Diamond dealers traveled to the Hong Kong Jewellery &
Gem Fair hoping the show would raise trading levels ahead of the all-important
fourth-quarter holiday season. As they left the show, which ran from September
13 to 19, most were satisfied with the business they had done, and sentiment
improved in the trading centers.
The show reflected a stable diamond market, with buyers
pushing for deeper discounts, while suppliers largely stood their ground.
Prices held steady for RapSpec A3-and-better diamonds, while prices for
lower-quality goods softened.
The RapNet Diamond Index (RAPI™) for 1-carat diamonds slid
0.1% between September 1 and press time on September 24. RAPI for 0.30-carat
diamonds dropped by 1.1%, while RAPI for 0.50-carat diamonds declined 1%. RAPI
for 3-carat stones rose 3% during the period.
Diamantaires brought a large volume of goods to the show,
since inventory levels were up this year after a first half in which
manufacturers ramped up production and rough-diamond buying while polished
sales remained sluggish. Between January 1 and the beginning of September, the
quantity of diamonds listed on RapNet increased 22% to 1.4 million unique
stones.
Orders at the show helped reduce some of that inventory,
with the number of diamonds on RapNet declining 2.6% from the early-September
figure by press time. Dealers noted steady demand for specific items, such as
1- to 2-carat, G- to J-color, VVS2- to SI2-clarity diamonds, and for 0.30- to
0.50-carat, F- to K-color, SI-clarity goods.
Reports that the major Hong Kong companies were looking for
goods and placing orders set a positive tone at the start of the show.
The likes of Chow Tai Fook, Chow Sang Sang and Luk Fook have
all recently noted a sales increase in China and some improvement in Hong Kong,
following a prolonged period of declines. That has raised expectations for
China’s holiday season, which began with the October 1 National Day festival
and extends into Christmas and the Chinese New Year on February 16, 2018.
But while the show demonstrated relative stability in the
diamond market, it also signaled that retailers were managing their inventory
more efficiently than before — particularly considering that they’ve been
expanding their store presence at a much slower rate. When they were opening
stores across China at a rapid pace between 2011 and 2013, they needed goods to
fill those stores, driving up diamond demand. With fewer stores opening today,
retailers are a lot more restrained in their buying. They’re also manufacturing
their own jewelry, meaning they require less from the market.
Consequently, jewelry wholesalers and manufacturers
exhibiting at the show reported cautious activity in the finished-jewelry
section, which took place at the Hong Kong International Convention Centre.
Jewelers observed steady demand for items below $1,000, while expensive items
above $10,000 were slow. They also noted a lack of new customers attending the
event.
Activity in the loose-diamond section at AsiaWorld Expo was
more upbeat, with visitor traffic up 6% in the opening days of the show,
according to Celine Lau, director of jewelry affairs at show organizer UBM
Asia. She noted an increase in visitors from China, India, the Philippines and
Brazil.
As a gateway to Asia Pacific, Hong Kong has enjoyed renewed
growth in its diamond trade of late. Polished imports to Hong Kong rose 10% in
the first half of the year, while polished exports grew 1%, according to data
from the Diamond Federation of Hong Kong, China. Net polished imports,
representing the net value of goods that remained in Hong Kong for consumption,
jumped 41% to $2.63 billion.
Trade with China drove this growth, as Hong Kong’s exports
to the mainland increased 31% and imports rose 21% during the half-year. Hong
Kong’s trade with the US also increased by double-digit percentages, as did
imports from India. Supply from Belgium and Israel, however, dropped, with
dealers from those trading centers noting difficulty competing with the large
Indian companies.
Dealers were hoping the show would not only stimulate
trading, but help raise polished prices and thereby improve their profit
margins — especially since rough trading cooled in September. The rough market
is expected to remain subdued in the coming months as India’s manufacturing
sector shuts down for the Diwali holiday, which begins on October 19.
That should provide some relief to diamantaires, as
polished-diamond demand tends to improve during the seasonally busier holiday
season. Already, the Hong Kong show has helped increase liquidity in the trade.
As attention turns back to the US for the Christmas holiday season, hopes are
rising that the final rush for goods in the fourth quarter will help raise
profit margins and enable a positive end to 2017.
Article from the Rapaport Magazine - October 2017. To subscribe click here.