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Market Comments 7/12/2012
Jul 12, 2012 6:00 PM
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Diamond markets quiet with U.S. on vacation and polished inventories sufficient to see through the third quarter. Rapaport Melee Diamond Index -13% to 122.48 in 2Q. Weak rough trading ahead of next week’s DTC sight with expectations for another small sight below $500M as sightholders plan to reject goods. ALROSA June large stone 10ct.+ rough auction sells $40M (89% by lot). Belgium’s June polished exports -13% to $1.3B, rough imports -35% to $925M. U.S. May polished imports +3% to $2.6B, polished exports -3% to $1.3B. Botswana’s May diamond exports -36% to $324M. Anglo American gains final approval for De Beers buyout. Rio Tinto names Alan Davies as diamond unit CEO.
Fancies: Extensive complaints about reductions of last week’s Pear Shape Price List. Dealers feel fancy shape market is strong with shortages of desirable goods and that prices should not have been lowered. Buyers please note significant price differentials between fine and average-cut fancy shapes. Fine cut stones may not be available as suppliers tighten discounts and resist lower prices. We are reviewing all specific complaints and analyzing discount levels, availability and cut specifications. Trade comments are invited to prices@diamonds.net.
Global Markets
United States: Trading is quiet as many wholesalers are on vacation and as buyers are prepared to wait through the summer months before making larger purchases. Overall sentiment is weak but dealers are not panicking as they did in previous downturns. There is steady demand for commercial quality SI goods. Retail sales are relatively stable, but are still below 2011 levels in most regions. Bridal jewelry continues to be the strongest category. Consumers are spending less and are prepared to compromise on size and quality to meet their tighter budgets.
Belgium: Polished trading is subdued. There is specific demand to fill orders but buyers are holding back from making larger purchases due to the weak market outlook. Confidence is low due to economic uncertainty, with more companies in the industry facing financial difficulties. Similarly, rough trading on the secondary market is quiet and sightholders are expected to reject goods at next week’s Diamond Trading Company (DTC) sight. Manufacturers continue to see little profitability in the rough that is on offer.
Israel: The polished market is restrained as recent price declines have impacted trading. Most dealers are holding onto their goods with the hope that U.S. and Far East demand will revive in August and September after the summer vacation period. There are some cash-strapped suppliers who are prepared to sell cheap as they need to generate sales. There is steady demand for commercial VS-SI goods while demand for better-quality IF-VVS stones remains weak. Similarly, rough trading is low as prices on the secondary market have softened and buyers fear further declines. Dealers have held back from trading before next week’s DTC sight.
India: Polished trading improved marginally from last week with a relative increase in demand for SI and I1 clarity goods. However, overall sentiment remains weak with very few foreign buyers in the market and domestic buyers uncertain about prices. The volatile exchange rate and tight liquidity continue to impact both rough and polished trading. There is sufficient rough in the market and rough inventories are rising as manufacturing levels remain well below capacity. Several small manufactures have closed their units and many have reduced their working hours to retain their skilled workers.
China: Weak economic sentiment has impacted diamond trading as buyers maintain a cautious outlook for the rest of the year. Polished wholesale demand is not as strong as it was last year as retail sales have slowed. Buyers are waiting to see if prices will decline further while others are prepared to work with their existing inventories until the uncertainty fades. There is steady demand for 0.30-carat to 0.50-carat, G-H, VS-SI diamonds.
Hong Kong: Wholesale diamond trading is quiet as dealers are uncertain about prices. There is sporadic demand for goods but buyers are avoiding building their polished inventories. Buyers are prepared to wait before committing to larger transactions as they expect further price reductions in the coming months.
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