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Rapaport TradeWire July 6, 2012

Jul 5, 2012 6:00 PM   By Rapaport
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  Rapaport TradeWire  
Rapaport TradeWire
RAPAPORT NEWS SERVICE | July 6, 2012   www.rapaport.com | news@rapaport.com
 
 
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Rapaport Weekly Market Comment July 6, 2012

Polished diamond prices decline in 1H12 with RapNet Diamond Index (RAPI) for 1ct. down 3.6%. Trading slow as dealers expect a quiet quarter. Far East buyers cautious and Indian suppliers under pressure as economic outlook weakens. Rough inventories rise as polished trading volume declines. Luk Fook FY12 revenues +47% to $1.5B, profit +54% to $174M. Israel’s 1H polished diamond exports -19% to $3.3B, rough imports -19% to $1.9B. Japan’s May polished diamond imports +45% to $76M. Leviev fires 150 Namibia factory workers after losing DTC sight.

RapNet Data: July 5
     
Diamonds   956,243
Value $6,166,416,944
Carats   1,009,643
Average Discount -27%

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  QUOTE OF THE WEEK
  The Julius Klein Group seeks to be a good corporate citizen throughout all aspects of our global operations and activities, and that doesn’t mean at one end of the diamond pipeline alone. DDI International understands that artisanal diamond miners are part of the wider community in which the industry does business, and so do we. We are happy to add our name to the list of DDI supporters.

Moshe Klein | JKG

Careers@Rapaport  
 
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.



INDUSTRY  
 
Polished Prices Drop in June

Certified polished diamond prices fell in ‎June as Far East and Indian demand stalled, industry liquidity dried up and the Indian ‎Rupee collapsed. Year on year 1 ct. prices declined 13.7%. Demand in the United ‎States is steady but wholesale buying remains selective as consumer’s trend toward ‎more affordable price points. Rough trading is at a standstill and Diamond Trading Company (DTC) sightholders are ‎rejecting overpriced De Beers boxes.‎ In June, the RapNet Diamond Index (RAPI) for 1 ct. certified diamonds fell 1.6%, the RAPI for 0.3 ct. stones declined by 1.2% and RAPI for 0.5 ct. ‎diamonds ‎dropped 1.4%. RAPI for 3 ct. diamonds fell 1% during the month.  ‎

During the first half of 2012, RAPI for 1 ct. diamonds fell 3.6% with the steepest ‎declines occurring during the latter part of May and through June. RAPI for 0.3 ct. stones ‎dropped 3.7% and RAPI for 0.5 ct. diamonds declined by 3.6%. RAPI for 3 ct. stones fell 5%. See the full report.



 
What Do Diamonds Fund in Zimbabwe?

WATCH NOW: In this special video presentation, Farai Maguwu, the director of Centre for Research & Development in Zimbabwe, discusses current issues facing the diamond industry, the status of human rights in Zimbabwe,  environmental concerns from toxic waste, the future of diamond revenue and the level of transparency from the flow of those funds into the treasury.  Additionally, he addresses the role of the Kimberley Process and suggests ways in which the global jewelry industry should handle their supply-chain given how Marange diamonds are entering  the marketplace.



RETAIL & WHOLESALE  
 
Retailers Report Weak June Sales

U.S. chain-store sales in June rose by only 0.2% year on year, according to  the International Council of Shopping Centers (ICSC). The remarkably weak performance was unexpected and signaled broader economic uncertainty.

  Same-store %Chng. Total %Chng $Mil
BonTon -0.7% -0.9% $1,062
Costco 3% 6% $9,180
Kohl's -4.2% -2.6% $1,708
Macy's 0.8% 1.2% $2,392
Nordstrom 8.1% 12.6% $927
Saks 6% 6% $259
Target 2.1% 2.6% $6,419






 
HSN Celebrates New Jewelry Lines

HSN is promoting its 35th anniversary with  virtual birthday parties on HSN's Facebook page, giving fans an inside look at the lives of Randy Jackson and Iman as well as HSN hosts Colleen Lopez, Amy Morrison, and many other HSN favorites. HSN Mobile users will also have insider access to Nate Berkus and Rachel Roy as they participate in special mobile-only "livechat" sessions where they will answer questions and share their thoughts and inspirations behind their HSN lines. Roy will also appear live on HSN for the exclusive launch of her statement jewelry,  satin and jersey dresses and other items. Jackson will launch Timepieces by Randy Jackson, an exclusive collection of luxury, high-quality and on-trend watches. Additionally, actress Judith Light will introduce her new, exclusive jewelry line on July 13.



