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Rapaport TradeWire September 14, 2012
Sep 13, 2012 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
Sept. 14, 2012
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All eyes on next week’s Hong Kong Show which will provide an important indication of Far East diamond and jewelry demand. Polished suppliers hoping that renewed Far East demand will improve industry sentiment and stabilize price levels. Buying activity expected to be selective and price sensitive as global economic slowdown creates uncertainty about future demand. Rough trading quiet and stable following De Beers approximate 10% price cut with DTC boxes fetching low single-digit premiums. U.S. July polished imports -15% to $1.8B, polished exports -13% to $1.2B. Japan’s July polished imports +31% to $85M. Best wishes to all for a happy, healthy and prosperous Jewish New Year.
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| RapNet Data: Sept. 13 |
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| Diamonds |
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999,269 |
| Value |
$6,201,266,996 |
| Carats |
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1,061,164 |
| Average Discount |
-27.64% |
www.rapnet.com
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Get Current Price List | Subscribe to Rapaport | Join RapNet |
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RAPAPORT ANNOUNCEMENTS
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The Rapaport Group wishes all of our friends and clients a happy, healthy, prosperous and peaceful Jewish New Year.
Our offices will be closed for the following Jewish holidays:
Rosh Hashana: September 17-18
Yom Kippur: September 26
Sukkoth: October 1-2, and 8-9
With best wishes for the new year,
The Rapaport Group
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September
19-23
Wed-Sun
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Rapaport Melee Auction in Hong Kong
Offering over 47,000 carats (328 lots) of recycled polished diamonds.
Diamond assortments being sold at good prices.
Excellent buying opportunities.
Regal Airport Hotel, 9 Cheong Tat Road
Hong Kong Int'l Airport, Chek Lap Kok
Berlin Suite, Basement Level
Register Now
email: auctions@diamonds.net
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September
21
Fri
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Martin Rapaport Hong Kong Presentation
Asia-World Expo, Room 201, Level 2
State of the Diamond Industry
2:30 p.m. - 4 p.m.
Topics: Primary forces impacting diamond prices and markets, analysis of price trends and socio-economic and political forces impacting diamond demand and supply; branding; synthetics/treatments and social responsibility.
RapNet Trading Network - Saville Stern
4 p.m. - 4:30 p.m.
How to Do Business in China - Julius Zheng
4:30 p.m. - 5 p.m.
These presentations are open and free to all.
Register now!
Visit the Rapaport Booth at Hall 7 # K32
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QUOTE OF THE WEEK
Neiman Marcus believes the Chinese economy, like every economy, is going to have ups and downs. We know long-term, the potential of the luxury consumer is tremendous. We are going to have a lot of work to do to educate the consumer about Neiman Marcus. What is important is this message of history, heritage and authenticity because they don’t know our brand.
Karen Katz | Neiman Marcus
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Careers@Rapaport
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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.
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RETAIL & WHOLESALE
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Daily Spending Increases
Gallup said that U.S. consumers spent an average of $77 per day in August, up from $73 in July, and the best August spending level recorded since 2008. The daily average in August was also the strongest figure since December 2008. The group found that for U.S. households with incomes of $90,000 or less, the daily spending average was $63 in August, up from $59 in July. Households with income above that amount kept daily spending at $135 per day, unchanged from the previous month. The average U.S. household income is roughly $50,000. Gallup described the pattern in August as atypical, since usually spending increases are driven by upper-income households, which has been the case so far this year. Lower- and middle-income consumers have held average daily spending to levels recorded in 2011 this year.
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U.S. Nov./Dec. Retail Outlook
ShopperTrak anticipates U.S. retail sales will rise 3.3% during the November and December period, while foot traffic should increase 2.8%.
With Thanksgiving weekend earlier in 2012, there are 32 days between Black Friday and Christmas, the longest interval possible, and retailers have one extra weekend before Christmas plus a weekend between Christmas and New Year's Eve this year.
ShopperTrak advised retailers to hold off marketing efforts until the presidential election concludes, but urged stores to have their marketing and advertising ready to go live on November 7 to capture the full sales potential of this season.
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Macy's Debuts 'What's in Store?'
WATCH NOW: Macy’s presented a sitcom-style blitz, ''What’s in Store?,'' a new ''retailality'' comedy that follows the hilarious situations that befall new Macy’s Herald Square store manager, Harold, as he collides with stars and wacky situations that make store fun and fashionable. The series is intended to attract the all-important millennial generation of shopper and create online buzz for the big box store heading into the Christmas season. Separately, L2 Think Tank rated Macy's the best retailer for adopting, using and promoting digital technology.
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Kroger's Earnings -1%
Kroger Co., the parent company of Barclay Jewelers, Fred Meyer Jewelers, Fox Jewelers and Littman Jewelers, reported net earnings slipped 0.6% year on year to $279.1 million or 51 cents per share for the second quarter that ended on August 11. Kroger reported total sales, including fuel, increased 3.9% year on year to $21.7 billion. The retailer's free cash flow allowed the company to return more than $1.9 billion to shareholders through share buybacks and dividends during the past four quarters. Kroger repurchased 23.7 million common shares for a total investment of $525 million in the second quarter.
