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Rapaport TradeWire May 1, 2015
Apr 30, 2015 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
May 1, 2015
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Diamond market sentiment improving slightly as prices stabilize, but cutters still losing money on overpriced rough. Shortages developing with very low trading volume and reduced manufacturing activity. Good U.S. demand for commercial-quality diamonds. Lower gold prices raise expectations for good jewelry sales during China’s May Day holiday. Rough markets quiet as sightholders expect reduced prices at next week’s De Beers sight. U.S. March jewelry retail sales -2 % to $4.8B, watch sales -3% to $630M. India’s March polished exports -10% to $1.8B, polished imports -37% to $500M, rough imports +3% to $1.5B.
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RapNet Data: Apr. 30
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| Diamonds |
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1,429,482 |
| Value |
$8,448,070,657 |
| Carats |
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1,332,069 |
| Average Discount |
-23.64% |
www.rapnet.com
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| The RapNet Diamond Index (RAPI) has been revised to reflect the average price of the 10 best priced diamonds in each category. |
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Get Current Price List | Subscribe to Rapaport | Join RapNet |
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QUOTE OF THE WEEK
Blackstone is excited to partner with Stornoway and Orion in the development of this high-quality diamond asset with significant resource potential. The Stornoway team are talented operators, uniquely situated to bring the Renard mine to production on time and on budget. Our partnership with Stornoway is consistent with our strategy of backing best-in-class managers and exceptional assets in the mining industry.
Jasvinder Khaira | Blackstone
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RETAIL & WHOLESALE
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U.S. Jewelry & Watch Sales -2%
U.S. jewelry and watch sales across all channels fell 1.7% year on year to $5.386 billion in March, as estimated from preliminary government figures. According to Rapaport News calculations, jewelry sales dropped 1.5% to $4.756 billion, while sales of watches contracted 2.9% to $630 million during the month. In addition, March became the sixth consecutive month to reflect a decline in sales for the sector.
As expected, given weaker consumer spending on jewelry, sales totals were revised lower for January and February. Jewelry sales for the first quarter of 2014 have fallen 1.4% year on year to $14.2 billion, while watch sales dropped 3.2% to $1.9 billion.
Jewelry sales at specialty jewelers have registered a more severe decline for the first two months of the year, falling 5.8% year on year to $4.673 billion. Totals for March will be released in May.
As a point of reference, total U.S. jewelry sales in 2014 improved just slightly, or 0.5%, to $69.5 billion and watch sales rose 1.8% to $9.5 billion.
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Swiss Watch Exports +6%
Swiss watch exports rose 6.3% year on year to $1.8 billion (CHF 1.753 billion) in March, according to the Federation of Swiss Watches. The group noted that watch exports for the first quarter of 2015 rose 3.1% to more than $5.2 billion, while watch exports by volume rose 13.2% to 2.3 million units.
The federation explained that watch exports priced less than $209 grew 22.9% by value and 22.5% by volume in March, while price points of $3,141 and above increased 8.3% by value and 5.5% by volume. However, exports with price points between $210 and $523, fell 6.1% by value and 2.9% by volume, while watches priced between $524 and $3,140 rose 1.4% by value and fell 1.4% by volume.
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Bonhams' Sale Achieves $7M
Bonhams fine jewelry sale in London realized $6.6 million (GBP 4.3 million) with the top lot, a 9.05-carat, D, VS1, pear-shaped diamond ring by Harry Winston, selling for $533,846 to a U.S. bidder. A 21.27-carat sugarloaf cabochon Kashmir sapphire and diamond ring sold for $442,460 -- three times the presale estimate, followed by a 17.97-carat Burmese sapphire and diamond ring that fetched $277,965 against a high presale estimate of $91,385. Additionally, a 7.10-carat, fancy light pinkish brown, pear-shaped diamond ring sold for more than five times its presale estimate of $30,461 and achieved a final price of $179,268.
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Graff Opens in Cyprus
Graff will open in Cyprus at the Limassol Marina in its progressive effort to expand in Europe, according to the Financial Mirror. Graff was founded in 1960 and has over 50 stores worldwide. Limassol Marina's shopping area is resident to an existing array of designer boutiques, a luxury spa and fitness club, yacht brokers and agents, a chandlery, showroom, restaurants, bars and cafes. It was the first super yacht marina in Cyprus, combining commercial and cultural facilities with elegant residences with private berths or direct access to the beach.
