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Market Comments 8/30/2012
Aug 30, 2012 6:00 PM
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Mumbai show signals slight increase in domestic jewelry demand with Indians buying jewelry from Indians, while international diamond suppliers experience tough environment due to import taxes. Steady demand for inexpensive lower-quality diamonds, while better-quality stones remain weak. De Beers reduces prices about 10% with DTC sight estimated at $580M. Cutters hope cheaper rough will enable profitable fourth quarter season. Tiffany & Co.'s 2Q revenue +2% to $887M, earnings +2% to $92M. Zale Corp.’s 4Q revenue +8% to $407M, net loss of $20M vs. loss of $33M a year earlier. Over 300 leading diamantaires attend Rapaport International Diamond Conference in Mumbai.
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 has been unpredictable. While some dealers report weaker demand this summer than last, others indicate a stable market. Those with the right type of goods in inventory are selling at steady prices as 0.33-carat to 0.90-carat, below SI goods are in demand. Wholesalers are having trouble replenishing inventory and dealers are finding it difficult to source fine-cut, certified round, SI2-I1 clarity stones. Fancy shapes continue to offer an attractive option compared to rounds with cushions in strong demand. Retail jewelers are focused on bridal under the carat and lower-priced silver pieces to keep their sales momentum as fine-diamond sales remain weak.
Belgium: Trading is quiet and the volume of goods being sold is below 2011 levels. There has been some improvement in demand for smaller, lower color, SI- goods from Indian buyers while demand for fancies continues to be stronger than for rounds. However, overall caution remains as it is difficult to assess Far East demand ahead of the Hong Kong show. Rough trading has been weak as many were waiting to see if De Beers would adjust prices at this week’s sight hoping that the declines that eventually took effect would help boost activity.
Israel: Polished dealers continue to lack confidence as this week’s India International Jewellery Show (IIJSW) show proved tougher for foreign exhibitors than locals. Most are hoping polished prices will stabilize ahead of the Hong Kong show, which starts September 19 - and which will be attended by a large Israeli delegation - to return some confidence in the market. Demand is relatively stable for pointer sizes and 1-carat, I+, VS2-SI, triple EX goods, while demand is weaker for larger stones above 3 carats. Rough trading is weak although recent price declines by DTC and Russia's ALROSA has helped lift sentiment.
India: Local polished demand improved slightly this week but trading activity still remains cautious. Buyers tried to push for higher discounts at IIJS that ended on August 27 but suppliers held their prices relatively firm. There is good demand for SI-I1 clarity goods as these goods are not easily available and their prices remain steady. Demand for better quality VVS stones is weak. Exhibitors did not see a significant increase in demand at IIJS but left the show satisfied with sales and overall sentiment improved. Rough trading remains weak and manufacturers continue to operate at reduced capacity. Dealers are encouraged by reports of price declines at the August DTC sight and hope this will ease liquidity and raise trading levels.
China: Economic caution continues to influence consumer confidence and demand for diamonds. However, buyers have started to inquire about goods again after being largely absent from the market in the past few months. They are focused on dossier, G-H, VS-SI goods. Retail inventories are low and buyers are expected to increase their buying activity in the coming weeks ahead of the October 1 National Holiday.
Hong Kong: Wholesale trading remains weak but expectations have improved for the September Hong Kong show. Dealers sense that retailers are starting to look for goods again, or at least are assessing price points in preparation for the October Golden Week. Still, the outlook is cautious and retailers are maintaining low inventory levels. Buyers are starting to compromise on the quality of goods they are looking for and there is a growing acceptance of SI goods in a traditionally VS-focused market.
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