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Israel
By Avi Krawitz
New Realities Call for New Strategies Israeli diamantaires are contending with lower sales in 2015, while the holiday season hasn’t provided the boost to demand that they sought. “People don’t have high expectations because there aren’t a lot of calls coming in like there used to be,” said Lior Gross, owner of Lior Gross Diamonds, a supplier of mainly large colorless diamonds in 2-carat to 20-carat sizes. “You don’t feel the atmosphere of Christmas approaching.” The decline in Israel’s polished trade has been consistent with the drop in the global trade, with polished exports down 21 percent year on year in the first nine months of 2015 and imports declining 20 percent. Polished exports to Hong Kong fell 26 percent and to the U.S. by 20 percent during the period, government data showed. Orit Samet, co-chief executive officer (CEO) of EZ Diamonds, a manufacturer of excellent make, round diamonds in sizes .01 carat to .75 carats noted that although U.S. demand is stable, retailers in all markets are avoiding an unnecessary buildup of inventory.
Consequently, suppliers who spoke with Rapaport Magazine reported that manufacturers and dealers are still holding a large quantity of goods that are difficult to sell. That said, they report some shortages in select categories resulting from a sharp reduction in manufacturing levels this year. Samet noted that while prices have stabilized to some extent in November, the market is being supported by lower supply rather than an increase in demand. “Demand is the same and the decline in 2015 has been larger than expected,” Samet said. “There’s also greater competition to fill orders because there are no fresh goods coming to the market. Demand is very specific.” Samet and others pointed to the slowdown in China as the primary reason for the prolonged decline in 2015. Zvulun Leviev, CEO of manufacturer LLD Diamonds, explained that the trade has been affected by a deceleration of growth in China’s economy. Meanwhile, the Chinese government’s anticorruption campaign and restrictions on cross-border money transfers have limited spending among the country’s highest earners, he added. Samet observed that China’s top jewelers put the brakes on their retail expansion programs from previous years, reducing their inventory requirements. “Even the largest retailers started the year with too much stock and no one wants to stockpile in the current environment,” she stressed. Gross agreed, but suggested that there is sufficient supply across the board and buyers can find what they want, especially if they’re prepared to pay a higher price for what they need. However, jewelers are simply looking to replace the items they’ve sold and for which they have continued demand from consumers, he explained. Shmulik Polnauer, chief diamond buyer at Leibish & Co., a supplier of fancy color diamonds primarily sold online, added that ultimately suppliers who are prepared to lower their prices are able to sell, while buyers are prepared to wait for the right deal.
To survive, Polnauer stressed that suppliers have to offer something unique and have a niche that adds value to the market. “You can’t just buy and sell today,” he added. Samet explained, “We can’t sell in the same way that we did before by just bringing goods to the table when buyers were looking for inventory. You need to be efficient and have the handling and infrastructure to accommodate orders in a volatile market.” EZ Diamonds, which supplies mainly uncertified polished in its own unique parcel assortments, has a strong focus on logistics and technology that offers it the flexibility and ability to reprice goods that don’t sell in a parcel, Samet explained. By being more efficient and making sure you have added value, she expressed confidence that companies can grow even as the challenging market conditions are anticipated to linger. “The question we ask ourselves is not when the situation will end but if it continues, is the diamond industry still an interesting market to be in,” she stressed. “I believe the answer is yes.”
The Israel Diamond Exchange (IDE) is holding elections for its executive committee in mid-December, which will see a new president of the exchange. Outgoing president Shmuel Schnitzer informed the bourse he will not run for re-election, an IDE spokesperson told Rapaport Magazine. Schnitzer, who is CEO and chairman of S. Schnitzer Diamonds, has served as IDE president since October 2013, following a previous term from 1998 to 2004. The election is being contested between Yoram Dvash, owner of Yoram Dvash Diamonds, and Arnon Yuval, partner at Sabari-Yuval & Co. Both currently serve on the IDE’s executive committee.Article from the Rapaport Magazine - December 2015. To subscribe click here.
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