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Market Comments 9/11/2014
Sep 11, 2014 6:00 PM
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All eyes on next week’s Hong Kong Show with mixed expectations for Far East demand as diamond markets remain uncertain. Indian suppliers reducing prices to raise liquidity levels. Buyer’s market prevails. The RapNet Diamond Index (RAPI™) for 1ct. lab-graded diamonds -1.4% in Aug. Rough trading slows as Surat manufacturers focus on cutting operations ahead of Oct. Diwali season. Gem Diamonds opens Ghaghoo underground mine in Botswana. Belgium’s Aug. polished exports -12% to $484M, rough imports +30% to $1.1B. Rapaport to stop listing all EGL grading reports on RapNet Diamond Trading Network, effective Oct. 1.
Fancies: Fancy shape market steady with fair demand for excellent shaped and larger polished sizes. Cutters are moving to fancy shapes because of significantly high rough prices for identical quality round diamonds. Curves (Pears, Ovals) are doing better than Squares (Emerald, Princess) in larger sizes with Squares doing better in under the carat sizes. Demand for Princess cut weak. Far East markets becoming more aware of fancy shapes. Buyers very selective regarding shape- and cut-quality with extreme price differentials between excellent- and average-cut fancies. Off-make, poorly-cut fancies illiquid and hard to sell even at very deep discounts.
Global Comments
United States: Polished trading is fairly stable with a lot of dealers traveling to next week’s Hong Kong Jewellery and Gem Fair. There are many diamond sellers in New York and there is a lot of inventory currently in the wholesale market. There is good demand for commercial-quality, SI-I2 clarity diamonds and steady demand for melee, as reflected in the Rapaport Melee Auction that took place this past week. Retail sales are stable and approximately in line with the same period last year. However, jewelers anticipate steady growth during the holiday season as consumer confidence has improved in recent months.
Belgium: Trading in Antwerp is relatively weak, with most dealers waiting for the Hong Kong show to buy and sell. Overall, sentiment is positive, but there is mixed expectations for Hong Kong with concern among suppliers that Indian manufacturers will lower their price points. Suppliers are offering higher discounts on large-sized, VVS goods in an attempt to raise liquidity levels, although demand for large, expensive goods remains relatively slow. There is good demand for over-sizes, especially 1.70-carat and 2.40-carat goods, while demand for dossiers has softened. Rough trading has slowed with more goods coming to market following this week’s ALROSA contract sale.
Hong Kong: Trading in Hong Kong has been slow with dealers focused on preparing for next week’s show. Sentiment is mixed among diamond dealers, with some believing the market has bottomed and that the show will signal improved Far East demand ahead of the fourth quarter season. There is steady demand for 1-carat, D-G, VS-SI, triple EX goods. However, most are in wait-and-see mode, preparing their inventory for sales at the show.
India: Trading has improved, despite low expectations for the Hong Kong show. There is good demand for 0.50-carat to 0.70-carat, F-I, VS1-SI1, while demand is relatively soft for 0.30-carat to 0.40-carat goods. Suppliers note that Chinese buyers have returned to the market and there is a sense that price levels may have bottomed. There is good demand for commercial-quality melee stones targeting the U.S. market, and improving demand for 1-carat, G-J, SI-I2 diamonds. There is some domestic demand for large stones above 3-carats, J-M, piqué goods. There has been a slight improvement in liquidity with manufacturers reaching out to new banks for financing, but overall cash flow levels remain a concern. Rough trading is slow with manufacturers ramping up their factory output ahead of the Diwali festival in late October.
Israel: Sentiment is weak in Ramat Gan as dealers are trying to navigate volatile market conditions. A large contingent of Israeli suppliers are traveling to the Hong Kong show, which they anticipate will provide a barometer for global market conditions and polished price levels. Still, expectations for the show are relatively subdued, with Israeli dealers concerned that Indian suppliers will lower their prices at the show. Polished demand is very selective and buyers are simply filling specific existing orders.
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