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Market Comments 6/19/2014
Jun 19, 2014 6:00 PM
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Polished diamond markets quiet ahead of U.S. summer vacation. Hong Kong fair begins with reduced expectations for polished trading following relatively weak JCK Las Vegas show. Rough market firm and prices stable after $640M De Beers sight. Cutters fighting for survival with low profit margins and tight liquidity. Petra Diamonds recovers 122.52ct. blue diamond at Cullinan mine. Chow Tai Fook to buy Hearts On Fire for $150M, reports FY revenue +35% to $10B, profit +31% to $970M. India’s May polished exports -8% to $1.6B, rough imports -6% to $1.6B. World Diamond Congress ends, WFDB adds Canada, South Korea bourses to membership.
Fancies: Fancy shape market steady with fair demand for excellent shaped and larger polished sizes. Cutters are moving to fancy shapes because of significantly high rough prices for identical quality round diamonds. Curves (Pears, Ovals) are doing better than Squares (Emerald, Princess) in larger sizes with squares doing better in under the carat sizes. Increasing demand for 30-point Princess cut. Far East markets becoming more aware of fancy shapes. Buyers very selective regarding shape- and cut-quality with extreme price differentials between excellent- and average-cut fancies. Off-make, poorly-cut fancies illiquid and hard to sell even at very deep discounts.
Global Comments:
United States: Diamond trading in New York is stable but there is no real urgency among buyers. Activity is forecasted to be quiet in the next few weeks as dealers are looking toward the July vacation period. Trading is subsequently expected to improve ahead of the fourth quarter. There is good demand for Gemological Institute of America (GIA) dossiers but overall trading is focused on filling existing orders. Polished inventory levels are relatively full. Retail demand is stable and has improved as the warmer summer weather has inspired busier foot traffic to malls and stores. Jewelers are focused on bridal with increased spending on diamond jewelry for the wedding day.
Belgium: Polished trading is relatively slow as dealers returned from the Las Vegas shows disappointed. As a result, they maintained low expectations for the ongoing Hong Kong show, despite reporting steady Far East demand. There is steady demand for commercial-quality GIA dossiers, with good demand for 030-carat to 0.60-carat, G-H, VS-SI, triple EX goods. Rough trading is stable in Antwerp.
Hong Kong: The Hong Kong show began with low expectations as the June event is still the smallest and considered to be the least important of the three annual trade shows in Hong Kong. Polished suppliers are hoping for strong visitor traffic from Mainland China. Local trading is stable with good demand for 0.30-carat to 0.50-carat, G-H, VS1-SI2 diamonds. Hong Kong luxury retailers are reportedly cautious as the number of visitors from China has dropped.
India: Polished trading is stable even if it is slightly slower than expected. Many suppliers have traveled to the Hong Kong show and for the same reason there are fewer foreign buyers looking for goods in Mumbai. There is strong demand for GIA-dossiers in 0.30-carat to 0.69-carat sizes, and manufacturers are frustrated by the delays at the GIA holding up the production of these goods. Local demand is slowly improving and there is rising expectations for the India International Jewellery Show (IIJS) taking place in July as a precursor to improved jewelry demand for Diwali. Jewelers are slowly gaining confidence as the rupee has strengthened and stabilized and gold prices have softened since the election of a new government in May. Rough trading is stable following the De Beers sight and ALROSA sale in June.
Israel: Activity in the diamond exchange is quiet as a large delegation of suppliers is attending the Hong Kong show, albeit with moderate expectations. There is good demand for lower-color and lower-clarity goods for the U.S. market. Demand for GIA dossiers remains strong, particularly for 0.30-carat to 0.99-carat, G-I, VS-SI diamonds. Demand for fancy shapes is steady with cushions and ovals proving to be the most popular and improving demand for princess cuts below 1-carat. Rough trading is stable but cautious as manufacturers and dealers view rough prices as being high relative to polished.
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