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U.S. Wholesale
By Brian Bossetta
The first diamond trading week between dealers from the New York and Antwerp bourses, held in early May at the Diamond Dealers Club (DDC) in New York City, was “an unqualified success,” according to DDC President Reuven Kaufman, with some wholesalers reporting the event boosted business. “Whenever you bring in traders from around the world, it’s going to have a positive effect,” said Abe Fastag, vice president of Ideal Brilliant Company, a New York City–based wholesaler. “President Kaufman deserves a lot of credit for putting this together. It’s something we should have been doing all along.” Robert Oh, president of Charlie’s Gems, a diamond manufacturer and wholesaler in New York City, said the event definitely generated momentum. “When dealers get together, talking creatively, drumming up business, that’s a good thing and something I’d like to see more of,” he said, adding that the trading week, in his view, reinforced the improving overall business climate. Warmer temperatures and the end of the U.S. tax season were other factors Oh cited as positively affecting the wholesale market. “The day after the tax deadline on April 15, we got more calls than we had in the previous couple of weeks. There’s usually a bounce after tax season once people know how they’ve been affected” and have settled up their tax bills, Oh said. Business has also picked up — “a good 15 percent year over year” — for Andrew Rickard, vice president of operations for RDI Diamonds, a wholesaler based in Rochester, New York. “People are responding to the economy getting better,” he said. “Consumer confidence is up.” Rickard, who sells to retailers across the country, said he’s noticed improving markets on the West Coast, in Florida and across the Northeast. SI goods in G through J have been strong sellers, Rickard said, with rounds the most popular shape, followed by cushions and ovals. Fastag also said cushions and ovals were moving, but pear shapes as well. “VS and SI are always strong,” Fastag said. “There are always some who want VVS and higher but that’s usually not the norm.”
Ronnie VanderLinden, president of Diamex, a diamond wholesaler and manufacturer in New York City, said midrange colors in SI were moving, but he was less bullish on the overall state of the industry. “I’d like to be busier,” he said. “It’s a bit quieter than this time last year.” Despite what others see as an improving economy, VanderLinden said consumers are still skittish and less likely to spend. “Regardless of what we do, it’s the consumers who generate activity. And many consumers are still nervous because of the economy and the political climate.” Ami Koret, vice president of Davidoff Diamond Corporation in Houston, Texas, had a similar take. “Economic uncertainty hurts business,” Koret said. “I don’t think the economy is improving. Yes, there may be more jobs, but not high-paying jobs. I see young people who want to buy engagement rings but can’t afford to buy what they used to buy, so they are spending less.” Though Koret sells across the country, he said larger goods are popular in the Texas market — “everything is bigger in Texas” — 10 carats and up, H through J, VS2 to SI2. “Business is about the same as last year,” he said. “Steady, but nobody is standing in line to buy goods.”
Growing demand from a rising middle class in Asia — China and India particularly — along with the continued wait for grading services, are pushing up prices by as much as 5 percent from this time in 2013, according to Fastag. “When regular goods up to a carat and a half are out of circulation, that creates a void and prices go up,” he said of the certification delays at Gemological Institute of America (GIA). Rickard, who also noticed a rise in prices — “2 percent to 5 percent in the past few weeks” — said the holdup at GIA needs to be resolved. “Three months to get stones back is beyond absurd,” Rickard said. “Even a month is too much.” Asia’s growing economic stability and strength is a positive development for U.S. wholesalers with offices or relationships in the Far East, Oh said. “There is absolute growth happening there. There are new millionaires in China every day. That’s good for U.S. sales overall.”
While most wholesalers were optimistic that the industry is on the right track, Koret said he’d like to see some bipartisanship in Washington. “If Congress gets its act together and stops fighting, that would definitely improve the situation,” he said. “That is the number-one problem. People have lost confidence in D.C.” But, domestic politics aside, Fastag said he’s noticed a gradual increase in business and “sees no reason for that trend not to continue.” In VanderLinden’s opinion, the industry needs to do a better job of marketing to younger consumers. “We need to get youth to start buying diamonds and jewelry instead of iPhones and other electronics,” he said. “We need to reach out and capture them while they are young.”Article from the Rapaport Magazine - June 2014. To subscribe click here.
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