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Market Comments 12/18/2014
Dec 18, 2014 6:00 PM
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Warning: Polished prices under continued pressure with sellers lowering prices
as demand for cash exceeds demand for diamonds. While some hot spots persist,
overall market sentiment is negative. Rough prices coming down as sightholders
reject about 20% of overpriced rough at estimated $600M De Beers Dec. sight.
U.S. jewelry retailers hoping last-minute Christmas sales will boost mediocre
holiday season. Widespread discounting with U.S. jewelry Nov. CPI -5%.
Dominion’s 3Q revenue +50% to $222M, profit $34M vs. loss of $6.5M last year.
Belgium’s Nov. polished exports -8% to $1B, rough imports +14% to $1.2B. Turkey
scraps 20% diamond import tax and 18% VAT in bourse.
Fancies: Fancy-shape
market more stable than rounds as demand shifts to better values. Ovals are
particularly hot this holiday season with some Heart-shape demand in Hong Kong.
Pears and Cushions doing better than Princess and Marquise, which are weak. U.S.
holiday demand has helped improve fancy shape market with good U.S. demand for
commercial qualities. Far East fancy demand likely to improve as buyers become
increasingly value conscious. Buyers insisting on excellent-shape proportions
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: Polished diamond trading has slowed while wholesalers are more focused on selling diamond jewelry ahead of next week’s Christmas break. Dealers are avoiding sending diamonds out on memo as they want to have goods available for last-minute orders. Dealers are seeing some opportunity to sell large diamonds directly to consumers. However, in general, trading is focused on commercial-quality goods with steady demand for SI-I2 diamonds in all categories. In fancy shapes, there is strong consumer demand for ovals this season at the retail level. So far, there have been mixed reports about the holiday shopping season with jewelry sales expected to be just slightly better than last year.
Belgium: Market instability persists in Antwerp and sentiment is weak among diamond dealers. Polished suppliers are extending generous credit terms of 60 to 90 days to buyers, while some are selling at a loss in order to generate liquidity. There is good demand for GIA dossiers in 0.50-carat to 0.80-carat, D-J, VS-SI. Demand remains weak for better quality, 1-carat to 3-carat, D-F, IF-VVS goods, while demand is healthier for G-H stones in this category. Dealers note that demand is stable from the U.S., while European demand is relatively weak for this time of year. Demand from China is in limbo as buyers there wait for the Chinese New Year season. Rough trading is weak with De Beers goods selling at discounts on the secondary market while manufacturers battle to generate attractive profit margins.
Hong Kong: Activity has picked up slightly amid last minute buying before Christmas. Dealers are pushing for deals before they close next week for the rest of the year. A buyer’s market prevails as some dealers are willing to accommodate price-sensitive demand to boost their revenue before the year-end. There is steady demand for 0.30-carat to 0.50-carat, D-F, VVS+ while demand for commercial-quality goods in those sizes has slowed. Retailers were encouraged that the Occupy Central protests came to an end last week as they hope for an increase in visitor traffic over the Christmas-New Year period and strong sales in January ahead of the Chinese New Year Golden Week.
India: Polished diamond trading is slow with very little inventory demand from either the U.S. or China. There is also relatively weak domestic demand during the ongoing wedding season. Demand is price sensitive and selective. Buyers are pushing for higher discounts as suppliers need to raise liquidity levels. There is good U.S. demand for piqué goods, with some shortages reported in the market. There has been an increase in Chinese demand for parcels of VS-SI goods as they seek to avoid long turnaround times for grading. Demand has softened for 0.30-carat to 0.40-carat dossiers as more goods are being returned from the Gemological Institute of America (GIA). There is stable demand for 0.50-carat to 1-carat, G-J, VS-SI goods. In fancy shapes, ovals and cushions are the strongest sellers. Manufacturers have slowed their cutting activities due to low profitability as rough prices remain high while polished continues to drop.
Israel: All eyes are on U.S. Christmas season sales as dealers hope for improved inventory demand from their retail buyers in the new year. U.S. demand has improved and accounts for the bulk of current activity in Ramat Gan. There is steady demand for 0.50-carat to 1-carat, F-I, SI1-I2 goods, while in fancy shapes, there is good demand for ovals and pears. Demand is relatively weak for diamonds above 1-carat, with price-sensitive buyers pushing for higher discounts. Some suppliers are reducing prices in a bid to raise liquidity levels before the new year. There is steady demand for 3-carat to 10-carat, G-H, SI goods, while demand for better-quality D, IF-VVS stones in the same sizes is relatively weak. Rough trading is cautious as local dealers and manufacturers are finding it difficult to compete with high rough prices offered on tender.
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