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Rapaport TradeWire February 11, 2016
Feb 11, 2016 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
February 11, 2016
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Polished trading slows as Chinese buyers
vacation over Lunar New Year. Consumer demand slow but steady with concerns
that sluggish global economy and weak stock markets will lead to negative
wealth effect. Shortages supporting prices for specific goods which are in
demand. Large volume of new polished expected in 2Q after Jan. rough buying
spree. Botswana’s 2015 rough exports -39%
to $2.4B. Rio Tinto’s 2015 diamond sales -23%
to $698M, earnings +32% to $104M. Asian Star 3Q revenue -3% to $102M, profit
-25% to $2M. Blue Nile 4Q sales -5% to
$150M, profit +4% to $5M. U.S. 2015
polished imports -4% to $23.1B, exports -12% to $18.3B. De Beers to
launch grading at UK lab on March 1.
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| Diamonds |
1,085,796 |
| Value |
$7,869,567,573 |
| Carats |
1,223,918 |
| Average Discount |
-27.82% |
www.rapnet.com
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| The RapNet Diamond Index (RAPI) is the average price for the top 25 diamond qualities (D-H, IF-VS2). It is based on the 10 best priced diamonds for each quality. |
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Get Current Price List | Subscribe to Rapaport | Join RapNet |
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QUOTE OF THE WEEK
We sold a record number of engagement rings, expanded gross margin rate, and drove success in our new Webroom. As we look out on 2016, we will push harder on elements that are working: engagement ring units, wedding band attach rates, continued expansion of margin, and the Webroom concept.
Blue Nile chairman, CEO and president Harvey Kanter on fourth-quarter results
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MARKETS
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United States: Polished trading is steady and dealers maintain
a positive outlook. New York prices are firm with limited supply in select
categories of RapSpec A2 (3X, none) that are in demand...
Belgium: Antwerp cautious as dealers are uncertain in
which direction the market is heading. Demand is okay but market prices are relatively
high due to shortages, particularly for smaller goods...
Hong Kong: Diamond markets closed for the Chinese New Year
vacation. Hong Kong dealers expected to start returning next week, while
Chinese market is shut down through most of February...
India: Polished trading slowed slightly as Hong Kong
and China went on vacation. U.S. demand consistent and supporting the market.
Domestic demand cautious with weak rupee (-2.6% to 67.9/$1 in 2016) affecting
confidence and adding to local expenses...
Israel: Trading slowed slightly with Chinese buyers on
vacation for the Lunar New Year. U.S. demand is steady. Some foreign buyers in
Ramat Gan looking for goods in anticipation of next week’s International
Diamond Week...
Click here to continue reading
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INSIGHTS
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Organized Synthetics
The natural diamond trade should welcome the establishment of the International Grown Diamond Association (IGDA) announced last week even though it may actually serve as a wake-up call for the industry…
Click here to continue reading
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INDUSTRY
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U.S. Polished Imports -4% in 2015
Polished imports to the U.S
fell 4% to $23.1 billion in 2015 after the trade registered a relatively slow
end to the year. By volume, polished imports dropped 5% to 11.125 million
carats, while the average price of the imports rose 1% to $2,076 per carat,
according to provisional government data.
Polished exports by the U.S. dropped 12% to
$18.32 billion, taking net polished imports – imports minus exports – to $4.78
billion, a jump of 53% from the previous year.
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Botswana’s Export Slump Weighs on Economic Growth
A slump in global demand for diamonds hit Botswana’s economic
growth as exports of rough diamonds fell 39% to $2.41 billion in 2015,
according to provisional data published by the Bank of Botswana.
“The continued slowdown of growth in the global economy, particularly in the
major markets for our diamonds, has had profound impact on the domestic
economy,” Kenneth Matambo, Botswana’s minister of finance and development
planning, said in his budget speech for 2016 on February 1.
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De Beers to Launch Non-Forevermark Grading from U.K. Lab
De Beers will offer grading of
non-Forevermark diamonds from its U.K. laboratory for the first time from March
1 as the company expands a service currently existing in Antwerp and Surat.
The miner’s research company, International
Institute of Diamond Grading & Research (IIDGR), will open up the general
grading service to the entire trade including retailers and those outside the
U.K. It will include IIDGR’s Diamond Grading Reports and the more concise Diamond Identification Report. The service has been running in Belgium since 2012 and in India since
mid-2015.
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Fancy Color Diamond Prices Rise
Fancy color diamond prices
increased 0.3% on average during the fourth quarter of 2015 as
better-than-expected holiday sales outweighed sluggish Asian demand, according
to the Fancy Color Diamond Index. Lower supply from diamond producers have led
to a shortage of fancy yellow gems.
