|
|
Market Comments 8/23/2012
Aug 23, 2012 6:00 PM
|
|
|
First day of India’s IIJS show meets low expectations but market very concerned
about prices. Next week’s De Beers DTC sight allocation reduced to about $500M
with half the goods expected to be refused unless DTC reduces prices. Russians
also reducing supply. Polished demand uncertain with supply manipulations by
mining companies unlikely to increase polished price levels. BHP Billiton’s
FY’12 diamond revenue -30% to $707M, EBIT -58% to $224M. Gem Diamonds 1H revenue
-8% to $180M, net profit -51% to $25M. Signet Jewelers 2Q sales +7% to $854M,
profit +7% to $71M. Anglo American completes Oppenheimer buyout of De Beers.
Fancies: Fancy market doing relatively well as significantly lower prices than rounds attract value conscious buyers. Cushions are very hot with supply shortages. Weak demand and lower prices for rounds are encouraging manufacturers to shift production back to fancy shapes. Dealers report fancy shape market for excellent shapes and cuts is better and more profitable than round markets. Large fancies stones relatively stable but sales and liquidity are weak. There are extreme price differentials between excellent/fine and average cut fancy shapes. Fine cut stones may not be available as suppliers tighten discounts and resist lower prices. Square cuts doing better than curves.
Global Markets
United States: Wholesale trading is cautious but buyers are starting to look for attractive buying opportunities from suppliers who are pressed for cash and willing to sell low. Still, most are not buying for inventory as they prefer to wait a few more weeks hoping prices will continue to stabilize. There is relatively good demand for commercial goods below SI clarity while demand for fancy shape stones remains steady. Concerns about the economy persist and retail dollar sales are about in line with last year, but the volume of sales is below 2011 levels. Consumers and diamond buyers are opting for lower quality or smaller goods to better accommodate their tighter budgets. Retailers continue to push their engagement and bridal lines through the summer wedding season.
Belgium: Businesses returned from their summer vacations this week uncertain about what to expect from the market in the coming weeks. Some have traveled to Mumbai for the India International Jewellery Show (IIJS) but expectations are low that the show will give a significant boost to trading. U.S. demand is stable while Far East demand remains tentative ahead of the September Hong Kong show. Rough trading is weak and sightholders expect a very small Diamond Trading Company (DTC) sight next week.
Israel: Dealers returned from their annual vacations in a hesitant mood and unsure about market conditions. Rumors of potential bankruptcies have added to their unease. Some have traveled to IIJS hoping the show might spark better turnover while buyers are looking for bargains from cash-strapped Indian manufacturers. There is relatively stable demand for pointer sizes and 1-carat, I+, VS-SI, triple EX goods, while demand is weaker for larger stones above 3 carats. Rough trading remains weak ahead of next week’s DTC sight.
India: Polished and rough trading remains weak as traders’ confidence is low due to price uncertainty and tight liquidity. There is steady demand for SI-I1 clarity goods but demand for VVS remains low. Weak sentiment has been fueled by rumors that some companies are facing financial difficulties. Rough trading has declined further from last week. Diamond manufacturers are buying selectively as rough prices are high relative to the resulting polished, with many incurring losses on their manufacturing. Rough inventories have increased as several manufacturers are operating at reduced capacity. Expectations are low for IIJS as the weak domestic market has taken its toll on trading.
China: Consumer demand for diamond jewelry continues to be slow compared to one year ago as economic sentiment has weakened amid slower domestic and global growth. Similarly, diamond trading has declined and many are hoping prices will stabilize in the coming weeks to spur confidence ahead of the September Hong Kong show. There is steady demand for round, 0.30-carat to 1.10-carat, D-H, VS-SI, GIA-certified diamonds in triple EX and double EX cut grade, with none-to-faint fluorescence, albeit below 2011 levels.
Hong Kong: Business remains quiet as buyers are cautious about the market and the impact that the weak economic outlook may still have on diamond prices. Chinese tourists are still absent from the market but traffic is expected to improve in the coming weeks. Buying is confined to filling immediate orders and retailers are content to work with existing inventories for the time being.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|