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U.S. Wholesale
By Shuan Sim
Diamond dealers are relieved that diamond prices are stabilizing, given the fluctuations experienced in recent months. Business has been slowly picking up in the U.S. wholesale market and many concurred that May has been relatively calm with no drastic changes. “Sales are comparable to 2014,” said Reuven Kaufman, president of the Diamond Dealers Club (DDC) in New York City. “The American market is still very viable and very strong.” Kaufman said that as the Far East markets continue to be slow, America remains the main focus of many diamantaires. “Things in the U.S. can only go upward and onward from here,” he said.
Prices began stabilizing in early May, according to Jai Bhansali, vice president of sales at Diagem in Chicago. He said that business for him has been about the same compared to 2014. Some dealers speculated that a tight supply side and the backlash from high rough prices might have been the reason for prices stabilizing, though they could not say for sure. Replacing inventory hasn’t been an issue for most dealers, though Bhansali felt that perhaps non-Gemological Institute of America (GIA) certified goods or diamonds in the SI3-I1 range might become scarce. Some predicted that there might be shortages in the future as global production decreases. If that happens, it will be the bigger players with greater resources who will survive best. “Those who have the financial capacity to hold inventory longer and who have a larger customer base will be the ones who will be more successful,” said Nilesh Sheth, president of Nice Diamonds in New York City. He added that finding the right sourcing is important as liquidity and financing issues continue to plague the industry. Morris Szklarski, president of Kelsol Diamond Company in New York City, said that he has seen many businesses facing a lot of liquidity problems. He felt that some government actions worldwide have caused large amounts of money that used to go into the industry to disappear. For example, the Chinese market, once seen as a wealth of opportunities for the diamond industry, is now mostly muted as an ongoing anticorruption crackdown cuts down on excess and lavish spending, including jewelry.
Customers are increasingly making purchase decisions led by price considerations. Szklarski said that while business has been slightly better, it has not been as good as he had hoped. “Items being sold are medium- to low-priced and not the prime items,” he said, adding that 2-grainers formed the majority of the goods he sold recently. People are also opting for higher color and lower clarity, according to Bhansali. Customers are willing to pay more for better colors but not so much for better clarity. Many diamantaires have reported that G through J stones in the VS2 to I1 range have been moving well. Rounds and cushions remain top sellers, with little change in trends. In colored diamond sales, fancy yellow, champagne and cognac colors are moving well. “People would rather have pink diamonds, but most customers don’t have deep pockets,” said Sheth. He stressed that buyers have become conservative in their spending habits ever since the recession in 2008 and that people have not rushed to open their checkbooks even as the economy is recovering. Industry growth in the recovering economy has been slower than expected. “New jobs have been created, but they are mostly low-paying jobs,” said Ami Koret, vice president of Davidoff Diamond Corp. in Houston, Texas. He said that prices are coming down but that did not necessarily equate to more buyers. Koret added that the falling oil prices did not help the situation as the usual big clients from the oil industry have been absent.
The coming warmer months mean the advent of wedding season — a welcome break from the wintry sales seen in early spring. “People are always going to get married,” said Ian Levine, from Spectrum Diamonds in Dallas, Texas. He added that he is starting to get a few new customers. “Hopefully, as the economy improves, people will be more willing to spend more on their wedding,” Levine said. “I don’t think it’s where it should be or could be, but I’m optimistic that it will improve.” Most diamantaires expressed optimism that the bridal industry will be stable and reliable. “The bridal industry has always been a stable business,” Levine said. An interesting trend Szklarski noticed is that items that were salable 35 years ago and then went out of style are making a return. “People are always looking for something new, something different,” he said, explaining that when older designs fall out of the public eye for a long enough period of time, they can eventually become fresh again.Article from the Rapaport Magazine - June 2015. To subscribe click here.
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