declines in recent months.
U.S. market uncertain with some action in New York during DDC’s India Week. Signet
2Q sales -3% to $1.4B, profit +6% to $82M as private equity firm Leonard Green
invests $625M. Tiffany 2Q sales -6% to $932M, profit +1% to $106M. Michael Hill
FY revenue +10% to $421M, profit -29% to $15M. Dominion 2Q sales -24% to $160M.
Swiss watch exports -14% to $1.7B in July. India July polished exports +1% to
$1.7B, rough imports +27% to $1.4B.
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| Diamonds |
1,245,429 |
| Value |
$7,946,242,415 |
| Carats |
1,332,049 |
| Average Discount |
-30.40% |
www.rapnet.com
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| The RapNet Diamond Index (RAPI™) is the average asking price in hundred $/ct. of the 10 percent best priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet - Rapaport Diamond Trading Network. |
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Get Current Price List | Subscribe to Rapaport | Join RapNet |
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QUOTE OF THE WEEK
This holiday season, all eyes are on the ears.
Mark Light, CEO of Signet Jewelers, envisages strong interest in earrings this year.
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MARKETS
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United
States: Improved activity during
India Week in New York Diamond Dealers Club (August 22 to 25). Overall
polished market still cautious…
Belgium:
Market slowly opening up
as dealers return from vacation. Trading expected to be stable until
Hong Kong Jewellery and Gem Fair (September 13 to 19)…
Israel:
Trading quiet with the
Israel Diamond Exchange closed until August 28…
India:
Polished trading
improving ahead of Hong Kong show with dealers focused on VS-SI goods. Steady
U.S. and Chinese demand with a number of foreign buyers in Mumbai looking for
bargains…
Hong
Kong: Trading improving after
long, slow summer. China and other Asian markets steady. Local Hong Kong demand
slow…
Click here for deeper analysis
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INSIGHTS
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Dubai Probing Rough Diamond Values
While the Kimberley Process chair is focused on advancing forums on rough valuation, questions linger about the UAE's own diamond trade....
Click here to continue reading
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INDUSTRY
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Rio Tinto Quits Indian Mining Project
Rio
Tinto has terminated its Bunder diamond mining project in India to conserve
cash and cut costs. The venture in the central Indian state of Madhya Pradesh
was tipped as the first significant diamond mine in India, with operations
expected to commence in 2019. The miner now intends to close all project
infrastructure by the end of the year.
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India’s Polished Exports Rise in July
India’s
polished diamond exports climbed 1% to $1.65 billion in July, according to the
Gem & Jewellery Export Promotion Council. Polished imports added 2%
to $272.5 million, leaving net exports 0.6% higher at $1.38 billion. Rough
imports grew 27% to $1.4 billion and rough exports jumped 85% to $110.3
million, meaning net rough imports rose 24% to $1.28 billion. India’s net
diamond account, the difference between net polished exports and net rough
imports, plummeted 70% to $100.1 million.
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ALROSA to Auction 402ct. Rough Diamond
ALROSA
will offer a 401.97-carat rough diamond and a 40.25-carat polished stone at
separate sales this month in Vladivostok, a city near Russia’s border with
China. The miner recently opened a base in Vladivostok to help its sales to the
Asia-Pacific region. A total of 19 diamonds, with a combined weight of 1,098
carats, will be up for sale at the rough auction until September 3. A
tender of 28 polished diamonds will be held at the same time.
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Swiss Watch Exports Continue to Fall
Swiss
watch exports slumped 14% to $1.71 billion (CHF 1.64 billion) in July.
Shipments to Hong Kong dived 33% and orders from the U.S. declined 15%. The
high-end categories slowed, with precious-metal watch shipments falling 27%,
its fifth consecutive monthly decline. Exports of timepieces priced above
$3,119 (CHF 3,000) slumped 16%.
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RETAIL & WHOLESALE
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Private Equity Firm Invests $625M in Signet
Signet Jewelers announced a $625 million
investment from private equity firm Leonard Green & Partners (LGP). The deal is
expected to close in the third fiscal quarter of 2017, with Jonathan Sokoloff,
one of LGP’s managing partners, joining Signet’s board. Signet also reported
sales fell 2.6% to $1.37 billion in the second fiscal quarter ending
July 30, while profit increased 32% to $81.9 million. The jeweler adjusted
its full-year guidance downward.
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Tiffany Sales Slide in Challenging Environment
Tiffany
& Co.’s sales fell 6% to $932 million in the second quarter that ended July
31, with steep declines recorded in the U.S., Asia Pacific and Europe.
Management noted lower spending among foreign tourists in all markets and in
particular pointed to weakness in Hong Kong. Comparable store sales dropped 8%.
Net earnings rose 1% to $106 million as the company cut costs to offset the
slump in sales.
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Veteran Diamond Marketer Joins Macy’s
Macy’s
hired Richard Lennox as its chief marketing
officer, effective September 15. Lennox (pictured) ran the De Beers
account for marketing firm J. Walter Thompson, leading a team that developed
the iconic “A Diamond is Forever” campaign. He was also executive
vice-president and chief marketing and ecommerce officer at Zale Corporation.
The move comes after Macy’s announced plans to improve the quality of its
jewelry offering amid declining group sales.
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Michael Hill’s Sales Rise
Michael
Hill’s revenue jumped 9.5% to $421.3 million (AUD 551.1 million) in the fiscal
year ending June 30 with growth recorded across all regions. Sales in
Australia, its largest market, increased 4% to $234.9 million. Revenue advanced
7% in New Zealand and 19% in Canada. U.S. sales leapt 24% with same-store
revenue increasing 3.5%, which was below the jewelry retailer’s expectations
and budget.