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Bulgari to Develop Dubai Residences
Bulgari and property developer Meraas announced plans for 188 living spaces in Dubai, according to the Associated Press. Bulgari anticipates building 165 apartments, eight penthouses and 15 mansions at the Jumeira Bay Island development complex, where a Bulgari already plans to build a resort, marina and a yacht club. Bulgari is a subsidiary of LVMH and in addition to jewelry boutiques, it operates hotels in Milan, Bali and London.
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LG Releases Smartwatch
LG Electronics began selling its LG Watch Urbane in the U.S. on Google Play and through AT&T and Verizon. The LG Watch Urbane smartwatch is powered by the latest version of Android Wear and features a full-circle Plastic OLED (P-OLED) display. The watch offers a stainless steel body that is available in polished rose-gold and silver and a stitched leather strap. Wi-Fi connectivity enables the smartwatch to connect with a smartphone, access apps, receive notifications and, with LG Call, users can access recent calls and make calls directly from the watch. Other features include LG Pulse to measure heart rate during exercise.
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Campaigns Begin for ArtCarved, TRITON
Frederick Goldman Inc. partnered with integrated marketing firm ion+radarworks to create an online presence for the ArtCarved and TRITON jewelry brands. Frederick Goldman enlisted ion+radarworks to develop individualized social media strategies for the brands that are meant to engage consumers with content that focuses on experiences, community and personalization.
For ArtCarved, the marketing firm will focus on establishing campaigns across Facebook, Instagram and Pinterest, while it will launch a brand new presence for TRITON on both Facebook and Instagram.
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Boucheron's CEO Departs
Boucheron's president and CEO, Pierre Bouissou, resigned to "follow new professional challenges," according to a statement filed by the jeweler's parent company, Kering Group, which will name a successor at a later time.
Bouissou joined Kering in 2011 from rival luxury retailer LVMH where he served as managing director of Berluti. Until a replacement is hired, Kering assigned executive responsibility for Boucheron to Albert Bensoussan, the CEO of the luxury watches and jewelry division.
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Pure Gold Jewellers Tops Index
Pure Gold Jewellers was named the "Best Consumer Friendly Retailer" for the gold jewelry retail category by the Department of Economic Development in the United Arab Emirates. The retailer garnered the highest rating across the seven retail categories measured in the annual Consumer Friendliness Index, which also included electronics, hypermarkets, furniture, retail, coffee shops and automotive dealers.
Firoz Merchant, the founder and chairman of Pure Gold Jewellers, said, "Consumer Friendliness Index is a great government initiative to improve customer satisfaction levels and raise consumer confidence in Dubai's retail offerings. It is an honor to receive the award. I strongly believe customers are the focal point of any business, and therefore providing great customer service is part of our business philosophy."
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Cheng Joins WDMF Board
Peter (Kar Shing) Cheng, the chairman of the Chow Tai Fook Foundation and a director of Chow Tai Fook, joined the board of the World Diamond Mark Foundation (WDMF), an industry group that assists in the promotion of diamonds to consumers. Cheng, 62, holds positions as executive director for New World China Land Ltd. and deputy managing director of New World Development (China) Ltd. He is also a director of New World Development Company Ltd., NWS Service Management Ltd., New World Hotels (Holdings) Ltd., Hip Hing Construction Company Ltd. and Polytown Company Ltd. Cheng's non-profit roles include chairman of Hong Kong Renal Centre Ltd., chairman of The Welfare Fund Ltd., vice chairman of Hong Kong Economic Exchange and director of Green Council.
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Zalemark Debuts Crayola Jewels
Zalemark will debut its Crayola Fine Jewelry collection during the JCK show in Las Vegas. The line features jewelry designed by Steven Zale using unique Crayola colors in each piece. Warren Schorr, Crayola's vice president of business development and global licensing, said, "This new line celebrates the deep connection and emotion people have with color and we are confident it will resonate with people everywhere." The Zalemark jewelry line compliments Crayola's recently launched clothing line at Bloomingdales department store.