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De Beers Launches Imaginary Nature Collection
De Beers Diamond Jewellers unveiled its jewelry collection, Imaginary Nature, which was designed to exhibit a journey of light, where heightened imagination meets natural beauty with diamonds. Each Imaginary Nature piece balances the contrasts of the natural world with the drama of an ascent and the grace of gliding, according to De Beers. These rich contradictions are conveyed through an array of diamond cuts and settings. Radiant pear-cut diamonds were set on a tilt in a way to engage light and trace movement. By contrast, the definite angles of the baguettes against round brilliant diamonds punctuate each piece with tradition and brilliance.
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Smyth Jewelers to Manage Bailey Banks & Biddle
Jewelry store chain Bailey Banks & Biddle hired Baltimore, Maryland-based Smyth Jewelers to manage its operations, purchasing, administration and field support functions for nine store locations. Smyth Jewelers’ executives Mark Motes and John Jackson will serve as chief executive and chief operating officer, respectively, of Bailey Banks & Biddle. Smyth Jewelers operates three retail locations and two Pandora retail stores across Maryland in addition to eight Pandora retail stores nationwide.
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GENERAL
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Credit Tightens in India
Financing remains tight in India, however, this is primarily due to some large firms chasing bad investments, speculation and round-tripping, according to insiders. It was estimated that nearly $5 billion of working capital from banks were diverted from diamond firms and into real estate and rough diamond speculation, but now India's real estate market and rough diamond prices have softened. With those assets now worth less than the loans, the banks have tightened the reigns leaving small diamond firms, in some cases, unable to secure additional capital.
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Lloyd's China Offers Jeweler's Block
Lloyd’s Insurance Company (China) Limited launched a jeweler’s block insurance program designed for the diamond and jewelry trade in Shanghai. This program will be led by Navigators Underwriting division of Lloyd’s China, provides coverage for the diamond, jewelry and watch industries and is based on the Lloyd’s customary jeweler’s block coverage modified to be compliant under local jurisdiction and Chinese insurance regulations. Lloyd’s China designated Shanghai Golden Door Security Equipments Company Ltd. as the side line agent to distribute this product.
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Fairtrade Gold Engages Bridal Market
The Fairtrade Foundation and the Alliance for Responsible Mining will participate in the National Wedding Show in London, September 28 to 30 at Earls Court, to build upon their mission of engaging the bridal market with Fairtrade & Fairmined gold. The Fairtrade Foundation is planning a competition where jewelry designers will be on hand to help design a bespoke engagement or wedding ring. Recently, the first Fairtrade & Fairmined certified gold arrived at Ingle & Rhode and S&P Trading, both in the U.K., from The Comunidad Aurifera Relave S.A (The Relave Gold Community) or AURELSA, in Peru. AURELSA received Fairtrade & Fairmined gold certification in May 2012 and is only the fifth gold producer in the world to obtain Fairtrade & Fairmined status.
Additionally, the groups are reviewing standards that govern the certification for Fairtrade & Fairmined gold, which could lead to adjustments made for existing standards. The standards are open for public consultation until October 7, at www.fairtrade.net/standards.
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Graziano Joins Tacori
Tacori hired Robert Graziano as its new northeastern U.S. territory manager covering Connecticut, Massachusetts, Maine, New Hampshire, New York, Rhode Island and Vermont. Graziano’s career with the luxury watch and jewelry industry spans 15 years, including nine years at Breitling USA, where he eventually became southeastern regional manager. In 2007, he joined Vertu as its East Coast sales manager for luxury mobile phones.
In February, Tacori eliminated the role of sales representative and created the territory position in order to concentrate regions into fewer accounts per manager.
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O'Connor to Host MovieStyle
Jewelry style expert Michael O’Connor will host MovieStyle on the REELZCHANNEL with a focus on how influential styles in the movies became popular trends. The premiere episode airs September 15, 2012 at 9:30 p.m. EST and 6:30 p.m. PST. O'Connor will visit the iconic to the decadent as he takes viewers on a journey through World War II-era movie fashion trends in the 1940s and highlights the Hollywood starlets who embodied those classic looks, including Bette Davis, Rita Hayworth and Joan Crawford. O'Connor also hosts REELZ “Fashion Friday” segments and is a panelist on the network’s Fashion Fanatics post-awards show style critiques.
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MINING
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No Timeline for Rio Tinto Diamonds
Rio Tinto has no time constraints in determining the future of its diamond business as it weighs all options for the division. Rio Tinto is considering selling its diamond portfolio, which includes the Argyle mine in Australia, the Bunder mine in India and majority stakes in the Diavik mine in Canada and Murowa mine in Zimbabwe.
