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Rapaport TradeWire March 8, 2013
Mar 7, 2013 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
March 8, 2013
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Strong Hong Kong show exceeds expectations with much better business than last year. Excellent demand for 0.30-0.40 ct., F-I, VS-SI, goods. 3X bringing 5-8% premiums with some buyers taking VG due to shortages and higher prices for 3X. RapNet Diamond Index (RAPI) for 1 ct. polished diamonds +0.2% in Feb. Rough trading slows as speculative dealers can't sell high-priced purchases. U.S. confidence mixed as Dow Jones hits record high but March spending cuts slow economic growth. U.S. Jan. polished imports +11% to $1.7B, polished exports +29% to $1.5B. Botswana Dec. diamond exports -39% to $140M, FY exports +20% to $4.4B.
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| RapNet Data: Mar. 7 |
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| Diamonds |
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978,969 |
| Value |
$6,390,298,394 |
| Carats |
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1,069,223 |
| Average Discount |
-27.34% |
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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March
5-13
Tue-Wed
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Rapaport Single Stone AuctionNew York & Israel View details.
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March
11-19
Mon-Tue
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Rapaport Melee Auction
New York
View details.
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March
18
Mon
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Intl. Diamond Week in Israel
Martin Rapaport will deliver his “State of the Diamond Industry”
presentation at 4 p.m. in the Israel Diamond Exchange.
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QUOTE OF THE WEEK
There’s an irrational exuberance in the market today. I don’t see the logic in why people are paying so much for rough diamonds.
Name Withheld | De Beers Sightholder
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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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INDUSTRY
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De Beers Feb. Sight Estimate $550M
The De Beers February sight closed with an estimated value of $550 million as the company adjusted assortments to reflect higher values in its boxes. Sightholders noted that while De Beers kept its prices basically stable, the readjustments in the boxes effectively translated to a price increase of around 4%. Premiums on De Beers boxes have improved and are selling at around 5% on the secondary market. Prices for very large rough, above 15 carat sizes, have increased by more than 12%.
Dealers reported that premiums vary according to the type of goods being traded with cheaper goods garnering up to 8%, while more expensive rough that is suitable for high-end polished is trading at lower premiums.
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RAPI Steady in Feb.
Certified polished diamond prices held steady in February as U.S. markets and improved Far East consumer confidence have helped spur strong demand for mid-quality VS-SI, triple EX diamonds. The RapNet Diamond Index (RAPI™) for 1-carat certified polished diamonds increased 0.2% in February, RAPI for 0.3-carat diamonds rose 2.7% and 0.5-carat stones increased 0.7%, while 3-carat diamonds fell 0.2%. Prices have held relatively steady in the first two months of 2013.
The Rapaport Monthly Report – March 2013, “Steady Markets, Rough Anxieties,” is available for purchase at diamonds.net/report and addresses supply and demand concerns and explains why the surge in rough prices appears unsustainable.
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Hong Kong Show Activity Turns Upbeat
The mood was positive at this week's Hong Kong International Jewellery Show given strong traffic and, at least, better business levels than were experienced in all of 2012. There were a lot of inquiries for goods, but these did not necessarily translate to strong sales as there remains notable discrepancies between seller asking prices and buyer offers. There has been strong demand for GIA-certified 0.30-carat to 0.50-carat, H-I, VS-SI goods; excellent demand for triple EX certified stones and there are shortages in the market; stable demand for round, 1-carat to 3-carat goods; weak activity for better quality VVS+ clarity stones, while commercial-quality fancy shapes are strong.
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RETAIL & WHOLESALE
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Kothari Discusses India's Outlook
WATCH NOW: Sanjay Kothari, the past chairman of the Gem & Jewellery Export Promotion Council, comments on the recent Signature Show in Mumbai and overall market conditions in India. Traders remain relatively optimistic despite the headwinds of slow local demand for diamonds and jewelry, a volatile rupee to dollar exchange-rate and tight liquidity.
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Sotheby's Profit -37%
Sotheby's reported that its fiscal year revenue dropped 8% year on year in 2012 to $768.5 million, and attributed the decline to an 11% drop in auction commission, resulting from a 10% reduction in auction sales. Profit plunged 37% to $108.3 million, or $1.57 per diluted share. Before the fiscal year ended, Sotheby's refinanced its long-term bonds to year 2022, and incurred a $15 million pre-tax bond redemption loss as a result. However, this long-term refinancing will reduce Sotheby's financing costs by approximately $5 million per year, beginning in 2014.
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Berkshire's Jewelry Brands Come Under Pressure
Berkshire Hathaway, which owns Ben Bridge Jeweler, Borsheims Fine Jewelry, Helzberg Diamonds and the Richline Group among many other diverse product and services brands, reported net earnings jumped 42% to $15.3 billion in 2012 in large part due to bets placed on derivatives and not strong retail sales. Net earnings attributable to shareholders rose 45% to $14.8 billion. Revenue rose 13% to $162.5 billion. Retailers recorded a revenue increase of 4% year on year to $3.7 billion and pre-tax earnings from this division rose just 2% to $306 million.
