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Market Comments 10/31/2013
Oct 31, 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.
Rounds: Global demand very weak for this time of the year. U.S. market OK and better than the rest of the world but not as strong as expected before the holiday season. Reports of possible hike in India’s polished diamond duty from 2% to 5% dampens Diwali mood. Rough trading quiet. ALROSA valued at $8.1B in Moscow share listing. Titan Company’s 2Q sales +1% to $372M, net profit +4% to $30M. Blue Nile’s 3Q sales +10% to $99M, net profit +67% to $3M. U.S. Aug. jewelry store sales +7% to $2.4B. De Beers names Paul Rowley to succeed Varda Shine in Jan. We wish everyone a happy Diwali and a prosperous new year.
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 trading is stable but dealers were hoping for busier activity given that the holidays are fast approaching. Wholesale and retail jewelers seem to be willing to hold smaller inventory and wait until the last minute to buy what they need for the season. Buying therefore remains selective with strong demand for SI goods. Consumer confidence remains relatively low as political concerns continue to dampen holiday spending forecasts. Bridal lines continue to dominate retail jewelry sales.
Belgium: The market in Antwerp is stable with improving polished demand from Europe and the U.S. There is good demand for 0.30-carat to 0.60-carat, H+, VS-SI diamonds while 0.70-carat to 1.99-carat sizes are more difficult to sell, particularly the better quality items. Many Antwerp-based Indian dealers are taking vacation for the Diwali festival next week. Rough trading is quiet as low profit margins prevail in the manufacturing sector.
China: Both the wholesale and retail markets quieted this week with government anti-corruption measures affecting confidence among dealers and consumers. The strongest items remain the 0.30-carat to 0.50-carat, F-H, VS2-SI2 goods while 1-carat, F-J, VS-SI diamonds are also in reasonably good demand. Buyers are eyeing how the market will develop during the Christmas season.
Hong Kong: The wholesale diamond market is uncharacteristically quiet for this time of year as Far East buyers remain cautious. Demand is selective and buyers are not placing large-scale orders. Still, there is steady consumer demand, thus raising expectations that stronger orders will start to flow.
India: Polished sales have slowed even as local and foreign buyers were looking for goods before the Diwali break that will extend from November 1 to 11. There has been a large presence of foreign dealers in the market. Still, polished suppliers are keeping their prices firm despite holding relatively large inventory and the fact that liquidity challenges persist. Sentiment among large manufacturers and traders weakened due to rumors that the government plans to raise the import duty on polished diamonds to 5 percent. While the retail market has had a difficult few months, there is rising expectation for jewelry sales during Diwali. Rough trading is quiet as most manufacturing facilities will close in the coming weeks for Diwali.
Israel: Activity in Ramat Gan is relatively slow as dealers expected to be busier in late October before the holiday season. Suppliers who are focused on the U.S. are filling steady orders, with a strong focus on SI goods, but they haven’t yet experienced the rush for goods of previous years and are still holding out for it. Demand from other markets is slow. Many Israelis returned from their travels to India stating that they bought goods at firm prices there. Israeli buyers remain active in the market.
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