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Market Comments 12/5/2013
Dec 5, 2013 6:00 PM
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U.S. Thanksgiving weekend retail sales -3% to $57.4B. Cyber Monday sales +18% to $1.7B as consumers increase purchases through mobiles devices. Holiday demand supporting diamond prices but trading levels disappoint. November RapNet Diamond Index (RAPI) 1 ct. stable. Selective demand improving for 1-2 ct. collection clean (D-H, IF-VVS) certs. De Beers introduces forward contracts at auction sales. Next week’s sight expected to be about $600M. ALROSA signs cooperation agreement with Antwerp AWDC with 3Q revenue +41% to $1.2B, profit -4% to $252M. Luk Fook 1H revenue +70% to $1.3B, profit +72% to $125M. U.S. Oct. polished imports +54% to $2.2B, polished exports +35% to $1.5B.
Fancies: Ovals improving, pears shaping up, but squares slow. Availability tightening with shortages of select items that meet specific demand. Cutters have reduced production due to overpriced, unsustainable rough prices, and sellers holding back popular goods. U.S. demand for commercial-qualities good with some improvement in Chinese demand. Big expensive stones making news at auctions as global economic uncertainty drives investment demand. Off-make, poorly-cut fancies hard to sell even at very deep discounts. Buyers very selective regarding shape- and cut-quality with extreme price differentials between excellent- and average-cut fancy.
Global Comments:
United States: The wholesale diamond and jewelry markets are stable, buoyed by the Christmas shopping season. Dealers note that demand remains below levels experienced last year, and expectations are mixed for retail sales during the holiday period. The official retail selling season began over Thanksgiving weekend with disappointing store sales but strong online activity. The outlook for jewelry sales is slightly above other categories with lower-end diamond jewelry and mid-to-high-end luxury goods projected to be the strongest areas.
Belgium: Activity remains unusually quiet in Antwerp for this time of year. Trading is focused on 0.30-carat to 0.50-carat, VS-SI goods, which have maintained steady demand from both the U.S. and the Far East throughout the year. There is rising concern about gaining access to credit in 2014. Rough trading is stable but cautious ahead of the New Year.
China: The wholesale market is stable but still driven by demand to fill specific orders. There is steady demand for certified 0.30-carat to 0.50-carat, H-J, VS-SI goods. Retailers are expected to hold off from making larger inventory purchases as they wait to see how prices evolve over the U.S. Christmas season. Jewelry demand continues to be driven by strong gold consumer demand.
Hong Kong: The wholesale market is quiet as diamond dealers anticipated there to be stronger demand before Christmas. Chinese market is focused on gold jewelry, which is overshadowing diamond sales in the region at the moment. Diamond demand is specific, and dealers are in a wait-and-see mode, hoping the market will improve in the coming weeks spurred by preparations for the Chinese New Year.
India: The polished market has slowed slightly with few foreign buyers in Mumbai, while domestic demand is stable. Buyers have no urgency to buy if suppliers don’t meet their price. There are some reported shortages in the market as manufacturing remains below capacity and due to delays in releasing stones from the laboratories. New goods are expected to come to market in the coming weeks as the larger factories have increased their output since Diwali. Many workers in small-to-medium sized operations remain on vacation. Rough trading is slow but stable ahead of next week’s De Beers sight as liquidity concerns continue to constrain the trade.
Israel: Polished trading has improved, particularly as niche suppliers fill Christmas orders from Europe and the U.S. There has been a steady flow of foreign buyers from various markets in the bourse, which has helped lift the mood among local dealers. There is good demand for SI1-I2 goods for the U.S. market. There is steady demand for fine-cut fancy shapes and fancy color diamonds remain strong ahead of the season. Rough trading is stable ahead of next week’s sight.
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