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Rapaport TradeWire June 22, 2012
Jun 21, 2012 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
June 22, 2012
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Global markets quiet with increasing concern about global recession. Hong Kong show opens with low expectations as Far East demand remains sluggish. Rough prices declining with DTC boxes selling at discounts and some sightholders refusing to take goods. India remains highly problematic with tight liquidity and weak local demand. U.S. remains best market for polished. ALROSA 1Q sales +26% to $1.1B, net profit +8% to $386M with average prices for gem-quality stones +24% to $184/ct. India’s May polished exports -44% to $1.3B, rough imports -20% to $1.1B. Blue Star founder Vasantlal Laxmichand Mehta passes away.
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| RapNet Data: June 21 |
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| Diamonds |
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938,568 |
| Value |
$6,040,348,640 |
| Carats |
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992,114 |
| Average Discount |
-26.60% |
www.rapnet.com
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QUOTE OF THE WEEK
Our sense is that the recent weak economic data has woken Beijing up to the real risk of a global downturn and a local downturn, so there is a sense of urgency in Beijing to turn things around. The spending...will be financing housing and infrastructure projects. Rail investment comes to mind. Unlike in 2008, it will not be financed through bank loans and local government entities, but, rather it will be financed directly by Beijing, by the central government with a fiscal surplus of $132 billion.
Frederic Neumann | HSBC Asia
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Careers@Rapaport
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The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants, and entry level positions for our offices in New York, Antwerp, Mumbai, Dubai, and Shanghai. View jobs now.
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INDUSTRY
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Failed States Index Lists Three Diamond-Producers
Foreign Policy magazine listed three diamond-producing countries in its top 10 most failed states index for 2012. The nonprofit group ranks nations annually for their stability, human flight and abuse, economic decline, security and external intervention measures. While Somalia was ranked the most failed state in 2012, and for the fifth consecutive year, due to lawlessness, ineffective government, terrorism, insurgency, crime and piracy, the Democratic Republic of the Congo took second place. Zimbabwe ranked fifth and the Central African Republic was ranked No. 10. Cote d'Ivoire made the list as well, but it ranked No. 11.
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Rapaport Conference Videos
State of the Diamond Industry: In his annual JCK Vegas show address, Martin Rapaport, the chairman of the Rapaport Group, highlights diamond industry issues and global economic trends. In addition, Farai Maguwu, the director of the Center for Research and Development in Zimbabwe, discusses current conditions from the Marange. WATCH NOW
Where are Your Diamonds Coming From? In the Rapaport Fair Trade Diamond Conference, panelists identify ethical challenges facing the industry and discuss how to create a sustainable and responsible marketplace. Speakers include: Maguwu; Rapaport; Charles Stanley of Forevermark U.S., and Alan Martin of Partnership Africa Canada. WATCH NOW
The Rapaport Diamond Certification Conference discusses the state of diamond grading, global standards, how each lab identifies standards and how the role of certificates have evolved. Panelists include: Michael Cortez, founder of World Gemological Services; John Nichols of
Huntington Jewelers and Maarten DeWitte of Embee Diamonds. WATCH NOW
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Industry Groups Furthering the Cause
The Diamond Development Initiative (DDI) seeks public comment on its
draft standards for the Development Diamonds™ ethical certification
project until July 31. Jeff Corey, owner of Day’s Jewelers, and Dorothee
Gizenga, the executive director of DDI, explain why retailers need to
participate in protecting the artisanal and small-scale diamond miner.
WATCH NOW.
During the Vegas show, the Diamond Empowerment Fund (D.E.F.) hosted its first pop-up booth outside JCK Luxury in its ongoing industry efforts to raise awareness for ''Diamonds for Good'' campaign. Dr. Benjamin Chavis, Nancy Orem Lyman, Nicola Breytenbach-Steiner and Joseph Munyambanza extol the program creating future leaders in diamond-producing countries. WATCH NOW.
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RETAIL & WHOLESALE
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Analyst Assigns a 'Buy' Rating to TBZ
Antique Stock Broking Ltd., which owns shares in Tribhovandas Bhimji Zaveri Ltd. (TBZ), issued a 'buy' recommendation and a target price of $2.84 (INR 158) per share. The brokerage considered TBZ to be a high-growth proposition given aggressive expansion plans. TBZ currently operates 14 retail stores and plans to add 43 showrooms by the end of fiscal year 2015. The analyst anticipated TBZ sales to grow at a compound annual growth rate of 42% to about $503 million during the next two years with earnings growth at 52% to about $24 million.
