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U.S. Wholesale
By Shuan Sim
Wholesalers are reporting that sales in the past few weeks have been slow, and the recent JCK Las Vegas show did not provide much of a boost. Given what many diamond dealers see as a prevailing grim sentiment for sellers, some diamantaires gave up going to the trade show altogether. “There’s a concentration of too many sellers selling too much of the same thing,” said Chester Eisen, owner and manager of Nat Eisen & Sons, a diamond wholesaler based in New York City. He said the selling environment seemed weak at the JCK show this year and chose not to attend. Likewise Arie Glazer, owner of A.G.D., an importer and wholesaler of loose diamonds based in Timonium, Maryland, said that the market has been “soft” and the expense of going to the show wasn’t justified. Diamantaires who attended the show felt it was “fair” to “disappointing,” and many said that they mostly saw returning customers at their booths. “Sales have been dull and sluggish,” said Eisen. “It’s because consumer interest in diamonds and jewelry is weak; there is a low level of interest.” Glazer concurred that his sales have been “skinny” in the past couple of months and posits a weak economy to be the reason, based on what he’s heard from others within the industry.
Rounds, ovals and cushions continued to do well, though some dealers noticed that bigger-sized stones — 2 carats and up — moved particularly well. “The upper class is still shopping,” said Lior Sofer, vice president of Beny Sofer, a supplier of loose diamonds and jewelry based in New York City. Sofer said that the fact that the stock market has been doing well recently might have something to do with the robust market for bigger stones. “1 carat to 2 carats — the bread-and-butter of the middle market — has quieted down,” he went on to say. Glazer said that his diamonds of 1.8 carats and above were doing better. Sellers are reporting good movements not just in size, but in better clarity and color goods, probably due to affluent consumers spending more freely compared to the middle market. Dealers have reported goods with colors F through I selling better, mostly in the VS to SI clarity range. Customers are also spending more on better-cut diamonds, with many requesting triple-Ex stones.
Many dealers have noticed some difficulty in stocking goods, especially the lower-priced items. “Production is way down and manufacturing has gone down 40 percent to 50 percent since January,” said Sofer, adding that the industry is now feeling the effects of the reduced supply. “Prices have been creeping up on the better stuff and there isn’t a lot to go around,” he added, saying that while he’s been getting requests for more 3-carat diamonds, there are only a handful of suppliers to choose from and he could not afford to be picky. “The difficulty will be restocking items at the same price,” said Nick Jain, vice president of sales at Paramount Gems, a diamond and jewelry manufacturer in New York City. Buyers are not stocking as much as they used to, buying only what they need, said Jain. Another reason for increased prices in the past few months was that people were used to buying goods with better grades from certain labs at lower prices. When those labs had the integrity of their reports questioned recently, it caused a shift away from those goods. “People were used to the prices of those goods,” said Glazer, adding that it was hard to explain the sudden increase in prices to buyers.
Glazer believes that the market has begun to correct itself in terms of prices over the past six months, as a result of people getting used to the market conditions. He predicts little to no price increases or decreases and foresees a soft market moving forward. “Absent revived consumer interest, I expect to see more of the same,” said Eisen, predicting more sluggish sales and a tight supply as well, with no deep rises or falls in prices. “With not a lot of supply, that makes selling difficult,” said Sofer, expecting 1-carat to 2-carat sales to flounder and better-quality goods to move better. Rahul Parikh, president of K.R. Gems & Diamonds International, a diamond and diamond jewelry manufacturer based in Los Angeles, said that business will be a little sleepy in the next three months as summertime approaches. “People will be taking time off from work and will be going on vacations,” Parikh said, adding that the muted outlook is part of a cyclic swing in the industry and will not surprise many.Article from the Rapaport Magazine - July 2015. To subscribe click here.
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