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Antwerp
By Marc Goldstein
The mood of traders returning from the Hong Kong show was positive. The commercial goods sold especially well, but some buyers questioned the wisdom of traveling so far to get goods that can be found in Antwerp or elsewhere in pretty much the same price range. “In my opinion,” said Shashin Choksi of Swati Gems, “the difference in prices doesn’t justify the travel.” It is important to keep in mind that the globally positive overall mood of the show doesn’t hold true for every individual company. Although many exhibitors confirmed that sales were good in every product category, an understandable complaint was that competition was fierce because there were more than 1,000 exhibitors for the diamond sector alone. This is about three times more than were exhibiting at the March 2013 show in Hong Kong.
The total numbers can be too much for some diamond dealers. Of course, there’s the usual the-big-guys-take-all-the-business reaction but there’s another aspect. With three times more people competing for the same cake, even though there was more traffic, the demand, while steady, couldn’t increase enough to offset the huge increased supply. The trend of sales picking up since November 2013 was confirmed by the reaction in Hong Kong. China and Hong Kong are definitely becoming the main outlet markets for many suppliers and are contributing to optimism for the overall diamond industry’s performance in the remainer of 2014. One of the comments by Hong Kong show attendees is that a reduction of production probaby should be initiated in some specific product categories by both the major manufacturers and the smaller ones. In particular, it’s been reported that there is currently still too much inventory of VVS, at a time when market demand is clearly shifting toward VS. Perhaps, traders suggested, it would be wise to cut back on manufacturing VVS for the time being.
Sergey Panchekhin of Arcos Belgium, which represents ALROSA in Belgium, said, “We are offering standard ALROSA assortments in Antwerp, and currently, I don’t see any change in interest whatsoever from our customers for our parcels. We are seeing steady, and I could even say increased, requests for our products. Furthermore, that demand appears to be healthy and consistent. Obviously, we’re always in line with the needs of the trade, and although I do notice a little stronger interest in the midrange assortments, that does not negatively affect the rest of our trade.” Gon Raz of Windiam agreed that buyer interest is high. “What I can say is what I see in the market. The facts are that prices of rough are holding firm since 2013. Some people may be saying the opposite, but I can confirm that during the first two months of 2014, we sold more diamonds than during the same period of 2013, and this is true, be it in terms of number of diamonds, in terms of value or even in terms of carats.”
The first major Zimbabwe tender held in Antwerp in February was judged a resounding success — to such an extent that it raised concern among some smaller manufacturing companies. The chief executive officer of one of those companies explained that “It’s about another $70 million that is being spent by the major players with a supplier who will become a major new producer. And in an epoch where cash resources are limited and even tightening, it’s that much more money that will not be available anymore for the smaller companies.” The next Zimbabwean tender was scheduled at the end of March in Dubai, which indicates that Zimbabwean authorities intend to spread their supply around and don’t want to commit themselves too much to one diamond center. That’s not to say that Antwerp wouldn’t like to be Zimbabwe’s exclusive outlet. During the ZimAsset seminar in the Zimbabwean parliament on March 13, 2014, Ari Epstein, chief executive officer (CEO) of the Antwerp World Diamond Centre (AWDC), noted that for the first time in four years, a transparent and appropriate return on investment (ROI) for the Zimbabwean government had been achieved from its diamond sales. Prior to trading in Antwerp, Marange goods were sold in Zimbabwe and also in other diamond centers at an average price of $47 per carat, resulting in an average ROI for the Zimbabwean treasury of $7.05 per carat. By contrast, Antwerp, due to its critical mass of buyers, according to Epstein, achieved an average price of $80 per carat, for $12 per carat in royalties for the Zimbabwean treasury. He said those numbers represent a good argument for Zimbabwe concentrating all its sales in Antwerp. Calculating projected numbers based on the first Antwerp tender’s results, the additional annual revenues for Zimbabwe from trading all its goods in Antwerp would be $400 million, for an increase of $60 million in annual royalties.Article from the Rapaport Magazine - April 2014. To subscribe click here.
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