 
Nordstrom Signs With Extell

Nordstrom Inc. signed an agreement with Extell Development Co. to build its first full-line store in Manhattan at 225 West 57th Street. This new flagship store in the Columbus Circle neighborhood will boast 285,000-square-feet of shopping space and is expected to open in 2018. Nordstrom expects this seven-story department store will create  the base of a distinctive mixed-use, retail, hotel and high-rise residential tower that is still in the planning stages by Extell. Nordstrom views the development as a great opportunity to serve customers within the highly accessible, heavily trafficked and growing West Side retail scene.



 
JKG Joins DDI

The Julius Klein Group (JKG) has become a sustaining supporter of the Diamond Development Initiative (DDI), citing the need to support economic and sustainability projects for Africa’s artisanal and small-scale diamond miners. Stephane Fischler, a DDI board member, noted that JKG became the first Diamond Trading Company sightholder to sign on to the campaign.



 
JTV Promotes Tanzanite

Jewelry Television® (JTV) prepared a 45th anniversary celebration of the discovery of tanzanite through July 8. JTV is showcasing these stones from the Signature™ Vault and Heirloom™ Vault collections as well as a variety of exclusive jewelry pieces. JTV will present several exclusive tanzanite collections, including Kianga™, getting its name from the Swahili word meaning burst of light, Kutamani, the Swahili word for aspire, and Merelani Tribute, gemstones cut to exhibit inner star patterns. Additionally, the broadcast channel will feature  pieces from the Katzenberg Signature Collection,  hand fashioned by master lapidary Shlomo Katzenberg.



 
Whiteflash Plans Showroom

Whiteflash Inc. plans to open a retail showroom in Sugar Land, Texas come August. The store at Sugar Land Town Square will give the retailer's online following  a ''more traditional'' experience, said  Bryan Boyne, the company's vice president. Since the company’s inception in 2000 e-commerce has been their primary marketing channel at www.whiteflash.com. Sugar Land is located only  15 minutes southwest of the Whiteflash headquarters in Houston.



GENERAL  
 
GIA Expands Service for Smaller Stones

The Gemological Institute of America (GIA) has added a new identification option for diamonds 0.20 carats and under to its Quality Assurance services to address market concerns created by the influx of high-quality, undisclosed synthetic stones. The new GIA Diamond Quality Assurance service, specifically designed to randomly screen parcels of small diamonds, combines screening for synthetics with color treatment detection. This service, costing $12 per stone, examines D-to-Z diamonds and colored diamonds up to 0.20 carats, and black diamonds up to 0.50 carats. Based on the examination, GIA will issue a statement that the stone is synthetic or natural and – if natural – whether any permanent color treatments have been applied. GIA will accept both mounted and loose stones for examination.



 
Gaydamak Loses Claim Against Leviev

Arkady Gaydamak (pictured) lost his claim against Lev Leviev and Africa-Israel Investments charging that he had been  swindled out of approximately $2 billion  from a joint diamond investment in Angola. The London court found that an agreement signed between Gaydamak and Leviev on August 6, 2011 was valid and enforceable and thus released all claims against each other from that day forward.



 
Hrabak to Succeed Montalto

Signet's U.S. subsidiary Sterling Jewelers Inc. appointed Ed Hrabak (pictured), former senior vice president merchandising and general merchandise manager, to succeeded Bill Montalto in the position of executive vice president and chief operating officer.  Stuart Lee has been promoted to senior vice president, merchandising and general merchandise manager, and Dawn McGuire has been promoted to vice president, merchandising. Sterling also announced that Judy Fisher, the director of merchandising for the Jared retail division, has been promoted to divisional vice president of merchandising for the mall division, and Laurie Kosarik, the director, corporate timepieces and merchandise planning allocation and development, has been promoted to divisional vice president of merchandising for Jared.



 
LLD to Pay Employees Until July 20

The future of some 150 workers at the closed Lev Leviev Diamonds (LLD) facility in Namibia became clear this week as they were given layoff notices. The workers have been on leave since June 10 when Namdeb failed to renew LLD's sightholder status and the cutting and polishing plant attempted to work out a new supply deal. The Namibian newspaper quoted  Jonas Lumbu, the general secretary of the Mineworkers Union of Namibia (MUN), saying that LLD had agreed to pay workers' salaries until July 20. The company reportedly would offer a severance package of one week's salary for every year of service.