Increased revenue from the home furnishings and jewelry businesses as well as the inclusion of Oriental Trading since its acquisition on November 27, were partially offset by lower revenue from Pampered Chef. However, home furnishings retailers were substantially offset by lower earnings from jewelry businesses and Pampered Chef. Company chairman, Warren Buffett, will be selling jewelry to shareholders behind Borsheims' counter in Omaha, Nebraska on May 5, with ''crazy Warren'' pricing in an attempt to ring-up $2 million in sales that afternoon.
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Kristall Celebrates 50 Years
Kristall celebrated 50 years since its founding by the Ministry of Finance of the USSR on March 1, 1963. Kristall is the largest polished diamond manufacturing enterprise in Europe specializing in high-quality diamonds, is acknowledged as the Russian Cut brand and prides itself on producing diamonds that conform to the Triple Excellent standards. Kristall is represented by four trading companies, one each in Antwerp, New York, Hong Kong and Dubai. During the past 50 years, Kristall has polished 80.5 million diamonds, for a total weight of 9.3 million carats. The company currently employs 2,200 professionals.
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Qatar Boosts Stake in Tiffany to 11%
The Qatar Investment Authority, the largest shareholder in Tiffany & Co., increased its stake in the retailer to 11.27% this week. The sovereign wealth fund first purchased a 5.2% stake in Tiffany nearly 11 months ago, by February it had grown its investment to an 8.7% share. The news provided a boost to Tiffany on the Nasdaq this week as shares rose a solid 6% to more than $70, however, the share price remains just about flat year on year. BlackRock, The Vanguard Group and Capital World Investors follow behind Qatar as the top shareholders. Tiffany reports fourth quarter and fiscal year results on March 22.
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GENERAL
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GIA Lab Reports Get a Makeover
The Gemological Institute of America (GIA) revised the format for its global-standard gem grading and identification reports to consume less paper and other materials, weigh less and offer enhanced security features, including a unique and durable proprietary paper, that exceed document security industry guidelines. QR codes printed on each report will verify the document’s authenticity through direct access to GIA’s online Report Check service. There is also a new, streamlined process for consumers and occasional laboratory clients to submit gems for grading and identification services. GIA used the opportunity to redesign its website, too.
Additionally, the Ethisphere Institute named GIA as one of the World’s Most Ethical Companies in 2013 for efforts on building and maintaining a superior ethics and compliance program. Companies on the list have demonstrated an active role in promoting ethical business practices internally and exceeded legal compliance standards. GIA joined 144 firms named to the list this year.
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Firm Denies Smuggling Zim Stones
China Sonangal, which 100Reporters.com alleged was part of a diamond-smuggling operation in Zimbabwe, denied the charge and added that it had not purchased any diamonds from the country. The head of legal services for China Sonangal, Wee Jee Kin, told the Zimbabwe Independent that, while true, the firm is involved in the diamond business, among others, its diamonds only come from ''our jointly-held Catoca mines in Angola and none are from Zimbabwe.''
In an unrelated story, the Independent also quoted Zimbabwe's Mines Minister, Obert Mpofu, discussing plans to seal off newly discovered diamond fields in Masvingo province's Bikita district to halt illegal mining and to avoid a repeat of the Marange diamond fields free-for-all in 2006. Mpofu insisted the lockdown of the area would be achieved peacefully and in an organized manner to plug mineral leaks and allow the nation to benefit from its resource wealth.
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Forbes Ranks Top Billionaires
The annual Forbes list of billionaires boasted 1,426 names this year with an aggregate net worth up 17% year on year to $5.4 trillion. The U.S. led the roll call with 442 billionaires, followed by the Asia-Pacific region with 386, Europe with 366, the Americas with 129 and the Middle East and Africa at 103. Here are some of the major players who touch the diamond industry in one form or another.
Direct industry players included Nicky Oppenheimer and family at No. 182, down from No. 136 in 2012, and their net worth dropped $300 million to $6.5 billion; Laurence Graff, however, increased his standing on the list, rising 160 spots to No. 299 with a net worth of $4.3 billion from only $2.6 billion one year ago; Beny Steinmetz dropped to No. 316 from No. 162, and his net worth fell to $4.1 billion from $5.9 billion; Lev Leviev fell to No. 974 from No. 764 in 2012 and his net worth fell by $200 million to $1.5 billion and diamond dealer Nirav Modi joined at No. 1,342 with a net worth of $1 billion, according to Forbes.
Luxury retailers maintained prominent places on the list with Warren Buffett at No. 4 and a net worth of $53.5 billion, Bernard Arnault of LVMH at No. 10 with a net worth of $29 billion; Amazon's founder, Jeff Bezos at No. 19 with a net worth of $25.2 billion; PPR's chairman Francois Pinault and his family were at No. 53 with a net worth of $15 billion; Patrizio Bertelli was No. 175 with a net worth $6.7 billion and Johann Rupert and family at No. 179 with a net worth of $6.6 billion.
