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Market Comments 3/12/2015
Mar 12, 2015 6:00 PM
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Polished trading stalls as Hong Kong show sales disappoint. Dealers can’t buy if they can’t sell. Buyers have become more selective as the market slows creating opportunities for suppliers with the best goods. Sharp decline in manufacturing expected to create shortages which will help future demand. Antwerp concerned as bank financing dries up. Luk Fook’s Chinese New Year same-store sales -21%, gem-set jewelry +65% in China. U.S. Jan. polished imports -3% to $1.8B, exports +3% to $1.4B. Belgium’s Feb. polished exports +9% to $1.8B, rough imports -24% to $1B. ALROSA launches 2M ct/year Botuobinskaya diamond mine.
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: Dealers are exercising caution in New York due to uncertainty in the global market. U.S. exhibitor presence at the Hong Kong show was smaller than in previous years, while those that attended said trading activity was slow. Liquidity remains tight. However, some suspect that it is easing slightly since reduced manufacturing has lowered the volume of polished goods that are available and enabled dealers to sell off weaker inventory. While confidence is lagging, there is stable demand for 1-carat, G-M, SI-I2 diamonds, while ovals are selling well among fancy shapes. Jewelry retail sales are stable although consumers continue to shift toward lower price points.
Belgium: Sentiment is weak due to tight bank credit and concerns about profitability. Dealers returned from the Hong Kong show disappointed in their sales and reported that there was weak Far East demand for 1-carat and larger, VS+ diamonds that typically sold well there in previous years. There was stable demand for below 1-carat, J-M, SI-I2 goods at the show. In Antwerp, there is stable demand for dossiers and nice-make SI goods. There is also good demand for oval and emerald cut, 1-carat to 2-carat, IF-VS diamonds. Rough trading has improved on the secondary market, although dealers expect prices at the March contract and tender sales to reduce further.
Hong Kong: Polished trading is slow and sales at the recent show reflected weak conditions in the Far East diamond market. There is steady demand for round, pointer-size, H-L, SI diamonds and good demand for triple EX goods, which continue to garner a steady premium over non-triple EX diamonds. More manufacturers are setting loose diamonds in jewelry to make better profit margins from the finished product. Dealers were encouraged by reports of strong gem-set jewelry sales in Mainland China over the Chinese New Year, while sales of both gold and gem-set jewelry remained weak in Hong Kong and Macau.
India: Polished trading is slow after a disappointing Hong Kong show. Sentiment has also weakened due to unconfirmed reports of several small companies in financial distress. Banks are reducing their credit to smaller companies, while the larger manufacturers appear to have been less affected by tighter banking policies. Liquidity is also being squeezed by reported delays in payments to diamantaires from overseas clients. Local diamantaires are worried that global currency devaluations against the dollar will negatively affect demand from markets outside the U.S. There is stable demand for melee, SI-I2 clarity goods. There is steady demand for 0.30-carat to 0.50-carat, SI-I2 and for 1-carat to 3-carat, H-K, SI-I2 diamonds. Princess and pear shapes below 1-carat, SI are moving well.
Israel: Polished trading is stable as local dealers have regained some confidence. U.S. demand is stable, while diamantaires who travelled to Hong Kong said that the show was okay, although not as good as last year. Liquidity is tight. Manufacturers prefer to buy polished than manufacture new rough. However, there are shortages in select categories of polished due to reduced manufacturing. There is steady demand for 0.50-carat to 2-carat, G-K, VS-SI, triple EX goods. Demand for larger stones above 3 carats is soft. There is steady demand for pears and ovals.
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