MINING  
 
ALROSA's Rough Sale Nets $40M

ALROSA's June sale of special-sized diamonds, those of 10.8 carats or greater, achieved $40.4 million and was 89% sold by lot. ALROSA offered more than 25,000 carats in 377 lots, the biggest diamond weighed 174.69 carats. The mining giant expects to conduct seven more auctions this year with the next one scheduled for July 20 in Moscow and another on July 31 in Antwerp.



 
Namdeb Misses Target

Namdeb's  production targets have come in 30% of target because of problems from the rehabilitated Elizabeth Bay mine. But the mining firm remains on track to meet year-end profitability it said, in part to higher per-carat prices sold.



 
Afri-Can Marine Consolidates Shares

Afri-Can Marine Minerals received conditional approval from the Toronto Stock Exchange (TSX)  venture board to close its $3 million placement,  which commenced April 12.  Afri-Can also initiated procedures to begin trading its common shares on a consolidated basis of four pre-consolidation common shares for each single post-consolidation common share July 5.  Afri-Can can now  close the financing. The share consolidation reduced the company's 238,524,984 issued and outstanding common shares to approximately 59,631,246.



 
Petra Secures $25M Credit

Petra Diamonds  secured a $25 million revolving credit facility with IFC in order to fund expansion at its Finsch mine. The new facility is in addition to a $37 million revolving credit facility supplied by Rand Merchant Bank, but this will be lowered to $24.6 million so that the combined credit available to Petra will total $49.6 million. The company's total bank debt facilities now amount to $147.4 million with $78 million still available.



 
Botoulas Rejoins Namakwa

Namakwa Diamonds' chief executive, Richard Collocott, has resigned and will be replaced by Theo Botoulas. The company did not provide a reason for Collocott's departure.  Botoulas has more than 20 years’ experience in mining operations, asset management and the establishment of projects in junior mining companies, according to the firm.  Botoulas was previously the chief executive of Diamond Core Resources Ltd.  from 2003 to 2008 and acting chief operations officer of Namakwa Diamonds from 2008 until he resigned in 2010. Additionally, Edward Haslam has resigned as the non-executive chairman of the board.  Melissa Sturgess, who previously served as a senior independent non-executive director of the company, will replace Haslam as non-executive chairman.



STATS  
 
Israel

  1H $Mil. %Chng.
     
Polished exports $3,260 -19%
Polished imports $2,200 -22%
Net exports $1,060 -13%
     
Rough imports $1,999 -19%
Rough exports $1,522 -33%
Net imports $477  
     
Net diamond account $583 -42%


 
Japan

  May $Mil. %Chng. YTD $Mil. %Chng.
Polished imports $76 45% $349 18%


ECONWATCH  
 
Diamond Industry Stock Report

Disappointing retail sales in June did not hurt shares with  U.S. retail stocks surging this week in one of the best performances in years. Birks & Mayors (+20%) and Zale (+14%) led the pack with Movado, Nordstrom, Saks, Signet, Tiffany all pointing higher by high single-digits. European retail stocks were all higher, Indian shares were up too except for Classic Diamond (-5%) and Suashish (-1%). Mining shares posted strong gains,  except for Firestone (-1%) and Namakwa (-5%). Read the extended industry stock report for this past week.
  July 5 June 28 Chng.  
$1 = Euro 0.807 0.800 0.007  
$1 = Rupee 54.96 56.82 -1.9  
$1 = Israel Shekel 3.93 3.94 -0.01  
$1 = Rand 8.14 8.41 -0.27  
$1 = Canadian Dollar 1.01 1.03 -0.02  
         
Precious Metals        
Gold $1,604.45 $1,554.90 $49.55  
Platinum $1,474.50 $1,385.00 $89.50  
         
Stock Indexes       Chng.
BSE 17,538.67 16,990.76 547.91 3.2%
Dow Jones 12,896.67 12,602.26 294.41 2.3%
FTSE 5,692.63 5,493.06 199.57 3.6%
Hang Seng 19,809.13 19,025.27 783.86 4.1%
S&P 500 1,367.58 1,329.04 38.54 2.9%
Yahoo! Jewelry 956.38 889.64 66.74 7.5%


INDIA MARKET REPORT  
 
Polished and Rough Trading Activity

Activity remains very quiet. Demand is weak and there is too much of a price variation between buyers and sellers. Companies dealing in better goods are  facing a difficult time.    Read the full report.




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