Prices
for the fancy yellow segment performed the strongest, increasing 1.1%, the Fancy
Color Research Foundation said. Within the yellow category, 3-carat diamonds
demonstrated a 2.7% price increase and 5-carat stones rose 4.4%, likely driven
by low availability in rough tenders.
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Asian Star’s 4Q Revenue -3%, Profit -25%
India-listed Asian Star
reported quarterly revenue declined 2.6% year on year to $101.7 million (INR
6.9 billion) in the three months that ended December 31. Profit slumped 25% to
$2.2 million.
Diamond sales slipped 0.5% to $889.9 million
during the quarter. Jewelry sales totaled $17.8 million, representing a 12% decrease
over a year before, the diamond manufacturer and De Beers sightholder said.
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American Gem Society CEO to Retire
Ruth Batson, chief executive officer of the
American Gem Society (AGS) and AGS Laboratories, will retire after 23 years,
with her departure scheduled for the summer of 2017. The AGS board of directors
will form a committee to hire a new CEO.
“Ruth will participate in the search and
onboarding process of the new CEO,” said Louis Smith, AGS president. “We are
confident that we will find a great successor to guide the organization
forward. Ruth has generously provided us with ample time to make a seamless
transition."
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WJA Names 2016 Hall of Fame Honorees
The Women’s Jewelry Association
has named its Hall of Fame honorees for the association’s annual Awards for
Excellence gala scheduled for July 25 at the Hammerstein Ballroom in New York.
Sissy Jones, owner of Sissy's Log Cabin, will
receive the Lifetime Achievement Award; Peter Engel, president of Fred Meyer
Jewelers, will receive the Ben Kaiser Lifetime Achievement Award; and
longstanding jewelry retailer Ben Bridge Jeweler will receive the Corporate
Award.
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Scio Diamond Gets 28th Patent for Lab-Grown Stones
Scio Diamond Technology Corporation, a producer
of lab-grown diamonds, got its 28th patent for gemstone production from
chemical vapor deposition (CVD) diamond plate.
The company creates high-quality, type-IIa,
single-crystal diamonds in a controlled laboratory setting, it said. Its
diamonds are used in jewelry and for industrial applications.
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RETAIL & WHOLESALE
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Blue Nile’s 4Q Sales -5%
Blue Nile reported net sales fell 4.8% year on year to
$150 million in the fourth quarter that ended January 3 because of continued
weakness in high-ticket purchases and foreign currencies. Selling prices for core
engagement products slipped.
U.S. engagement net sales
declined 7.7% to $78.4 million, while U.S. non-engagement net sales retreated 0.3%
to $48.7 million.
Profit rose 4.3% as the cost of sales was cut 6.2% to $120.9
million. The online jewelry seller announced a first-ever dividend of $0.70 per
share.
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Pandora Closes 1,422 Unbranded Stores in 2015
Pandora closed 1,422 unbranded
stores in 2015 and increased its focus on branded and concept stores, as total
revenue for the year grew 40%. The Denmark-based jeweler opened a net total of
392 concept stores during the year, including 136 in the fourth quarter that
ended December 31.
Revenue from concept stores increased 54% to
$1.57 billion (DKK 10.4 billion), while total branded stores – which include
concept stores – advanced 45% to $2.24 billion.
Total company revenue for the year soared 40% to
$2.52 billion on strong growth across the major regions and product groups. Net
profit increased 19% to $554 million.
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Kohl’s 4Q Sales Steady
Department-store chain Kohl’s
Corporation reported comparable sales increased 0.4% in the fourth quarter to
January as a stronger holiday season from Thanksgiving week to Christmas was
offset by a slow start to the period and a weaker-than-expected January. Total
sales increased 0.8%.
The company lowered its earnings guidance because of lower
fourth-quarter sales and gross margin than planned.
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MINING
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Rio Tinto’s 2015 Diamond Sales -23%
Rio Tinto reported diamond revenue slumped 23% to $698 million in 2015 as market conditions drove down rough prices.
Lower demand from India and China, higher rough and polished inventory and
lower trade manufacturing margins forced prices to dip.
Diamond
production fell 25% to 17.4 million carats. Rio Tinto forecast output to
increase 21% to 21 million carats in 2016.
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‘Lesedi La Rona’ Chosen as Name for World's Second-Largest Diamond
The 1,111-carat diamond
recovered by Lucara Diamond Corp. in Botswana in November has been named
‘Lesedi La Rona’ following a competition among locals to label the gem.
The name, which means ‘Our Light,’ was given by
Thembani Moitlhobogi, the winner of a $2,196 (BWP 25,000) prize, according to a
Lucara statement February 9. The contest was only open to Botswanan citizens,
including the miner’s employees.
