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Market Comments 7/11/2013

Jul 11, 2013 6:00 PM  
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Polished trading quiet with Rapaport Melee Index -1% in 2Q. Rough markets cautious ahead of next week’s De Beers and ALROSA sales. Global 2012 rough production -10% in value to $12.6B, volume +4% to 127.9M cts., average price -14% to $98.81/ct. De Beers announces forward contracts for auction clients and will relocate auction HQ to Singapore. Botswana government Okavango auction brings high rough prices challenging De Beers sightholder price levels. Chow Tai Fook 1Q revenue +63% as Chinese gold purchases soar. U.S. May polished imports +22% to $3.2B, polished exports +13% to $1.5B. Dubai 1H rough exports +3% to $3.7B, rough imports +7% to $2.5B.

Fancies: Fancy markets OK but not enjoying significant Far East demand as rounds. ‎Lower fancy shape price points attracting price sensitive buyers. Strong demand for under the carat Princess cuts with Pears and Ovals catching up. Cushions relatively weak but doing better as ‎oversupply ‎eases. Marquise weak. ‎Improving demand for fancies at attractive price points encouraging ‎U.S. buyers. Extreme price differentials between ‎excellent/fine and ‎average cut fancy shapes.

Global Markets

United States: Diamond and jewelry demand is stable although wholesale markets have been quiet during the summer vacation period. Buyers are looking for specific goods to fill orders and are prepared to wait out the summer months before making larger purchases for inventory. Sentiment is fairly positive relative to other centers. There is good demand for commercial quality SI goods. Retail sales are relatively stable with bridal goods helping to buoy the market.

Belgium: Trading is quiet but stable with Far East and Indian dealers still cautious in light of economic factors affecting sentiment in those markets. U.S. wholesale buyers returned from vacation helping to spur trading. There is some interest from retail buyers but they are hesitant to meet suppliers’ price points and are pushing for higher discounts. There is steady demand for SI goods in sizes up to 2 carats.

China: Diamond and jewelry trading remains quiet on weak demand and overall economic caution. Retailers and dealers expect polished prices to soften as they try to sell existing inventory while increasingly ordering replacement goods on consignment. Buyers also suspect their Indian suppliers are facing tight liquidity and will sell cheap to generate cash flow. There is stable demand for round 0.50 carat, 0.70 carat and 1 carat, D-H,  VS-SI, GIA-certified goods. 

Hong Kong: Diamond trading remains quiet as dealers are cautious due to weak economic data in China. But they have been encouraged by recent positive financial results from the major jewelry retailers in the region. There is steady demand for 0.30-to-0.50 carat, G-I, VS-SI diamonds with buyers noting that prices have held relatively steady for these goods. Demand for better quality VVS+ goods remains weak.

India: The weak rupee continues to present the greatest challenge to local diamond dealers and manufacturers as the currency fell to new lows this week. Both polished and rough trading is slow with foreign demand accounting for the bulk of activity, particularly from the stable U.S. market. Local Indian polished buyers are largely absent from the market. Suppliers are holding their prices relatively firm for popular goods. Manufacturing is also slow and factories are operating at reduced capacity. Rough trading is cautious ahead of next week’s De Beers sight and ALROSA contract sales. 

Israel: Polished trading is slow but with steady demand for SI goods from the U.S. market. Local buyers are looking for opportunities to purchase goods cheap, particularly from Indian suppliers that they believe are under pressure to sell. But they’ve had limited success. Suppliers are holding their prices firm for in-demand VS-SI goods. Demand for VVS diamonds is weak. Rough trading is cautious after ALROSA achieved strong prices at its June auction.
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