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DMIA Elects VanderLinden as President
The Diamond Manufacturers & Importers Association of America (DMIA) installed a new board and appointed new directors during the DMIA's general membership meeting on March 5. Ronald (Ronnie) VanderLinden was elected president, stepping in to fill the shoes of Ronald (Ronny) Friedman who served as DMIA president for the past nine years.
Executive Board:
President Ronald VanderLinden
Vice President Sheldon Kwiat
Vice President Fred Knobloch
Vice President Hertz Hasenfeld
Vice President Saul Goldberg
Vice President Eli Haas
Secretary Stuart Samuels
Treasurer Parag Shah
The board of directors include
Steve Eisen, Marvin Finker,
Ishaia Gol, Suzette Gomes,
Manny Gordon, Jay Greenberg,
Stan Grosssbard, Tom Heyman,
Daniel Kaleko, Moishe Klein,
Daniel Klugman, Melissa Kulhanhian,
Alan Rehs, Charles Rosario,
Matthew Schamroth and Michael Verstandig.
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MINING
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Gemfields Profit Falls
Integrated mining firm Gemfields plc reported that its revenue fell 39% year on year to $27.7 million during the six months that ended on December 31. Profit slid 78% to $4.7 million.
Gemfields' rough emerald tender that took place in November in Singapore achieved $26.8 million and was 84% sold by lot. The company reported that a total of 930,000 carats sold for an average of $29.71 per carat. The company noted that it produced 14.5 million carats of emerald and beryl, mainly of higher-grades from its Kagem mine in Zambia during the period.
Gemfields also completed its acquisition of Faberge and acquired a 75% stake in a second substantial ruby deposit in the Montepeux district of the Cabo Deglado province of Mozambique.
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Guinea Renews Stellar's Licenses
Stellar Diamonds' two diamond exploration licenses in Guinea were renewed for two years. The licenses are held by its subsidiary, Friendship Diamonds SA, and are located adjacent to company’s Droujba project, covering approximately 118-square-kilometers. Stellar's Droujba property hosts a JORC-inferred 3 million carat diamond resource, according to the company's project report.
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STATS
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U.S.A
| | Jan. $Mil. | %Chng. | | Polished imports | $1,676 | 11% | | Polished exports | $1,513 | 29% | | Net imports | $164 | -52% | | | | | | Rough imports | $39 | 3% | | Rough exports | $25 | -50% | | Net imports | $13 | | | | | | | Net diamond account | $177 | -46% |
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Botswana
| | Dec. $Mil. | %Chng. | 2012 $Mil. | %Chng. | | Rough and polished exports | $140 | -39% | $4,430 | 20% | | Rough and polished imports | $155 | 223% | $2,024 | 181% | | Net exports | ($15) | | $2,406 | -16% |
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ECONWATCH
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Diamond Industry Stock Report
U.S. stocks were mixed with JCP (-16%) slammed for a second week, but Birks (+9%), Blue Nile (+5%) and Tiffany (+6%) performed well. European shares and most Indian firms were higher, C.Mahendra (+15%), Goenka (+7%), Suashish (+11%) stood out winners. Mining shares lower with Stornoway (-14%) and Firestone (-9%) in the steepest slump.
Read the extended industry stock report for this past week.
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Mar. 7 |
Feb. 28 |
Chng. |
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| $1 = Euro |
0.763 |
0.765 |
-0.002 |
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| $1 = Rupee |
54.57 |
54.37 |
0.2 |
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| $1 = Israel Shekel |
3.71 |
3.71 |
0.00 |
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| $1 = Rand |
9.15 |
9.01 |
0.14 |
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| $1 = Canadian Dollar |
1.03 |
1.03 |
0.00 |
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| Precious Metals |
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| Gold |
$1,577.90 |
$1,580.40 |
-$2.50 |
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| Platinum |
$1,590.00 |
$1,581.00 |
$9.00 |
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| Stock Indexes |
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Chng. |
| BSE |
19,413.54 |
18,861.54 |
552.00 |
2.9% |
| Dow Jones |
14,329.57 |
14,054.49 |
275.08 |
2.0% |
| FTSE |
6,439.16 |
6,360.81 |
78.35 |
1.2% |
| Hang Seng |
22,771.44 |
23,020.27 |
-248.83 |
-1.1% |
| S&P 500 |
1,544.26 |
1,514.68 |
29.58 |
2.0% |
| Yahoo! Jewelry |
1,160.80 |
1,170.29 |
-9.49 |
-0.8% |
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INDIA MARKET REPORT
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Polished and Rough Trading Activity
Local polished activity is very restrained as attention is centered on Hong Kong. The rupee to dollar exchange-rate turned volatile again, while liquidity is tight in the market.
Read the full report.
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