January was a quiet month, ideal for assessing Christmas and making plans for the coming year. Most wholesalers who spoke with RDR reported flat or slightly increased holiday sales. Atit Mehta, vice president of Atit Diamond Corporation in New York City, said, “Christmas was very tricky and we’re still kind of figuring out how it went. I think on the whole we’re fractionally up from 2008.” Jay Moskovitz, vice president of Robert Moskovitz Co. in New York City, estimated that the holiday was “a tiny drop better” than 2008. Mike Rabbanian, president of International Diamond Club, Inc. in Los Angeles, noted, “I think there was some last-minute shopping.”
However, Shakeel Japanwala, manager of the certified diamond division at C.D. Diam in New York City, billed the season “okay” and conceded that it was “not as good as last year.”
No one came close to matching 2007’s results, but this was no surprise. Ami Koret, vice president of Davidoff Diamond Corp. in Houston, Texas, explained, “That’s going to take years. But we are headed in the right direction.”
Prices Climb
Supplies remain tight, with shortages of fancy shapes in better makes and qualities. Atit Mehta observed, “There are just not enough goods in the market and rough prices have increased a tremendous amount.”
Koret remarked, “Most mining companies cut back. Overall, I would rather see it this way than have diamonds flooding the market. Stability is the main thing. The mining companies are doing a good job.”
Many witnessed higher prices as a result of the shortages. “Prices have increased,” stated Atit Mehta. “So far this month, we are seeing a lot of price resistance. It will take a while for retailers to adjust. I think the challenge ahead is that retailers have depleted their inventory, but they have to replenish at higher prices.”
Rabbanian commented much the same. “Nobody wants to buy anything. I am worried, to be honest. I don’t know how buyers and sellers are going to meet. I feel it is more difficult than last January, when at least you had low prices.”
Japanwala contended that most of his sales are originating from overseas. “People are calling from Hong Kong and China, but not the U.S.”
Planning for Valentine’s DayThough nowhere near to the importance of Christmas, Valentine’s Day holds the promise of driving some sales, and diamantaires were preparing themselves. Atit Mehta reported, “We just carry on, replenishing our inventory. So far, we haven’t seen too much of an increase in demand.”
Moskovitz said, “We usually gear up on some cheaper-end heart shapes that can be made into pendants for approximately $1,000 per carat at retail.” Rabbanian also has plans to work on his inventory, noting, “We try to do the best buying that we can.”
Koret stressed, “Our business is nice and steady, with no big ups and downs. We do what we do best and keep doing it.” At the same time, he pointed out, “At Christmas, consumers have many gifts to buy, so they buy smaller. For Valentine’s Day, they just buy for one person, so usually they buy bigger.”
The International Diamond Board (IDB), a group formed by major mining companies — including Rio Tinto, BHP Billiton and De Beers — to spearhead international generic diamond marketing, was shelved indefinitely due to uncertainty about ALROSA’s participation. But few in the industry appeared to be following the story.
Despite the IDB setback, diamantaires weighed in strongly in favor of generic diamond marketing. “I’m sure it would benefit the whole diamond business,” advised Rabbanian. “Even the least valuable stuff is marketed. If Coca-Cola didn’t advertise for six months, everyone would forget about Coca-Cola.”
Predictions for 2010Expectations for 2010 run the gamut. Moskovitz believes “People are starting to feel a little good about the coming year” and Koret declared that “Things are getting better. I’m sure there are many issues in the economy that have to be resolved, but I don’t think it’s going to get worse. As long as it doesn’t get worse, I’m happy.”
On the other hand, Rabbanian said, “To be honest with you, people are waiting for a miracle. If you ask people, they have no idea what is in the future. There is no good news at all.” He warned of potential pitfalls. “They should stop raising the rough prices. Gold prices have a very bad effect, also.”
Atit Mehta provided several predictions. “Throughout the year, credit is going to be a problem. Memo terms have decreased and that’s pretty healthy for the industry,” he noted. He forecasted that another trend will accelerate. “I think that we are going to see prices increasing back to the levels seen before 2007.” In general, the market won’t be kind, he concluded. “People might have survived one year, but if things don’t get better, you are going to see another wave of insolvencies.”
The Marketplace
• Prices have increased approximately 15 percent from fall 2009.
• Diamonds wholesaling for $800 to $2,000 are meeting some demand.
• Colors are mostly ranging from H to J.
• Retailers are looking for clarities from I2 to SI2.
• Supplies of fancy shapes are limited, especially in good makes and clarities.
• Rounds dominate the market, with princesses next and some interest in
pear shapes.
Article from the Rapaport Magazine - February 2010. To subscribe click here.