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Market Comments 9/3/2015
Sep 3, 2015 6:00 PM
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Indian dealer market illiquid with no one buying for inventory. Dealers with money waiting for lower prices. Some action in Israel during Diamond Week but ~$15M insolvencies creating concern. Dubai reports ~$136M retailer insolvency with similar failure expected in China. Low expectations for HK show. Fair to good NY demand for large stones but stock market plunge reducing U.S. consumer confidence. Aug. RAPI for 0.30ct. -1.7%, 1ct. -0.9%. Rough prices still too high with no profits for cutters. Rapaport estimates reasonable profitability would require an additional 20% rough price drop. Botswana budget pressured by falling rough sales. ALROSA 1H revenue +26% to $2B, profit +105% to $726M.
Fancies: Demand soft. Pears, Ovals and Cushions steady, Princess, Hearts slow. Prices for curves improving slightly. U.S. demand supporting market for commercial-quality fancies, especially for sizes under 1-carat. 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.
United States: New York trading is stable as the U.S. remains the best market for diamonds. Still, dealers are cautious as buyers are making offers at lower prices. Buyers are looking for deals but there is a shortage of the right type of goods on the market. There is steady demand for SI to I2 clarity diamonds for the American market. There is also steady demand for large stones on New York’s dealer circuit. Retail sales are stable but still showing slow overall growth from last year, while bridal diamond brands have stood out as strong performers. Retailers have moderate expectations for the Christmas shopping season although there are concerns that recent stock market volatility has put a dent in consumer confidence.
Belgium: Activity in Antwerp’s diamond district remains quiet with dealers waiting to see how the market evolves in the days leading up to the Hong Kong Gem and Jewellery Fair that begins on September 16.There is stable demand for 1-carat, D-H, VS-SI, triple EX diamonds but available goods don’t always match buyers’ specifications. There is concern about CVD and HPHT treated diamonds being mixed into diamond parcels, which has added to buyer caution even though no recent cases have been officially proved. Rough trading is stable with improved sentiment following the De Beers 10 percent price cuts. Rough dealers are eyeing the next ALROSA sale to see if the Russian company will follow suit.
Hong Kong: The diamond and jewelry market is very quiet with a reported slowdown in tourist arrivals affecting sentiment. Luxury retailers continue to post sales declines and some are reportedly closing or relocating as their turnover doesn’t justify the high rental costs in the city. China and Hong Kong-based retailers have consequently curbed their diamond buying preferring to work from existing inventory through the current quiet season. Diamond buying is specific and very few are buying to build up inventory. Expectations remain fairly muted for the September show.
India: The market is slow and dealers are very cautious due to reports of bankruptcies in Israel, Dubai and China. Suppliers are insisting on cash deals as buyers are delaying payment. Local demand has also been restrained as the rupee weakened by 3 percent in August to its current level of $1/66.2. There is steady U.S. demand for piqué goods with relatively positive reports stemming from the recent India week at the Diamond Dealers Club of New York. Manufacturers are maintaining their reduced polished production levels although there has been a slight improvement in rough demand after De Beers cut prices at the August sight.
Israel: The market received a much-needed lift during this week’s International Diamond Week at the bourse. Dealers noted that the event was more a strong networking opportunity with some sales taking place. Still, buying was cautious, with activity clouded by reports of bankruptcies of two Israeli companies with $14 million estimated to be outstanding to the trade. Trading was focused on American goods with a notable presence of the U.S. buyers and exhibitors that returned to participate in the event.
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