RAPAPORT... The expanding Shanghai Diamond Exchange (SDE) completed its move to the brand new China Diamond Exchange Center in late October. The new building also houses the Diamond Administration of China (DAC), the governing agency for China’s diamond business, which includes the departments of commerce, customs, inspection and quarantine, taxation, industry and commerce and foreign exchange control.
SDE fully occupies one of the towers in the 14-story twin tower structure and part of the space in the second tower, where offices are also available to other industries. Most of the member companies of SDE are located on the third through the ninth floors of the first tower and the general service area — including customs declaration and inspection, along with Kimberley Process (KP) and the central value-added tax (VAT) invoice issuing offices — is on the 14th floor.
Shows in BeijingThe China International Jewelry Fair 2009, which was held from November 5 through 9 in Beijing, drew more than 600 jewelry exhibitors from 15 countries and regions. More than 320,000 square feet of exhibition space presented collections of diamond jewelry, gemstones, antique jewelry, pearls and corals, gold and silver jewelry and precious watches, and also a small amount of loose diamonds.
Shi Hongyue, deputy secretary-general of the China Jewelry, Jade and Gem Industry Association, told China Central Television (CCTV) that China’s whole economy is developing at a high speed and the jewelry industry is developing even faster. He said he expects jewelry sales to reach $29.3 billion in 2009 as domestic demand picks up the slack from weaker overseas markets.
Immediately following the show, India’s Gem and Jewellery Export Promotion Council (GJEPC) hosted the third annual edition of the Indo-China Buyer-Seller Meet (BSM) in Beijing, with eight Indian suppliers exhibiting. The previous two editions of BSM were held in Shanghai and Shenzhen in 2007 and 2008, respectively.
Dominating Platinum Demand China will account for more than 25 percent of world platinum demand in 2009 and will become the world’s biggest consumer of platinum auto catalysts within a few years, according to Philip Klapwijk, chairman of GFMS Ltd., a precious metals consultancy. China’s share of demand in the platinum market far surpasses its share of demand in the gold and silver markets, Klapwijk said in a speech at the annual London Bullion Market Association conference in Edinburgh.
It is estimated that China’s jewelry demand in 2009, at approximately 44 tons, will represent nearly half the world’s platinum jewelry demand and could even reach as high as 55 tons, Klapwijk said. With domestic sources of platinum extremely limited, Klapwijk said China will need to increase imports of platinum from international markets as demand increases.
Domestic Market Continues to Grow
The global financial crisis has taken a toll on the export-oriented jewelry and diamond manufacturers in China, but that damage has been somewhat offset by growth in the domestic market. Polished diamond imports on the Shanghai Diamond Exchange (SDE) reached $300 million during the first half of 2009, up 12.7 percent year on year. In the first three quarters of 2009, colored stone imports rose by 30 percent from 2008. Gold jewelry demand is estimated to reach 400 tons for the year, compared to the 326.7 tons in 2008. The jade market is stable, with small price increases in the high-end products. The price of pearl products also increased by 30 percent to 50 percent from the previous low level.
In 2008 and the first half of 2009, well-known brands continued to grow in large and medium-size cities, opening more than 2,500 retail points. The projected sales of jewelry in Mainland China might approach $30 billion in 2009, with a 10 percent increase from 2008. China already is ranked number one in the world in the consumption of jade and platinum, and it also might pass Japan to take second place in diamond consumption. In addition, it ranks high in the consumption of ruby, sapphire and silver.
In June 2009, the bank savings of the Chinese had reached $8.3 trillion, up 29.02 percent, and spending was up by 10.3 percent. As a vast country, China has approximately 3,000 rural counties and 655 cities, almost 200 of which have a population in excess of one million. The jewelry market in rural areas is far from developed, leaving a lot of room for further expansion. It is estimated that in ten years, the jewelry consumption in Mainland China might exceed $58.6 billion.
The Marketplace- With no major holiday to boost sales, the wholesale market is somewhat quiet but still stable after the National Golden Week holiday in October.
- Demand is greatest for round 0.30- to 1.10-carat stones in D-J, VVS-SI, Gemological Institute of America (GIA)-certified and preferably EX cut.
Article from the Rapaport Magazine - December 2009. To subscribe click here.