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Rapaport TradeWire November 17, 2016
Nov 17, 2016 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
November 17, 2016
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Indian
diamond industry under pressure with severe liquidity crisis as government
drastically reduces money supply by invalidating 500 and 1,000 rupee currency.
Rough trading slow with De Beers $470M Nov. sale smallest of the year. ALROSA
Oct. rough sales $431M. Sotheby’s Geneva sells $136M (87% by lot) with
emerald-cut, 17.07 ct., fancy intense pink, VVS1 diamond sold to Graff for $21M
($1.2M/ct.). Christie’s Geneva sells $97M (77% by lot) with pear-shape, 9.14
ct., fancy vivid pink, VS2 diamond fetching $18M ($2M/ct.). Belgium Oct.
polished exports -17% to $775M, rough imports -7% to $897M. JBT reports number
of U.S. jewelry businesses -5% to 27,142 in 3Q. |
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| Diamonds |
1,265,368 |
| Value |
$7,866,721,772 |
| Carats |
1,353,401 |
| Average Discount |
-30.32% |
www.rapnet.com
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| The RapNet Diamond Index (RAPI™) is the average asking price in hundred $/ct. of the 10 percent best priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet - Rapaport Diamond Trading Network. |
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Get Current Price List | Subscribe to Rapaport | Join RapNet |
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QUOTE OF THE WEEK
The market is totally immune to the macro environment.
Rahul Kadakia, international head of the Christie's jewels department, on the consistent allure of colored diamonds, quoted by CNBC
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MARKETS
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United
States: Dealers
filling Christmas orders are maintaining firm prices. Difficult to negotiate
terms with suppliers for memo goods. Steady demand for 0.70 to 2 ct., G-J,
VS2-SI2 diamonds…
Belgium: Market
sentiment positive and trading steady as dealers fill holiday orders. Improving
European luxury demand for 1 to 2 ct., D-G, IF-VVS RapSpec A2+ diamonds…
Israel:
Steady
U.S. demand before holiday season. Dealer trading slow but November better than
October…
India: Cautious
mood as jewelry demand and diamond trading slows due to government
demonetization program. Lack of liquidity mutes activity…
Hong
Kong: Polished
trading slow with selective demand for Hong Kong Christmas season. Steady
demand for 1 ct., G-J, VS1-SI2 diamonds…
Click here for deeper analysis
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INSIGHTS
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India's Attack on Cash
Prime Minister Narendra Modi’s demonetization program has far-reaching consequences for the diamond and jewelry trade...
Click here to continue reading
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INDUSTRY
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Graff Splashes $37M on Sotheby's Pink Diamonds
Sotheby's
sold $136 million worth of jewels at its Geneva auction. The top lot was a
step-cut, 17.07-carat, fancy intense pink, VVS1 diamond ring, which sold to
Graff Diamonds for $20.8 million, or $1.2 million per carat. Graff also bought
a pear-shaped, 13.20-carat, fancy intense pink, internally flawless diamond, valued
at $16.2 million, or $1.2 million per carat. The Sky Blue Diamond, a
square-cut, 8.01-carat, fancy vivid blue, VVS1 Cartier ring, was purchased by
an anonymous buyer for $17.1 million, or $2.1 million per carat, at the lower
end of its pre-sale estimate. The auction sold 87% by lot.
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Christie’s Geneva Sells Pink Diamond for $18M
Christie’s
netted $97.1 million at its Geneva auction with a pink diamond also topping the
bill. The pear-shaped, 9.14-carat, fancy
vivid pink, VS2 diamond sold to an unidentified Asian buyer for $18.2 million,
or $2 million per carat. The auction house set a new world record for a
pair of earrings, selling two pear-shaped, D-color, flawless diamonds for
$17.6 million ($170,000 per carat). The diamonds weighed 52.55 carats and 50.47
carats respectively. The auction was 77% sold by lot. |
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416 U.S. Jewelers Close Shop in 3Q
Jewelry
business closures in the U.S. increased 31% to 416 nationwide in the third
quarter, according to data from the Jewelers Board of Trade (JBT). Most
companies had “ceased operations,” which means they closed for reasons other
than financial difficulty or consolidation. These totaled 392, representing a
42% jump from a year ago. Bankruptcies crept up to 10 cases from nine a year
earlier.
