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Market Comments 1/2/2014
Jan 2, 2014 6:00 PM
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Diamond prices firm in December as difficult year ends on a positive note. 2013 RapNet Diamond Index (RAPI) for 0.30ct. +10.1%, 0.50ct. -0.7%, 1ct. -4.5%, 3ct. -4%, Rapaport Melee Index (RMI) +3.6%. Markets quiet with improved sentiment after positive U.S. holidays and record stock market year-end close. Expectations rise for Chinese New Year despite cautious economic outlook. Far East gold demand strong as prices plunge 28% in 2013. Indian diamond manufacturing below capacity with tight liquidity. Rough trading stable but manufacturers expected to restrain buying as bank credit tightens.
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: Wholesale trading is expectedly slow with most businesses closed during the past week for Christmas and New Year’s Day. Sentiment has improved due to the end-of-year shopping season and resulting from certain positive economic trends, which will hopefully boost consumer confidence in 2014. Polished suppliers are also hoping that reports about the holiday season, scheduled to be published in the coming week by the major jewelry companies, will be positive and signal steady prospective restocking during the first quarter. Diamond dealers and wholesalers note that their inventory levels are low but they are waiting to assess the level of post-season returns from their retail clients before buying again.
Belgium: Bourse services remain closed during the Christmas-New Year break and most businesses are also closed. Many Antwerp-based Indian dealers traveled to Mumbai to look for goods during the break. Rough dealers and manufacturers are cautious about the January tender and sight cycle as bank credit for rough purchases has tightened in 2014.
China: Wholesale diamond trading is quiet but there are rising expectations for the coming weeks ahead of the Chinese New Year Spring Festival that begins on January 31. Dealers are focused on sourcing certified 0.30-carat to 0.50-carat, D-I, VS-SI, and there is good demand for triple EX certified diamonds in sizes up to 1.10 carats. Retail activity remains dominated by consumer demand for gold products.
Hong Kong: Retail jewelry sales were stable during the Christmas season, and diamond suppliers reported that activity was about in line with 2012. However, they noted that they’re working with tighter margins as buyers have become very price sensitive. Both wholesale and retail jewelers are looking toward the Chinese New Year period to boost sales, as they expect diamond dealers and consumers from Mainland China to make shopping trips in the coming weeks.
India: Overall activity is slow as foreign buyers are largely absent from the market during the Christmas-New Year break. There is steady demand for small polished goods from the local market and from Antwerp-based Indian buyers. Demand is stable for dossiers, which are in relatively short supply, particularly for certified 0.30-carat to 0.40-carat, SI goods. Domestic diamond demand has been slow compared to previous years, despite reports of a busy wedding season in the retail market. Rough trading is slow with tight liquidity in the local market as manufacturers are keeping their factory output at relatively low levels.
Israel: The bourse is relatively quiet as the focus of supply shifts from the U.S. Christmas season to the Chinese New Year period. U.S.-focused dealers report that the season was better than previously thought, although there remains some concern that a larger volume of goods that were sent on memo will be returned in January. Manufacturers continue to express their biggest concern that the tight profit margins experienced in 2013 will continue into the year ahead.
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