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Luxury Varies by Age Group
The Shullman Research Center's latest series of insight reports for luxury marketing revealed how three generations (boomers, generation X and millennials) define U.S. luxury using word choices. Participants in Shullman's reports are defined as affluent households with incomes of at least $75,000.
Baby boomers, who are generally in their early 50s to almost 70 years of age, defined luxury as "expensive," "quality" and "non-essential" and -- to a lesser extent -- two products made their list: "cars" and "jewelry." GenXers, who represent the age range of mid-30s to early 50s, listed the words "expensive," "high-end," "quality," while "cars" and "jewelry" featured more prominently than it had with boomers. However, jewelry did not appear as a word choice for millennials -- late teens to mid-30s -- as they felt luxury meant "expensive," "high-end," "quality," "classy" and the only product was "cars."
When asked to name the top 20 luxury brands, a few jewelry firms resonated with millennials, including Cartier, Gucci, Rolex and, barely making the list, Hermes and Tiffany & Co. Meanwhile, genXers named Cartier and Tiffany & Co. and Rolex on their list, while Hermes and Gucci just made the cut.
Boomers very prominently named Tiffany & Co., Cartier, Rolex and Gucci as luxury brands, and barely making the list -- luxury department store Neiman Marcus.
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CIBJO Issues Coral Blue Book
CIBJO's Coral Commission will release its special report at the 2015 CIBJO Congress, slated to take place in Salvador, Brazil, on May 4. The Coral Blue Book was prepared by the Coral Commission led by Vicenzo Liverino and will be presented for consideration at the event. The purpose of the CIBJO Coral Commission is to both preserve and develop trading in coral and jewelry comprised of coral, through the development and codifying of regulations and standards that promote consumer confidence and fair trade.
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MINING
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Petra Increases Debt Facilities
Petra Diamonds Ltd. announced a $300 million notes issue and an increase to its senior lender debt facilities to prepare for the construction of a modern processing plant at its Cullinan mine in South Africa. Petra's lender group has agreed, in principle, to increase the miner's debt facilities - subject to the closing of the issue - from $81.6 million to $302.4 million, along with certain amended availability and repayment terms.
Petra stated that it will use the proceeds to settle (not cancel) certain existing debt and, together with future drawdowns from the expanded facilities, fund the construction at Cullinan. The new fit-for-purpose processing plant at Cullinan carries a capital cost of $142.8 million and is expected to improve the recovery of a full spectrum of diamond sizes, protect large stones from breakage and improve efficiency in order to lower operating costs.
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Firestone Secures Standby Facility
Firestone Diamonds plc agreed to a $15 million standby debt facility with Resource Capital Fund VI L.P., subject to shareholder approval, which would satisfy one of the remaining conditions to the drawdown of its Absa debt facility. Firestone has also agreed to a restructuring of its existing $30 million mezzanine facility, with no changes to its commercial terms. The $15 million standby debt facility is expected to fund any potential cost over-runs or delays in respect to the development of a main treatment plant at its Liqhobong diamond project in Lesotho. Firestone's board of directors did not currently anticipate a need to draw down on the facility. The project currently remains within budget and on schedule, Firestone confirmed. The mine is expected to achieve initial production before the middle of 2016.
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Blackstone Invests in Stornoway
Blackstone Tactical Opportunities, an affiliate of Blackstone, invested in Stornoway Diamond Corporation and acquired a minority ownership interest in the Renard diamond stream, by way of a secondary market transaction with Orion Mine Finance.
The Renard diamond stream was concluded in July 2014 by FCDC Sales and Marketing Inc., which is a subsidiary of Stornoway and by which FCDC agreed to sell a 20% undivided interest in diamonds produced from the Renard diamond project for an up-front payment of $250 million.
Following this Blackstone-Orion transaction, Orion remains the majority owner of the Renard stream interest and continues to be the second largest shareholder with an approximate 20% stake in Stornoway's issued and outstanding common shares.
The Renard diamond project is fully funded and ready to develop an open-pit and underground diamond mine that is expected to produce an average of 1.6 million carats per year over an 11-year lifespan. The project remains on schedule for plant commissioning beginning in late 2016 and commercial production in the second quarter of 2017.
