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Market Comments 9/20/2012

Sep 20, 2012 6:00 PM  
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Hong Kong show begins with steady but selective Far East demand for ‎inexpensive lower-quality diamonds. Sales better than expected but price sensitive ‎Chinese buyers still not buying for inventory. Rising concerns about polished shortages ‎as Indian manufacturing remains below capacity. DTC expects small October sight. ‎ALROSA 1H rough diamond sales +11% to $2.4B, production -15% to 16.4M Cts.‎

 
Fancies: Fancy market doing relatively well as significantly lower prices than rounds ‎‎attract value conscious buyers. 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 mixed with some improvements reported ‎since August. There is reasonable demand for rounds, 0.50-carat to 1.50-carat, G-I, VS2-‎SI-, Triple Ex goods, while demand for fancy shapes is focused on cushion cuts, then ‎radiants and oval shapes. Retailers are starting to plan their holiday inventories while ‎expectations for the season remain mixed. ‎

Belgium:
Overall trading slowed with many businesses closed at the beginning of the ‎week for the Jewish New Year. Suppliers are concerned that some exhibitors at this ‎week’s Hong Kong show will become increasingly flexible to sell low as the show ‎progresses in order to generate cash and ease their liquidity concerns. Rough trading has ‎improved slightly with De Beers and ALROSA goods presenting slightly better margins in ‎the secondary market.   ‎

Israel: Trading was quiet given the short business week due to the Jewish New Year and ‎as many dealers traveled to Hong Kong for this week’s show. Polished suppliers have ‎been encouraged by the recent increase in buyer requests and they have managed to ‎defend their prices to an extent, particularly in SI- clarity goods. However, they also ‎recognize that the market is fragile and that weak Far East demand at the Hong Kong ‎show could signal further caution during the fourth quarter season. ‎

India: Activity in the domestic polished and rough markets has been restrained due to the ‎Jain religious festival of Paryushan and as many dealers are at the Hong Kong show. ‎Demand is relatively steady for SI and lower clarity stones while demand for IF-VVS ‎goods is weak. Tight liquidity and the sudden exchange rate volatility have added to ‎overall market caution. Manufacturers continue to operate at reduced capacity while their ‎profit margins remain tight. Rough trading has improved slightly over the past two weeks, ‎with better activity in rough that yields SI and lower category polished.‎

China: Buyers are seeking clarity about prices and remain hesitant to make large ‎purchases for inventory until they see some stability in the market. They also sense that ‎prices may soften in the coming weeks and are testing suppliers at the Hong Kong show. ‎While many have delayed buying until the show, wholesale activity has picked up in ‎recent weeks as retailers prepare for the National Day Golden Week holiday period – a ‎big wedding period – that starts October 1.

Hong Kong: The market has been focused on the AsiaWorld-Expo, the venue of the ‎diamond pavilion at the Hong Kong show, which has seen steady but cautious diamond ‎buying. Local demand is relatively low as dealers continue to view global economic ‎trends with concern, while trading is being driven by buyers from China, India, and ‎elsewhere in the Far East region. Buyers have been trying for deeper discounts but ‎suppliers have held steady in the popular VS2-SI goods, while being more flexible on ‎prices for the better quality VVS stones. ‎
 
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