Production from those assets is expected to account for 22% of global diamond production by 2017, up from 10% currently. Rio Tinto expects that strong industry fundamentals will drive diamond prices higher over the next decade.
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Petra Seeks Buyer for Fissure Mines
Petra Diamonds appointed QuestCo (Pty) Ltd. of South Africa to manage the sales process of its Fissure mine operations, which include the Helam, Sedibeng and Star mines in South Africa. Bids will be considered for any one or a combination of the mines and interested parties can submit expressions of interest by September 21. Combined production at the three mines fell 19% year on year to 70,874 carats in fiscal 2012. Sales dropped 19% to $17.7 million with the average price rising 5% to $255 per carat.
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Lucara's Tender Nets $13M
Lucara Diamond Corp.'s third sale of Karowe rough diamonds fetched $13.4 million; all 48 lots offered sold to bidders, including 741 carats withheld from the previous sale in July. The company sold 52,231 carats of diamonds for an average price of $257 per carat this week, compared with $176 per carat achieved at the July tender. A 16.44-carat diamond sold for $28,010 per carat, or $460,484 in total, representing the highest value stone.
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Rockwell's Production +14%
Rockwell Diamonds reported that rough diamond production grew 14% year on year to 4,218 carats for its second quarter, which ended on August 31. The company's Saxendrift and Jasper projects produced 1,876 carats, or the same amount as one year ago, while production fell 8% at Tirisano to 558 carats and surged 31% to 2,274 carats at the Klipdam mine.
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Liberia's KP Compliance Falters
Liberia must work towards achieving the minimum Kimberley Process (KP) standards for rough diamond exports, UN Secretary-General Ban Ki Moon said in a recent progress report on the United Nations Mission in Liberia (UNMIL). The government’s capacity to control diamond mining and trade continues to be weak, with the network of regional offices of the government's diamond office lacking basic capacity to monitor the movement of diamonds out of affected counties, according to the UN.
The report also said the U.S. Agency for International Development indicated that it will stop funding the property rights and artisanal diamond development program established in 2010 to help the Liberian government improve compliance with the Kimberley Process, partly due to Liberia's lack of commitment to the scheme.
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STATS
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U.S.A.
| | July $Mil. | %Chng. | YTD $Mil. | %Chng. | | Polished imports | $1,747 | -15% | $12,220 | -8% | | Polished exports | $1,229 | -13% | $10,216 | -5% | | Net imports | $517 | -20% | $2,004 | -22% | | | | | | | | Rough imports | $47 | -28% | $302 | -23% | | Rough exports | $21 | -61% | $201 | -27% | | Net imports | $26 | 136% | $101 | -12% | | | | | | | | Net diamond account | $543 | -17% | $2,106 | -21% |
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Japan
| | July $Mil. | %Chng. | YDT $Mil. | %Chng. | | Polished imports | $85 | 31% | $525 | 21% | | | 1,000s | | 1,000s | | | Carats | 201 | 42% | 1,119 | -2% |
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ECONWATCH
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Diamond Industry Stock Report
U.S. retail stocks were mixed (Signet +6%, Birks & Mayors -2%), while euro stocks were mostly lower (LVMH and Theo Fennell -7%). India shares were mostly higher (C.Mahendra +11%, Su-Raj +12%). Diamond mining stocks were more stable than last week except for Peregrine (-17%). Read the extended industry stock report for this past week.
| | Sept. 13 | Sept. 6 | Chng. | | | $1 = Euro | 0.769 | 0.791 | -0.022 | | | $1 = Rupee | 55.30 | 55.65 | -0.4 | | | $1 = Israel Shekel | 3.94 | 4.02 | -0.08 | | | $1 = Rand | 8.23 | 8.30 | -0.07 | | | $1 = Canadian Dollar | 0.97 | 0.98 | -0.01 | | | | | | | | | Precious Metals | | | | | | Gold | $1,765.60 | $1,701.70 | $63.90 | | | Platinum | $1,681.00 | $1,581.00 | $100.00 | | | | | | | | | Stock Indexes | | | | Chng. | | BSE | 18,021.16 | 17,346.27 | 674.89 | 3.9% | | Dow Jones | 13,539.86 | 13,290.53 | 249.33 | 1.9% | | FTSE | 5,819.92 | 5,777.34 | 42.58 | 0.7% | | Hang Seng | 20,247.63 | 19,209.30 | 1,038.33 | 5.4% | | S&P 500 | 1,459.99 | 1,432.01 | 27.98 | 2.0% | | Yahoo! Jewelry | 976.63 | 959.51 | 17.12 | 1.8% |
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INDIA MARKET REPORT
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Polished and Rough Trading Activity
Improved demand, good activity in Dossiers, mainly VS/SI and some stability in prices, which is supported by a relatively stable rupee. Rough market soft even after reduction in DTC prices.
Read the full report.
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