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MINING
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Dominion’s Sales and Production Decline
Dominion
Diamond Corporation’s rough sales fell 24% to $160 million in the second fiscal
quarter ending July 31 due to a shift in focus to lower-value goods at its
Ekati mine in Canada. Sales of rough from Ekati slumped 40% to $83.3 million,
while production fell 7% to 856,000 carats due to a shutdown following a fire.
Revenue from Dominion’s 40%-owned Diavik mine in Canada increased 6.5% to $76.7
million.
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Stellar, Octea to Merge Sierra Leone Mines
Stellar
Diamonds and Octea Mining agreed to combine their Sierra Leone projects to
create the second largest diamond-mining operation in West Africa. Stellar
plans to amalgamate its Tongo kimberlite project with Octea’s adjacent Tonguma
asset, which would enable annual production of up to 250,000 carats of
“high-value” diamonds. Trading in Stellar’s shares on London’s AIM was suspended
until an admission document outlining details of the deal is published.
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Lucara Invests to Improve Small Diamond Recovery
Lucara
Diamond Corp. will expand the use of X-ray technology (XRT) to target smaller
size diamonds at the Karowe mine in Botswana, having used the equipment to recover
exceptional stones such as the 1,109-carat Lesedi La Rona. Four new XRT units will
focus on diamonds ranging from 4 millimeters to 8 millimeters. The project
is expected to be completed in the fourth quarter of next year at an estimated
cost of up to $30 million.
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Tycoon Sees Opportunity in Consolidating Mines
South
African billionaire Christo Wiese sees prospects for consolidating diamond mining
operations in the region, Bloomberg reported. Wiese, the country’s richest
man, formed a consortium that made a cash offer for Trans Hex earlier
this month. “There are opportunities for consolidating diamond operations
in southern Africa,’’ he said. “Obviously we will look at growing the business
as much as we can.’’
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GENERAL
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Israel Bourse Petitions Minister Over Lending
The Israel Diamond Exchange (IDE) called on
Finance Minister Moshe Kahlon to help overturn First International Bank of
Israel’s (FIBI) decision to tighten its lending standards for the industry. FIBI rolled out more stringent
collateral demands and now follows a policy “that does not exist in any other
sector,” a petition says. IDE president Yoram Dvash has vowed to fight FIBI’s decision. |
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24 Karat Club to Leave Iconic Venue
The
24 Karat Club of the City of New York will cease holding its annual Grand
Banquet at the city’s Waldorf-Astoria Hotel after more than 100 years due to a
renovation project at the venue. The 115th banquet on January 14, 2017, will be
the last one to take place in the grand ballroom, the 24 Karat Club said. A
three-year refurbishment project at the luxury Manhattan hotel has forced the
organization to seek an alternative.
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India Diamond Week Brings 'Hundreds' to DDC
More than
60 exhibitors and “several hundred” buyers attended the fifth India Diamond
Week at the Diamond Dealers Club (DDC) of New York this week. The event,
organized by DDC and India’s Gem and Jewellery Export Promotion Council, marked
an increase in New York trading as dealers return from the summer break. Sixteen
Indian diamond manufacturers participated alongside U.S. suppliers, enabling
them to build on relationships from previous events, said Reuven Kaufman,
president of the DDC.
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ECONWATCH
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Diamond Industry Stock Report
Michael Hill (+11%) gained on strong sales results, while Blue Nile (+10%) and Charles & Colvard (+19%) both enjoyed strong weeks despite the Dow Jones index falling 0.5%. Share prices were recorded before the market opened Thursday and before reports of disappointing sales at Signet Jewelers and Tiffany & Co. Signet saw its shares fall in early trading Thursday, while Tiffany gained on improved profit. Global diamond mining stocks were mixed, led by True North Gems (+5.9%).
View the detailed industry stock report
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Aug 25 (12:24 GMT) |
Aug 18 (12:04 GMT) |
Chng. |
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| $1 = Euro |
0.89 |
0.88 |
0.00 |
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| $1 = Rupee |
67.05 |
66.83 |
0.22 |
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| $1 = Israel Shekel |
3.76 |
3.78 |
-0.02 |
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| $1 = Rand |
14.13 |
13.35 |
0.78 |
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| $1 = Canadian Dollar |
1.29 |
1.28 |
0.01 |
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| Precious Metals |
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Chng. |
| Gold |
$1,322.72 |
$1,350.45 |
-$27.73 |
-2.1% |
| Platinum |
$1,082.75 |
$1,123.40 |
-$40.65 |
-3.6% |
| Silver |
$18.56 |
$19.75 |
-$1.19 |
-6.0% |
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| Stock Indexes |
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Chng. |
| BSE |
27,835.91 |
28,123.44 |
-287.53 |
-1.0% |
| Dow Jones |
18,481.48 |
18,573.94 |
-92.46 |
-0.5% |
| FTSE |
6,817.45 |
6,858.17 |
-40.72 |
-0.6% |
| Hang Seng |
22,826.87 |
23,023.16 |
-196.29 |
-0.9% |
| S&P 500 |
2,175.44 |
2,182.22 |
-6.78 |
-0.3% |
| Yahoo! Jewelry |
661.54 |
665.81 |
-4.27 |
-0.6% |
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INDIA MARKET REPORT
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Polished Trading Activity
Polished trading
improving ahead of Hong Kong show with dealers focused on VS-SI goods. Steady
U.S. and Chinese demand with a number of foreign buyers in Mumbai looking for
bargains. Steady demand for 1 ct. D-I, SI-I2 diamonds. Fancy shapes improving.
Rough demand stable ahead of next week’s De Beers sight. Manufacturing expected
to remain steady until November Diwali break.
Read the Polished Diamond Trading Report |
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