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NY DDC, Dubai Multi Commodities Centre to Boost Trade
Ahmed Bin Sulayem, the executive chairman of the Dubai Multi Commodities Centre, and Reuven Kaufman, the president of the New York Diamond Dealers Club (DDC), announced an agreement to cooperate on a broad range of issues affecting their memberships. The two industry bodies have agreed to regular exchanges of trade delegations between the two centers, commencing with a New York delegation visit to Dubai in the fall. The fall trade mission to Dubai is for the mutual buying and selling of diamonds, an exchange that should prove beneficial for members of the industry in both centers. Additionally, the trade mission would facilitate the development of long-term business relationships among the participants.
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WFDB Distinguishes SDX from DES
The World Federation of Diamond Bourses (WFDB) sought to clarify that the opening of the Singapore Diamond Exchange (SDX), a platform for private investors to invest in diamonds, should not be mistaken for the Diamond Exchange of Singapore (DES), which is the first Asian member of the WFDB. The SDX is operating within the Singapore FreePort and has no connection with the WFDB, according to the global body. The DES, however, is registered as a non-profit association in Singapore, was the very first diamond bourse in Asia to become member of the WFDB, back in 1980. The acronym “DES” and its logo are registered trademarks in Singapore. DES members are in no way associated directly or indirectly with the SDX, stated the WFDB.
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Shrenuj to Open Manhattan Office
Shrenuj USA will be taking a full floor at 64 West 48th Street in Manhattan, a building owned by The Muss Development. The integrated diamond firm reportedly rented a 4,000 square foot showroom space with executive offices on the building’s 15th floor.
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GIA Discusses Synthetics at DMIA Meeting
The Diamond Manufacturers & Importers Association of America (DMIA) hosted a synthetic discussion during their general membership meeting on June 18 in New York. The Gemological Institute of America (GIA) shared the latest measures in detecting synthetic diamonds. There have been many high-quality stones made through the CVD process in recent years and it is not something can be stopped, contended GIA. Synthetic diamonds are occupying a parallel market to natural stones, and while gemologically its becoming more and more difficult to identify CVD diamonds there are many ways in which to distinguish them. CVD diamonds, for example, have irregular black inclusions and dispositions of non-diamond carbon inside and they have a red orange fluoresce under an Ultra Violet (U.V.) light. Almost all of these identification methods, however, require lab-grade equipment and expertise. “There are non-lab devices, some better than others, that will give you an indication that you should test more, but no device will tell you outright,” said GIA's Tom Moses. “It is becoming a ‘refer to a gem lab’ situation more and more.”
While HPHT can create diamonds of all colors and sizes, the stones are more easily identifiable. The HPHT process requires metal catalysts to speed up production of stones, therefore many stones have recognizable metal inclusions, which if detected with a simple magnet confirms its orgin.
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Blue Star Founder Vasantlal Mehta Passes Away
Vasantlal Laxmichand Mehta, the founder of the Blue Star Group and Arjav Diamonds, passed away June 17, in Mumbai at the age of 82. Having moved to Mumbai from Palanpur in 1947, Mehta started with humble beginnings. His career began as a diamond broker in Zaveri Bazaar. He founded Blue Star in Mumbai in 1966, and over the following decade, he brought his three sons, Akshay Mehta, Anuj Mehta and Ashit Mehta, into the business. Together they expanded the firm’s Indian and overseas operations. Described as a people's man, he has been an inspiration to not only his family and organization but also to thousands of others in the Palanpur samaj and diamond industry in India.
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AWDC Elects Fischler as President
The newly elected board of directors of the Antwerp World Diamond Centre (AWDC) elected Stephane Fischler as its new president. The board also appointed Kaushik Mehta as vice president, representing the trade, and Philippe Barsamian as vice president representing the diamond bourses. Fischler said, "Antwerp has a unique people infrastructure and a unique pool of talent, in and outside our industry. Together, we must strengthen and promote our common and rich history for the benefit of all. I firmly believe we need to focus on further anchoring our industry in our local society; share the value of our entrepreneurship and global networks with Antwerp, Flanders and our country."
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GIA Creates Scholarship for U.S. Veterans
U.S. military veterans will have access to new scholarships for advanced gemological education as part of the Gemological Institute of America's (GIA) 2013 international scholarship program. The scholarship application period will run through October 31. In addition, there is a range of other scholarships available for on-campus and distance education programs, as well as for lab classes. The 2013 application period marks the debut of the GIA Scholarship Fund for U.S. Veterans. Multiple scholarships for the Accredited Jewelry Professional degree through GIA’s eLearning distance education program are available. To qualify, applicants must include proof of U.S. military service, including reservists and National Guard personnel.
