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Market Comments 7/5/2012
Jul 5, 2012 6:00 PM
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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.
Fancies: Demand for fancy shape diamonds improving with reductions in discounts. Price conscious consumers buying more fancy shapes as their prices appear more attractive than rounds. Manufacturers are shifting production back to fancies in light of shortages. Square cuts doing better than curves (Pear Shapes, Ovals, Marquise etc.). Fancy shapes remain less liquid than rounds and may trade at significantly higher discounts for medium to less-well-shaped diamonds. Very large (5 ct.+) top-quality well cut fancies attracting some investment demand.
Global Markets
United States: Diamond trading in New York has slowed as the Diamond Dealers Club was closed this past week and given that it was a shorter week due to the July 4 public holiday. Wholesale trading is expected to continue at lower levels through the summer. Retail demand is stable but below levels seen a year ago. Bridal sales are relatively strong with good demand for rings with a center stone below 1-carat, G-, SI-.
Belgium: Rough trading remains quiet as Diamond Trading Company (DTC) and ALROSA goods continue to trade at discount prices. Rough inventories have increased and demand is expected to remain low during the upcoming July sight cycle. Polished demand is very specific as dealers expect some further softening of prices. Demand for small diamonds used in the watch industry has slowed.
Israel: Sentiment among dealers remains weak as trading has softened since the beginning of June. Suppliers have lowered their prices but it remains difficult to sell. Buyers are prepared to wait before making large-scale purchases as they anticipate further declines. Suppliers are increasingly cautious about who they sell to as liquidity is limiting payment options. Demand is selective and limited to specific, short-term orders. There is good demand for fancy shapes below 2-carats and rounds in SI lower clarities.
India: Market sentiment is weak as liquidity is tight and the exchange rate volatility continues to affect confidence. Diminished demand and price uncertainties have impacted rough and polished trading. Buyers are hesitant to make large-quantity purchases, despite sellers offering greater discounts on certain goods, as they expect prices to soften further in the coming weeks. There is steady demand for SI and lower clarity stones while demand for better quality diamonds remains weak. There is sufficient rough supply in the market to meet manufacturing requirements but trading remains at a standstill as cutter’s profit margins are tight.
China: Wholesale diamond trading is quiet as price uncertainties linger. Buyers are reluctant to buy in the current market environment and wholesalers and retailers are content to work with existing inventories. There is steady demand for 0.30-carat to 1.10-carat, G-H, VS-SI diamonds, with a strong focus on 0.30-carat to 0.50-carat sizes. Consumer demand is down from last year as economic growth has slowed.
Hong Kong: Polished diamond demand continues to be quiet with large price differences apparent among suppliers. Prices have softened since the June Hong Kong show as suppliers attempt to stimulate sales. Buyers expect further declines during the summer and are willing to wait a few months before they start to make larger inventory purchases again.
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