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Belgium’s Rough and Polished Trading Falls
Belgium’s
polished diamond exports dropped 17% from a year ago to $775.2 million in
October, while polished imports fell 10% to $796 million. Net polished exports
swung to negative $20.8 million from positive $50.8 million a year ago. Rough
imports dropped 7% to $897.4 million, while rough exports slumped 29% to $721.1
million. Net rough imports stood at $176.3 million compared with negative $54.2
million a year earlier. Belgium’s net diamond account, representing total
polished and rough imports less total exports, stood at negative $197.1 million
for the month, versus positive $105 million in October 2015. |
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RETAIL & WHOLESALE
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Jewelry Ads Give Contrasting Messages
Forevermark,
Tiffany & Co and Kay Jewelers released video commercials ahead of the
holiday season, showing contrasting approaches to entice consumers. Forevermark
and Kay’s campaigns promoting their respective ‘Ever Us’ two-stone collections
feature couples in their daily interactions, targeting millennials. Tiffany’s
holiday commercial follows a more traditional model, focusing on the glamour
and shine of a diamond. |
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Holiday Sales to Gain from Post-Election Certainty
Retail
sales during the U.S. holiday season will increase between 2.1% and 2.5% over
last year, magnified by the relatively low base in 2015, Standard & Poor’s
predicted. The forecast covered general merchandise, apparel and accessories,
furniture and other retail sales. Sales this season will benefit from increased
certainty after the disruptive U.S. presidential elections, commentators said
while remaining cautious about the extent of any potential upturn.
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Alex and Ani Appoints President
Alex
and Ani named Cindy DiPietrantonio its president to oversee strategy and lead
daily operations. DiPietrantonio (pictured), who joined the jewelry
company in July as interim chief operating officer, will report to Carolyn
Rafaelian, its founder and CEO. DiPietrantonio previously served as interim
president of SHEEX Performance Bed Sheets and Sleepwear where she helped raise sales by more than 400%, Alex
and Ani said.
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Alibaba Sells Record $18B in Single Day
Sales
on Alibaba Group’s Alipay platform jumped 32% on Singles’ Day, underlining the
day’s growing importance on the Chinese retail calendar. The total value of
transactions hit $17.8 billion (RMB 120.7 billion) compared to $14.3 billion
last year, Alibaba reported. The major shopping day, also called “11.11” since
it falls on November 11, is being marketed as an occasion for single consumers
to buy products for themselves.
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MINING
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De Beers Sells $470M in Quiet November Sight
De
Beers recorded its smallest sight of the year in November amid a seasonally
quiet period for the rough diamond market. The ninth sales cycle of 2016
totaled $470 million compared with $178 million a year ago when the rough
market was in the doldrums. Premiums on the secondary market were about 5% for
higher-quality goods but sightholders noted prices softened on news of the Indian
government’s move to scrap 500 and 1,000 rupee notes.
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ALROSA October Sales Hit $431M
ALROSA
reported rough diamond sales totaled $430.8 million in October as demand
remained strong despite disruptions caused by Diwali. The figure
represents a decline from $435.1 million a month ago but is still relatively
high for this time of year. October is seasonally slower because Indian
manufacturers limit rough buying so they are not overstocked when factories close for Diwali in November. |
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Lucara Sells 224ct. Rough for $11M
Lucara
Diamond Corp garnered $38.7 million from the sale of 12 “exceptional” stones
recovered at its Karowe mine in Botswana. The top lot in the tender
was a 224.5-carat, type IIa diamond which sold for $11.1 million, or $49,497
per carat. Five diamonds sold for more than $2 million each. A 162.3-carat
stone drew $4.9 million, while an 81.8-carat diamond garnered $3.8 million. |
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Lace Diamond Mines Put into ‘Business Rescue’
DiamondCorp subsidiary Lace Diamond Mines (LDM) was placed into “business
rescue,” after severe weather forced the company to halt production and request
a suspension of its shares. LDM will formally appoint a business rescue
practitioner in due course, the miner said. The deposit in South Africa
was flooded after almost 90 millimeters of rain fell in just over an hour on
November 11.