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Diamcor Sale Achieves $5M
Diamcor has achieved $4.72 million in revenue from the sale of 25,627.59 carats it sold at tenders since June 2013. The diamonds were sourced from the company's Krone-Endora alluvial project in South Africa and sold for an average price of $185.54 per carat.
The company also recovered and sold a 91.72-carat diamond for $817,920 and a 43.90-carat diamond for $317,924.
The information was part of the company's update of the initial technical report for the project previously filed on July 30, 2009.
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Debmarine Names New Vessel
Debmarine Namibia has named its new $194 million (NAD 2.3 billion) vessel after founding president, Sam Nujoma, according to The Namibian newspaper. The MV Nujoma, which is a diamond exploration and sampling vessel, will be constructed in Norway and is expected to be delivered in July 2017. Debmarine's CEO, Otto Shikongo, said that Debmarine will cover 25% of the cost, while Standard Bank Namibia and RMB Namibia, a unit of FNB Namibia, will cover the balance.
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STATS
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India
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March $Mil. |
%Chng. |
YTD $Mil. |
%Chng. |
| Polished exports |
$1,749 |
-10% |
$5,840 |
8% |
| Polished imports |
$500 |
-37% |
$1,278 |
-32% |
| Net exports |
$1,249 |
60% |
$4,561 |
30% |
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| Rough imports |
$1,453 |
3% |
$3,425 |
-18% |
| Rough exports |
$156 |
-15% |
$351 |
-17% |
| Net imports |
$1,297 |
5% |
$3,074 |
-18% |
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| Net diamond account |
($48) |
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$1,487 |
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Belgium
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March $Mil. |
%Chng. |
YTD $Mil. |
%Chng. |
| Polished exports |
$1,234 |
-7% |
$3,808 |
-3% |
| Polished imports |
$1,814 |
24% |
$3,927 |
8% |
| Net exports |
($580) |
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($119) |
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| Rough imports |
$1,401 |
5% |
$3,280 |
-19% |
| Rough exports |
$1,303 |
-5% |
$3,209 |
-21% |
| Net imports |
$98 |
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$71 |
446% |
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| Net diamond account |
$678 |
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($190) |
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ECONWATCH
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Diamond Industry Stock Report
Widespread declines for U.S. stocks with only Tiffany & Co. (+1%) ahead of last week. Far East shares higher, led by Chow Tai Fook (+4%) and Europe mainly lower. Indian shares mixed with Gitanjali (-7%) leading declines and Classic Diamond (+8%) ahead of gains. Miners mainly lower, led by Petra (-7%). View the detailed industry stock report.
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Apr. 30 |
Apr. 24 |
Chng. |
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| $1 = Euro |
0.891 |
0.923 |
-0.032 |
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| $1 = Rupee |
63.58 |
63.28 |
0.3 |
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| $1 = Israel Shekel |
3.87 |
3.93 |
-0.06 |
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| $1 = Rand |
11.90 |
12.15 |
-0.25 |
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| $1 = Canadian Dollar |
1.21 |
1.21 |
0.00 |
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| Precious Metals |
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| Gold |
$1,183.40 |
$1,194.40 |
-$11.00 |
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| Platinum |
$1,141.00 |
$1,135.00 |
$6.00 |
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| Stock Indexes |
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Chng. |
| BSE |
27,011.31 |
27,735.02 |
-723.71 |
-2.6% |
| Dow Jones |
17,840.52 |
18,058.69 |
-218.17 |
-1.2% |
| FTSE |
6,960.63 |
7,053.67 |
-93.04 |
-1.3% |
| Hang Seng |
28,133.00 |
27,827.70 |
305.30 |
1.1% |
| S&P 500 |
2,085.51 |
2,112.94 |
-27.43 |
-1.3% |
| Yahoo! Jewelry |
1,324.93 |
1,364.52 |
-39.59 |
-2.9% |
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INDIA MARKET REPORT
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Polished Trading Activity
Very slight improvement for demand and trading activity in the local market, especially as prices firm and manufacturing units head for vacation. Liquidity remains tight and overseas payments are slow to materialize. Read the polished diamond trading report.
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