RAPAPORT... November should be one of the most active markets for polished diamonds, as retailers and jewelry manufacturers gear up for the Christmas sales, but this year, although business has improved from October, it is one of the quietest Novembers in many years. Money is still being channeled to the stock market as it takes its meteoric rise to new heights. Unless diamonds are exactly what the market wants, dealers are reluctant to commit to buying inventory and cannot be tempted by cheap prices unless, of course, at give-away bargain prices.
Quality, Sizes CountDemand is concentrated mostly in better colors and clarities. D, E and F are the main colors sought. Clarities can range from VVS to very good SI. G colors are by far the slowest movers and H colors fare a bit better. Again, anything in lower colors shows more demand, especially in sizes below 2 carats.
As for sizes, 2 carats are extremely slow, and the demand has shifted to 1.50, and, of course, any sizes between 1.70 and 1.90, which are extremely rare.
The main demand is for 3 carats and larger, either in better colors or in colors below J. For goods in midrange colors, retailers depend mostly on luck to find the right customer, as there is no steady demand for these goods. Dealers are not keen to keep these diamonds in stock and work only on memo with this range.
The market is also becoming ever more demanding in better cuts. Goods with certificates have to have grades of triple VG, but the main demand is for triple EX.
Demand is strong for matched pairs, when each stone is at least 1.50 carats up to around 3 carats. Supply is always short for better merchandise, and, although pairs do fetch a premium, they are also very hard to locate, especially in fancy cuts, when both the cut and models must match.
Fluorescence FactorFluorescence is not acceptable to most consumers in Hong Kong. The stigma of fluorescence is so bad that even if goods with strong or medium blues are offered at a discount, dealers and retailers will not consider the stones. These goods are traded only on memo and, most of the time, the deals fall through solely because of the fluorescence in the stones.
Although fluorescence is tolerated in goods below J, these goods are usually destined for Hong Kong’s neighboring markets. Should those markets one day catch the bug against fluorescence, these stones will become virtually unsalable.
A lot of money is being spent on promoting diamonds, but some of this should be channeled to reverse the public’s bias against fluorescence. It is, after all, a natural characteristic of certain types of diamonds, and, many times, it even enhances the look of the diamond.
The problem started with an insistence, widely reported in the media, that fluorescent diamonds had to be discounted, followed by talk in the trade of synthetic diamonds being mostly fluorescent and of most stones coming from new mines being fluorescent. Retailers in Hong Kong also used the issue of fluorescence to “kibitz” diamonds shown to them by customers who had bought from rivals. While it is true that retailers’ discussions of fluorescence managed to instill doubt in their customers about their rivals’ diamonds, that negative attitude is now biting them back, as customers have shunned fluorescent stones altogether.
Bad press and ignorance started the trend, so how about some positive press and education of both retailers and the public about the virtues of diamonds with fluorescence? With fluorescence, one has a diamond that nature has made even prettier.
Christmas is ComingHong Kong jewelry retailers are now announcing their preChristmas sales in order to stimulate demand, but, in some cases, many smaller retailers feel the pinch as larger retail chains take the lion’s share of sales, while theirs actually decline.
It is hoped that the buoyant stock market will make people feel richer, and that some of the profits will eventually be spent on diamonds, but it will most probably be at the eleventh hour. In a stock market as strong as this one, consumers tend to lock in their money until the last possible moment to milk the last drop of profit before the end of the year. At that point, the world goes into holiday mode and the stock markets take a brief rest until the new year.
This year’s Christmas season will be a big determining factor for the price of diamonds. At the moment, there is definitely a large shortage of certain type of goods, like high colors in VVS clarities. Whether it is a real shortage or man-made in order to demand higher prices, it will all resolve itself during the Christmas sales by whether consumers follow their usual practice of buying diamonds at Christmas or opt to fill their stockings with something besides diamond jewelry.
The Marketplace• 3 to 5 carats in D-F colors in VVS-SI are in extremely hot demand, mostly in rounds, but also in fancy shapes.
• 1.00 to 1.90 carats in a wide range of colors and clarities are moving well. Top makes or heavy makes are in demand, while good makes linger in limbo unless offered at better-than-usual discounts.
• Laser inscription is becoming more popular with consumers, with many demanding it before purchasing. The trend seems to be gaining support, as many diamond manufacturers now laser-inscribe all their stones.
• 0.50-and-larger dossiers are still in demand, but smaller sizes seem to have softened.
• Demand has picked up for small Indian sizes, but the main problem is that there is demand in specific sizes only, and others are totally neglected.
Article from the Rapaport Magazine - December 2006. To subscribe click here.