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Market Comments 10/17/2013
Oct 17, 2013 6:00 PM
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TRADE ALERT: Buyers beware. Persistent reports that large amounts of synthetic lab grown diamonds are being mixed with natural diamonds in parcels of melee and pointers. Know your supplier and insist phrase “natural, untreated diamonds” be included on all invoices.
News: Polished market tough but improving ahead of Diwali and Thanksgiving. Buyers delaying inventory purchases amid persistent price uncertainty. SI strong, VVS weak. Rough market stalled. ALROSA valued above $8B ahead of Oct. 28 offering as 3Q production +10% to 9.9M cts. Rio Tinto’s 3Q production +12% to 4.2M cts. Gem Diamonds sells 12.47ct, blue diamond for $7.5M ($603K/ct). Strong demand, high prices at Argyle pink tender. Christie’s NY sells $47M (75% by lot) with rectangular‐cut, 8.77ct, fancy intense pink, VVS1 ring fetching $6.3M ($721K/ct).
Fancies: Buyers find it increasingly difficult to find the “right goods” that meet their specific demand. Shortages developing as cutters reduce production due to overpriced, unsustainable rough prices, and sellers holding back popular goods. Good U.S. demand for commercial-qualities, but Far East and Chinese demand weak. Very big expensive stones making news as global economic uncertainty drives investment demand. Off-make, poorly-cut fancies selling at very deep discounts. As with rounds, SI-I1 qualities are best sellers in carat and under sizes. Buyers very selective regarding shape- and cut-quality with extreme price differentials between excellent- and average-cut fancy.
Global Comments:
United States: Polished diamond demand is slowly improving ahead of the Black Friday-Thanksgiving weekend, as expectations for the season are positive. However, there is concern that the government shutdown, which ended Thursday, has weakened consumer confidence and economic growth, and may also diminish gift spending in November-December. That, coupled with suspected weakness in the global polished trade, has influenced wholesale and retail jewelers to hold relatively low diamond inventory and they are careful not to overstock at this time. Bridal sales are steady at the retail level.
Belgium: Polished diamond trading is stable with strong demand for SI-clarity goods in most category diamonds. Dealers note good demand from U.S. and European buyers ahead of the Christmas season, although buying remains very selective and buyers appear to be delaying larger inventory purchases as late as possible. Indian dealers have become a bit more active in Antwerp ahead of the Diwali break. Rough trading is slow with De Beers goods trading at discount to list prices or with long-term credit on the secondary market.
China: Consumer confidence continues to tread cautiously with retailers concerned that the recent U.S. debt ceiling debate might spread uncertainty across the globe. They’re hoping that third quarter economic growth data, due out after press time, will spur confidence. Wholesale diamond trading is restrained with good demand for commercial goods. Currently, 0.30 to 0.50-carat, G-H, VS-SI diamonds are the strongest category.
Hong Kong: The wholesale market is slow with dealers cautious after the National Holiday Golden Week. Sales to China are relatively slow and there is a sense that consumer sentiment is still sluggish compared to previous years. Retail sales are steady with jewelry retailers hoping to continue the momentum from Golden Week through the Christmas season.
India: Trading has improved as some confidence returned in October, due in part to the stabilization of the rupee against the U.S. dollar. Local dealers are returning to the market as Diwali approaches on November 3. A strong presence of foreign buyers remains in Mumbai looking for goods before Indian businesses close for the festival. While there is a reported shortage of in-demand goods, an influx of diamonds to the market is expected in the coming weeks. There is strong demand for dossiers in 0.30 to 0.59-carat, H-J, SI diamonds and steady demand for 1-carat, G-H, SI goods. Local buyers are selective and remain cautious that prices may soften due to recent declines in rough prices. Domestic rough trading is slow and manufacturing remains well below capacity.
Israel: Market sentiment is mixed with dealers noting steady U.S. demand for polished but adding that margins are tight. Local polished dealers are very active looking for goods, but prices are sensitive with steady trading of SI-clarity diamonds. There has also been a notable presence of Chinese buyers in the bourse this week. Large diamonds above 3-carat, H-L, SI1-I1 are doing well and there is a shortage of fine-cut, fancy-shape goods.
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