The type-IIa gem was the
largest diamond ever recovered in Botswana and the second largest ever found in
the world.
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Lucara Schedules First 2016 Exceptional Stone Tender
Lucara Diamond Corp. will hold
its first exceptional stone tender of 2016 from April 4 to 13 in Gaborone,
Botswana. The tender will feature ten diamonds with a combined weight of 1,525
carats, including a 296-carat, type-IIa gem.
The event will not feature any of the three
exceptional diamonds recovered in November that included a 1,111-carat,
type-IIa stone from the Karowe mine in Botswana, the second largest diamond in
history.
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GENERAL
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Italy’s Fiera di Vicenza Mulls Listing
The Italian company behind the
annual VicenzaOro jewelry show is considering listing its shares on the Milan
Stock Exchange.
Fiera di Vicenza’s board of directors told
shareholders it was considering the move at a meeting of investors February 3,
according to a statement. A
stock-market flotation is “supported by strategic and economic objectives.”
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Madoff Jewelry Up for Auction Online
Jewelry and watches formerly
owned by convicted fraudster Bernie Madoff and his wife Ruth are being
auctioned online by Texas-based company Gaston & Sheehan Auctioneers.
Items on offer include two Patek Philippe
timepieces, with latest bids of $30,200 and $24,544 as of February 8, according
to listings on the auctioneer’s website. An 18-karat white-gold bracelet by
Sabbadini in Milan set with 654 round diamonds, with an approximate total
weight of 48.11 carats, had a bid of $26,205. Bidding
ends February 16.
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JAPAC Raises Over $25K in 2015
Jewelers of America Political
Action Committee (JAPAC) raised $26,680 in 2015 to support its advocacy efforts
in Washington DC, according to Jewelers of America (JA).
“JAPAC gives the jewelry industry a platform to
have a collective voice on issues,” said Jenny Caro, JAPAC chair and co-owner
of Jewelry By Designs in Woodbridge, Virginia. “These funds are an important
tool in preparing JAPAC for the essential 2016 election year.”
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ECONWATCH
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Diamond Industry Stock Report
U.S. and European retail stocks had a tough week, with drops
led by Birks Group (-21%), Kohl's (-22%), Damiani (-15.5%) and Charles &
Colvard (-14%) as major stock indexes around the world declined. Mining stocks
generally dipped, led by Rockwell Diamonds (-14%), but there were improvements
for Stornoway Diamond (+5.5%), Mountain Province (+3.1%) and Anglo American
(+3%).
View the detailed industry stock report.
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Feb. 11 (11:41 GMT) |
Feb. 4 (10:40 GMT) |
Chng. |
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| $1 = Euro |
0.88 |
0.89 |
-0.012 |
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| $1 = Rupee |
68.42 |
67.69 |
0.7 |
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| $1 = Israel Shekel |
3.89 |
3.91 |
-0.02 |
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| $1 = Rand |
15.91 |
15.86 |
0.05 |
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| $1 = Canadian Dollar |
1.40 |
1.37 |
0.03 |
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| Precious Metals |
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Chng. |
| Gold |
$1,218.40 |
$1,146.21 |
$72.19 |
6.3% |
| Platinum |
$939.33 |
$888.99 |
$50.34 |
5.7% |
| Silver |
$15.45 |
$14.77 |
$0.68 |
4.6% |
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| Stock Indexes |
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Chng. |
| BSE |
22,951.83 |
24,338.43 |
-1,387 |
-5.7% |
| Dow Jones |
15,914.74 |
16,336.66 |
-421.92 |
-2.6% |
| FTSE |
5,553.04 |
5,923.65 |
-370.61 |
-6.3% |
| Hang Seng |
18,545.80 |
19,183.09 |
-637.29 |
-3.3% |
| S&P 500 |
1,851.86 |
1,912.53 |
-60.67 |
-3.2% |
| Yahoo! Jewelry |
966.43 |
993.20 |
-26.77 |
-2.7% |
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INDIA MARKET REPORT
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Polished Trading Activity
Polished trading slowed slightly as Hong Kong
and China went on vacation. U.S. demand consistent and supporting the market.
Domestic demand cautious with weak rupee (-2.6% to 67.9/$1 in 2016) affecting
confidence and adding to local expenses. IIJS Signature show quiet. Steady
demand and shortages of better-quality RapSpec A2 (3X, none) diamonds. Shortages
supporting prices as new polished production coming to market at a slow pace.
Manufacturers increasing production after large volume of rough purchased in
January. Significant increase in polished availability expected in about three
months. Rough trading slowed compared to last week and premiums have come down
a bit.
Read the Polished Diamond Trading Report
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