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Market Comments 2/26/2015
Feb 26, 2015 6:00 PM
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High hopes for Hong Kong show with large quantity of diamonds on offer, despite severe 30-35% cutback in manufacturing and 50% decline in value of new production. Liquidity is tight but prices holding steady as sellers await outcome of HK show and possibility that shortages will stabilize the market. Rough trading improves at Antwerp rough fair as De Beers reduces overall prices by an estimated 2% at Feb. sight. Dominion’s 4Q sales +3% to $241M, Ekati production +70% to 821,000 carats. Lucara’s 4Q revenue +20% to $71M, loss of $17M vs. profit of $21M a year earlier. Sarine’s 4Q revenue +10% to $18M, profit -13% to $3.9M. China’s 2014 polished diamond imports +31% to $2.2B.
Fancies: Ovals and Pears doing well, Cushions and Emeralds stable, Princess and Hearts weak. Prices for curve-shapes improving slightly. Straight-shape fancies not hot. Prices for fine-cut stones are holding up better than rounds. Pears OK. Princess relatively weak. U.S. demand supporting market for commercial-quality fancies, especially for goods under the carat. Larger sizes stable. 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.
Global Comments
United States: Polished trading is stable but buyers remain relatively cautious. New York-based polished suppliers note that they face competition from overseas manufacturers who are offering lower prices and generous credit terms in an attempt to improve their liquidity levels. There is steady demand for larger diamonds and for bread-and-butter piqué goods in most sizes. Demand for laboratory-graded 0.30-carat to 0.50-carat sizes has softened in recent weeks. Jewelry retailers reported mixed sales levels during Valentine’s Day and continue to focus on bridal ahead of the spring and summer wedding season.
Belgium: Sentiment improved slightly in Antwerp as dealers prepared for next week’s Hong Kong International Diamond, Gem and Pearl Show taking place from March 3 to 6. Still, there is some caution as demand for dossiers remains relatively weak. There is improving demand for 2-carat to 3-carat diamonds, while demand for 1-carat goods is relatively slow. Rough trading is stable and there was a positive atmosphere at the rough diamond trade fair that took place in the Diamankring exchange this week.
Hong Kong: Diamond trading activity was sporadic for most of the week as some businesses only re-opened around Tuesday or Wednesday from their Chinese New Year break. Polished dealers were focused on preparing their inventory for next week’s Hong Kong show, and were largely gathering market intelligence before the event. Many are hoping the show will signal stronger interest from local jewelry retailers following the busy Chinese New Year period, although initial reports about jewelry sales during the Spring Festival have been mixed.
India: The market remains relatively slow and polished dealers are hoping the Hong Kong show will boost activity. Diamond manufacturers have maintained lower levels of production but are expected to start ramping up in the coming months amid reports of shortages in some categories of polished. Cutters have shifted their manufacturing to focus on non-certified diamonds and to satisfy the prevailing steady U.S. demand for piqué goods up to 1-carat in size. There are some deals occurring in Mumbai from international buyers, mainly from Israel and the U.S., but largely from dealers that are preparing for next week’s show. Rough trading is stable with some price reductions reported from the De Beers sight this past week.
Israel: Trading improved slightly ahead of the Hong Kong show. Dealers report that there is steady demand from large U.S. retailers that is supporting the local market and polished price levels. Still, liquidity is tight and buyers are pressuring for higher discounts. There is stable U.S. demand for G-M, SI-I2 diamonds in most sizes. There is also good demand for fancy shapes, particularly ovals and pears. Demand from the Far East improved ahead of the Chinese New Year but remains cautious.
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