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Market Comments 12/26/2013

Dec 26, 2013 6:00 PM  
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U.S. holiday sales exceed low expectations despite consumer caution. Diamond trading centers quiet as U.S. and Belgium markets close for Christmas. Markets now focusing on Chinese New Year demand. Rough markets stable with increased manufacturing to relieve polished shortages. Liquidity challenges persist. Courts order Tiffany to pay Swatch $450M in contract dispute. Antwerp Diamond Bank sold to Yinren Group. Marange Antwerp tender sells 279,723 cts. for $10.7M ($38/ct.). Belgium’s Nov. polished exports -1% to $1.1B, rough imports -1% to $1.1B. Hong Kong 3Q polished imports +15% to $4.8B. All of us at Rapaport wish you and yours a happy, healthy, prosperous and peaceful New Year. 

Fancies: Ovals and pears doing well while square-shapes weaken. Availability of well-shaped diamonds tightening with shortages of select fine qualities in very large 5ct.+ sizes. Cutters returning to normal production with relatively good U.S. demand and improving Chinese demand for commercial qualities. 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: All eyes were on the retail market as consumers made their final gift purchases before Christmas. There have been mixed reports about the Christmas shopping season with foot traffic said to be below previous years, while online purchases have jumped. Jewelry sales have been among the stronger retail categories but jewelers are waiting for January returns before giving a final assessment. Initial feedback suggests that jewelry retail sales improved in 2013 from the previous year. Wholesale diamond trading has been quiet in the past week with many businesses closed for the holiday. 

Belgium: Rough and polished diamond trading is quiet as the bourse closed between Christmas and New Year. Many Antwerp-based Indian dealers have traveled to India for the period, and note that sentiment has improved. Dealers are looking for goods to supply the Far East market ahead of the Chinese New Year season, with steady demand for 0.30-carat to 0.50-carat, VS-SI diamonds.

China: Diamond and jewelry markets are relatively quiet but are expected to improve in the coming weeks ahead of the Chinese New Year Spring Festival that begins on January 31. Dealers are hoping demand will improve in 2014 after a cautious past year. There is good demand for 0.30-carat to 0.50-carat, D-H, VS-SI, GIA-certified goods with rising demand for nice-make fancy shape and color diamonds.

Hong Kong: Polished diamond markets are steady with trading driven by demand for the Chinese New Year. Dealers remain careful due to a cautious outlook for the Chinese economy. Jewelry retailers are more focused on gold products than diamonds as consumers continue to see value in low-priced gold. Christmas jewelry sales are steady.

India: Polished diamond trading is stable supported by domestic demand, while international demand is relatively quiet during Christmas. Large manufacturers report decent sales to the U.S. during the Christmas season and expect that the momentum will continue during the Chinese New Year. There is good demand for -2 sieve and dossiers, particularly for 0.30-carat to 0.59-carat, VS-SI diamonds. Dealers also note a shortage of goods due to low levels of manufacturing in the second half of 2013. Rough trading is steady as manufacturers slowly ramp up their factory output. Liquidity remains a challenge, especially for small-to-medium sized manufacturers.

Israel: Trading is relatively quiet as U.S. buyers are on vacation during the Christmas period. Polished suppliers to the U.S. note that they had a better season than expected, with good demand for 0.30-carat to 0.50-carat, D-J, SI and for 2-carat to 5-carat, SI diamonds. Dealers are shifting their focus to the Far East market and note that Chinese buyers are selective and price sensitive. Rough trading is stable.     
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