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Market Comments 11/20/2014
Nov 20, 2014 6:00 PM
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Buyer’s market with suppliers pressured by tight liquidity. Limited inventory
buying ahead of holiday season. U.S. demand stable, Far East weak. Market for
fancy shape and fancy color diamonds improving with increasing dealer demand due
to oversupply and limited profitability of rounds. Markets expect steady rise in
Internet jewelry sales this holiday season as comScore predicts U.S. Nov./Dec.
online retail sales +16% to $61B. U.S. Sept. specialty jewelry store sales +1%
to $2.2B. Chow Tai Fook’s Oct. Hong Kong sales -17% due to political protests.
Belgium Oct. polished exports -4% to $1.3B, rough imports -1% to $1.1B. Swiss
Oct. watch exports +5% to $2.3B.
Fancies: Fancy shape
market improving as manufacturers gain favorable margins over rounds. Princess
cuts waking up following long slow period. Large fancies in
demand. Healthy
U.S. demand maintaining price levels for commercial qualities. Curves (Pears,
Ovals) doing better than Squares (Emerald, Princess) in larger sizes with
Squares doing better in under the carat sizes. Far East becoming more aware of
fancy shapes but demand still limited. Buyers selective regarding shape- and
cut-quality with significant 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: The market in New York is slow, with relatively weak demand for smaller goods. The Israel Diamond Week that took place in the New York Diamond Dealers Club in mid-November generated positive sentiment with busy activity and good demand for large stones and yellow fancy color diamonds. There is steady demand for 1-carat to 3-carat, G-H, VS-SI diamonds. Expectations are rising for the Christmas holiday season with a lot of promotional activity ahead of the Thanksgiving weekend. Luxury jewelers note steady sales in the U.S., but middle income consumers are shifting to lower price points.
Belgium: Antwerp is fairly quiet as dealers are slowly regaining confidence and sentiment is neutral. Buying is focused on filling specific orders rather than building up inventory as inventory levels remain relatively high across the pipeline. There is stable demand for VS2-SI2 goods in all sizes and colors. Manufacturing profit margins remain tight due to high rough prices and declining polished prices. Liquidity is also tight due to reduced bank credit. There are reports of shortages in 2-carat to 3-carat, D-G, SI goods. In fancy shapes, there is rising demand for pear shapes above 2 carats and large princess and emerald shape goods.
Hong Kong: Polished diamond demand continues to be relatively weak for this time of the year. Diamantaires are concerned about Chinese buyers failing to make payment on previously extended credit as the government is placing limitations on money transfers. There is steady demand for 1-carat diamonds, while overall demand for goods is low as inventory levels remain relatively high. Dealers are shifting to fancy shape and fancy color diamonds in an attempt to garner more attractive profit margins. Retail jewelers continue to be affected by lower tourist numbers due to the Occupy Central disturbances. There is steady consumer demand for jewelry during the ongoing local wedding season.
India: Trading has been subdued in Mumbai this week as buyers remain cautious. Demand has slowed slightly for 0.30-carat to 0.40-carat diamonds while there is steady demand for 0.50-carat to 0.70-carat and 1-carat goods in G-K, VS-SI categories. There are many foreign buyers in the market but that has not translated into increased transaction volume as they are pushing for higher discounts. Liquidity remains tight and is a primary concern for manufacturers. In fancy shapes, there is good demand for cushion, oval and princess cuts with rising demand for princess shapes above 1-carat as these goods are popular among U.S. and Far East consumers. Consumer buying is stable during the ongoing wedding season with rising demand for gold jewelry as the price of gold has declined.
Israel: Dealers have returned from the Israel Diamond Week in New York with mixed feedback. Participants noted busy activity but cautious buying at the event. U.S. demand is improving ahead of the holiday season, but demand in Hong Kong and China remains weak. Still, polished trading in the bourse has stagnated as buyers are cautious in a volatile market. Liquidity is tight. There is good demand for 0.30-carat to 2-carat, I-K, VS2-SI2 diamonds, while demand for high-end large stones above 3 carats has softened. Diamonds larger than 5 carats are strong in SI clarity, but weak in IF-VVS clarities.
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