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GENERAL
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JA: Trump Election Won't Impact Proposed Tax Bill
Jewelers
of America (JA) said attempts to achieve tax “fairness” in the U.S. should be
unaffected by the Republican Party’s continued control of the Senate. The
tussle to pass the Marketplace Fairness Act will continue in 2017 and
the Senate could consider the legislation before President-Elect Donald Trump
takes office in January, according to JA. At present, online sellers such as
Amazon and eBay can avoid charging and collecting sales tax in states where
they do not have a warehouse or another physical presence.
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Smithsonian Showcases Diavik Foxfire
A record-breaking rough diamond found in Canada has come on display at the Smithsonian National Museum of
Natural History in Washington D.C., appearing until February 16. The Diavik Foxfire is the largest gem-quality rough diamond recovered in Canada, according to Rio
Tinto, which owns 60% of the Diavik mine. The
diamond was sold in June to Deepak Sheth of Amadena Investments LLC/Excellent
Facets Inc., which chose to keep it in its rough form. |
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ECONWATCH
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Diamond Industry Stock Report
Indian jewelry stocks fell this past week as investors feared the potential impact of the government's decision to invalidate 500 and 1,000 rupee notes. The declines were led by Gitanjali Gems (-20%). U.S. retail stocks were mostly solid, headed by Kohl's (+18%), amid reasonably positive expectations for the upcoming holiday season. Macy's (+9%), Movado Group (+10%) and Nordstrom (+11.5%) also made healthy gains this week. European luxury and mining stocks were mixed.
View the detailed industry stock report
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Nov 17 (12:00 GMT) |
Nov 10 (13:22 GMT) |
Chng. |
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| $1 = Euro |
0.93 |
0.92 |
0.01 |
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| $1 = Rupee |
67.80 |
66.74 |
1.07 |
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| $1 = Israel Shekel |
3.85 |
3.84 |
0.02 |
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| $1 = Rand |
14.27 |
13.84 |
0.43 |
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| $1 = Canadian Dollar |
1.34 |
1.35 |
-0.01 |
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| Precious Metals |
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Chng. |
| Gold |
$1,230.57 |
$1,279.66 |
-$49.09 |
-3.8% |
| Platinum |
$945.50 |
$983.00 |
-$37.50 |
-3.8% |
| Silver |
$17.05 |
$18.59 |
-$1.54 |
-8.3% |
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| Stock Indexes |
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Chng. |
| BSE |
26,227.62 |
27,517.68 |
-1,290.06 |
-4.7% |
| Dow Jones |
18,868.14 |
18,589.69 |
278.45 |
1.5% |
| FTSE |
6,769.24 |
6,890.61 |
-121.37 |
-1.8% |
| Hang Seng |
22,262.88 |
22,839.11 |
-576.23 |
-2.5% |
| S&P 500 |
2,176.94 |
2,163.26 |
13.68 |
0.6% |
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INDIA MARKET REPORT
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Polished Trading Activity
Cautious
mood as jewelry demand and diamond trading slows due to government
demonetization program. Lack of liquidity mutes activity. Smaller companies
under pressure. Large diamond and jewelry exporters better positioned, with
steady U.S. and Chinese demand as rupee -3% in past week to INR 68/$1. Dealer
demand for small, low-quality rough declines after currency ban. Factories
still closed for Diwali to reopen Nov. 21.
Read the Polished Diamond Trading Report |
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