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Market Comments 2/13/2014

Feb 13, 2014 6:00 PM  
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Polished markets stable as prices firm but buyers are selective and waiting for Hong Kong show results. Far East sentiment improves after good Chinese New Year jewelry sales. Chow Tai Fook’s holiday revenue +32% with gem-set jewelry same-store sales +13%. Rough prices surging to unsustainable levels as Indian manufacturers make use of easy government supported bank credit that may end in April. Rio Tinto diamond revenue +15% to $852M, net earnings of $53M vs. loss of $25M in previous year. China’s 2013 gold consumption +41% to 1,176t., gold jewelry +43% to 716.5t. U.S. 2013 polished imports +16% to $22.9B, polished exports +15% to $19.1B, net diamond account +23% to $4B.

Fancies: Fancy shape diamond market improving with good U.S. demand for commercial-quality Ovals, Pears and Cushions. Square-shapes cool with big emeralds strong. Availability of well-shaped fancies tight with shortages of select fine qualities in large 5ct.+ sizes. Rising investment demand for large expensive stones. 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 fancies.

Global Comments:

United States: Diamond trading is stable but buyers are selective and price sensitive. There is steady demand for commercial quality, triple EX certified diamonds. Sentiment remains positive following the Christmas shopping period and heading into Valentine’s Day. Retail jewelers have been pushing discounts to boost Valentine’s Day sales but consumers are not expected to splurge too much on jewelry this year. Off sizes, or goods just below 1-carat, are selling well and there is rising demand for fancy shape diamonds – particularly for ovals and cushions. 

Belgium: Polished trading is relatively quiet with stable demand from the U.S. and European markets, while Far East buyers remain conservative. Buyers have absorbed recent price increases but are naturally cautious in the short term. There is continued strong demand for smaller certified diamonds and improving demand for 0.70-carat goods, which has been relatively weak in the past year. Rough trading is strong and prices have increased on the secondary market.

China: The wholesale market remains cautious but is expected to improve in the coming weeks as dealers start to look for goods to replenish inventory that was sold during the Chinese New Year holiday. There is good demand for GIA-certified 0.30-carat to 0.50-carat, F-J, VS-SI diamonds. Sentiment is positive with reports of steady jewelry sales growth during the holiday.

Hong Kong: Polished trading has improved as wholesalers returned from the Chinese New Year break and are preparing for the Hong Kong show in early March. There is steady demand for 0.30-carat to 0.50-carat, D-J, VS-SI diamonds with buyers focused on sourcing nice commercial goods. The retail jewelry market has slowed since the New Year rush as jewelers assess their inventory requirements following the holiday.

India: Polished trading slowed slightly as prices have increased and buyers are uncertain whether current levels will be sustained. There is steady demand from international buyers but many are holding back until the Hong Kong show. They hope there will be better availability by then as the GIA is expected to release more goods to clear its backlog. Suppliers remain positive as they’re able to garner some profit on new polished coming to market that was manufactured from rough bought at relatively low price levels in the second half of 2013. Rough trading is strong as dealers and manufacturers are aggressively buying rough as they expect liquidity to be squeezed in the second quarter.

Israel: The market is relatively quiet with stable U.S. demand while Far East buyers are expected to fully return to the market around the Hong Kong show. There is steady demand for dossier-certified goods and SI clarity stones in all sizes. The market for large diamonds above 3 carats has improved. Rough dealers and manufacturers are struggling to compete for goods with their Indian counterparts as rough prices continue to rise.   
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