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Market Comments 5/24/2012
May 24, 2012 6:00 PM
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TRADE ALERT: CVD synthetic diamonds, diamonds triple treated to avoid detection and diamonds recut to match higher grade GIA reports being traded without disclosure. Kudos to IGI for detecting and exposing CVDs. We advise buyers to require “Natural Untreated Diamonds” be included on all invoices. Trading slow with low expectations for Vegas shows. Signet 1Q sales +1% to $900M, profits +9% to $83M. Tiffany 1Q sales +8% to $819M, profits +1% to $82M. Zale Corp. 3Q revenue +8% to $445M, net loss of $5M vs. loss of $9M a year earlier. Gitanjali 4Q sales +47% to $643M, net profit +8% to $19M. India’s April polished exports -35% to $1.3B, rough imports +20% to $1.6B.
Global Markets
United States: Wholesale demand is steady although many buyers are waiting for the JCK Las Vegas show, which begins on June 1, to place orders. Demand for rounds is stronger for diamonds below 1.00-carat and demand for fancy shapes in sizes 1.00-carat to 3.00-carat continues to improve, with cushions and princess cuts being the most popular. It has become difficult to find the popular goods to fill orders. Retailers note that bridal customers are trending toward diamonds just above or below 1.00-carat, H-I, SI goods.
Belgium: Rough trading is slow and prices have softened slightly. Polished trading is relatively quiet but stable. Demand is not especially strong, but the right stones are selling at firm prices. However, it is difficult to find well-made goods. Tight liquidity is limiting buyer’s options. There is steady demand for pointer sized goods up to 1.00-carat, with commercial quality G-H, VS-SI clarities the most popular. Pique goods are moving well in round and fancies, driven by U.S. demand.
Israel: Rough trading is weak as prices are still considered high despite the slight correction in effect the past two weeks. Polished trading is stable, with much of the activity linked to preparations for the JCK Las Vegas show. Many are holding back from closing deals as they hope the show will provide stronger indications about prices. Buyers are focused on sourcing what they need to fill orders and are cautious about purchasing additional inventory as economic concerns weigh on their confidence. There is good demand for certified 1.00-carat, G-H, SI diamonds with triple EX cut.
India: Polished demand improved marginally from last week ahead of the JCK Las Vegas show, but overall trading remains constrained. Some companies resumed their factory operations after a brief vacation, but overall manufacturing is restrained as rough prices are still considered high. Demand for small size polished goods is better than for large stones. Domestic buyers are watchful as the rupee continued its slide to new lows against the U.S. dollar and liquidity remains tight. Exchange rate volatility and tight liquidity has also influenced weak rough trading. The market is looking toward the upcoming JCK show to get a clearer trend about prices and demand.
China: There was growing interest in last week’s Jewelry Shanghai show, particularly among international suppliers seeking to enter the Chinese market. Wholesale and retail sales are stable but slightly subdued as global economic concerns continue to influence caution. There is good demand for certified 0.30-carat to 1.10-carat, D-H, VS1-SI2 diamonds. Prices remain firm but buyers are still cautious.
Hong Kong: Demand for commercial quality stones remains stable but relatively weak for higher-end goods. Demand is steady for 0.50-carat to 3.00-carat, H-I, VS2-SI1 stones. Fewer tourists from mainland China contributed to a slight slowdown in business while economic concerns and conservative consumer spending are also impacting sales. There is price uncertainty among buyers, who are carefully monitoring their inventories.
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