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MINING
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ALROSA Diamond Sales +27% in 1Q
ALROSA reported that diamond revenue rose 27% year on year to $1.1 billion in the first quarter of 2012 as prices strengthen and the volume of sales increased. ALROSA’s total revenue increased 26% to $1.13 billion and its net profit increased 8% to $386 million. The volume of sales of gem-quality diamonds rose 2% to 6.1 million carats, the total volume of sales increased 4% to 9.5 million carats and ALROSA’s production fell 19% to 8.1 million carats.
Additionally, ALROSA's supervisory board approved, in principle, the company's production development plan through the year 2021. The key objectives are to ensure that ALROSA’s growth is primarily driven by its core-business of diamond-mining; retain leadership in the world market; anticipate mineral replenishment needs; raise the company’s market value and implement investment projects to fund new facilities. The long-term plan also stipulates growing production volume from 34 million carats at present to an average annual target of 38 million to 40 million carats. The supervisory board also terminated Dmitry Mostovov, the former director of the Mirny Mining and Processing Division, from ALROSA's executive committee and appointed Ilya Ryashchin, ALROSA’s first vice president to the post.
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Gemfields' Auction Nets $9M in Jaipur
Gemfields raised $9 million from its auction of predominantly lower-quality rough emerald and beryl in Jaipur between June 9 and June 13. The company offered 10.85 million carats for sale of which 3.47 million carats were sold. Twenty five companies attended the auction and 20 of these placed bids on the goods. The auction yielded an average of $2.61 per carat for the lots sold.
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Rio Tinto Appoints Truter to Oversee Argyle Mine
Rio Tinto appointed Kim Truter as the managing director of the company's Argyle diamond mine in Australia, effective July 1. Truter held a number of senior roles within Rio Tinto and most recently served as president and chief operating officer of the Diavik diamond mine in Canada. He was instrumental in leading the development of underground mining at the Diavik mine, the company noted.
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Diamcor Commissions its Plant at Krone-Endora
Diamcor Mining Inc. completed the vast majority of construction and the installation of site infrastructure at its Krone-Endora at Venetia diamond project in South Africa. Next, Diamcor will process the remainder of ore concentrate material secured as part of the property's acquisition from De Beers, process new material that was recently mined and stockpiled, and conduct further testing in order to achieve new diamond valuation estimates. Following these exercises, Diamcor plans to focus on achieving targeted production through trial-mining exercises in effort to improve production for sale to its partner Tiffany & Co.
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STATS
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India
| | May $Mil. | %Chng. | YTD $Mil. | %Chng. | | Polished exports | $1,245 | -44% | $7,913 | -42% | | Polished imports | $193 | -88% | $2,870 | -74% | | Net exports | $1,051 | 59% | $5,043 | 108% | | | | | | | | Rough imports | $1,135 | -20% | $6,600 | 9% | | Rough exports | $117 | -25% | $722 | 9% | | Net imports | $1,018 | -20% | $5,878 | 9% | | | | | | | | Net diamond account | $33 | | $835 | |
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ECONWATCH
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Diamond Industry Stock Report
Stocks were largely mixed this week with U.S. retail taking the brunt of losses, while European retail made solid gains. Indian shares were mixed and mining shares were mainly lower. Read the extended industry stock report for this past week.
| | June 21 | June 14 | Chng. | | | $1 = Euro | 0.797 | 0.794 | 0.003 | | | $1 = Rupee | 56.28 | 55.82 | 0.5 | | | $1 = Israel Shekel | 3.89 | 3.86 | 0.03 | | | $1 = Rand | 8.38 | 8.37 | 0.01 | | | $1 = Canadian Dollar | 1.03 | 1.02 | 0.01 | | | | | | | | | Precious Metals | | | | | | Gold | $1,565.70 | $1,625.20 | -$59.50 | | | Platinum | $1,435.00 | $1,492.00 | -$57.00 | | | | | | | | | Stock Indexes | | | | Chng. | | BSE | 17,032.56 | 16,677.88 | 354.68 | 2.1% | | Dow Jones | 12,573.57 | 12,651.91 | -78.34 | -0.6% | | FTSE | 5,566.36 | 5,467.05 | 99.31 | 1.8% | | Hang Seng | 19,265.07 | 18,808.40 | 456.67 | 2.4% | | S&P 500 | 1,325.51 | 1,329.10 | -3.59 | -0.3% | | Yahoo! Jewelry | 905.83 | 898.72 | 7.11 | 0.8% |
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INDIA MARKET REPORT
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Polished and Rough Trading Activity
Polished trading is very quiet and the dollar reached new highs against the rupee; furthermore, liquidity is very tight but there is ample supply of goods in the rough market.
Read the full report.
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