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Market Comments 8/7/2014
Aug 7, 2014 6:00 PM
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TRADE NOTICE: The Rapaport Price List is now based on the new “Rapaport Specification A” as modified and published August 8, 2014. Full details of all new specifications are available at www.diamonds.net/rapspec. The new specifications have been significantly modified. Comments from the trade should be emailed to rapspec@diamonds.net. Effective today the Rapaport Price List excludes price information for Marange and green-tinted diamonds. RapNet members will be required to remove all non-fancy color, green-tinted diamonds from RapNet regardless of origin. Members that list green-tinted or Marange diamonds on RapNet will be subject to suspension and publication.
Rounds: New Rapaport Diamond Specifications published with modifications following comments from trade. Diamond trading quiet with Belgian and Israeli dealers taking August vacation. U.S. market positive with moderate expectations for India Diamond Week in New York. Polished buyers avoiding large inventory purchases before Sept. HK show. July RapNet Diamond Index (RAPI) for 1ct. -2.4%. Rough trading stable but manufacturer margins tight due to high rough prices. Rio Tinto’s 1H diamond revenue +7% to $431M, diamond earnings +260% to $18M. Titan Company 1Q sales -8% to $466M, profit -3% to $29M. Blue Nile 2Q sales -1% to $107M, profit -2% to $2.2M. U.S. June jewelry sales +3% to estimated $4.9B. U.S. June polished imports +4% to $1.6B, polished exports +15% to $2.9B.
Fancies: Fancy shape market soft with fair demand for excellent-shape larger polished goods. Princess cuts weak. Curves (Pears, Ovals) are doing better than Squares (Emerald, Princess) in larger sizes. Square cuts steady in under the carat sizes. 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: Polished trading is steady and there is some anticipation for next week’s India Diamond Week in the Diamond Dealers Club of New York. Dealers are working with tight margins and are focused on enhancing their value-added niche programs to increase their profits. There is steady demand for G-J, SI and lower clarity round goods. In fancy shapes, there is stable demand for ovals, cushions and pears, 0.50-carat to 2-carat, F-I, VS2-SI goods while demand for princess cuts is weak. The general retail market is expected to improve in August, spurred by back-to-school shopping. Jewelry sales are seasonally slow but in line with expectations, as the engagement and bridal jewelry market continues to provide support for the industry.
Belgium: Trading in Antwerp is very slow as most dealers have taken vacation as the bourses remain closed until August 18. Some have taken the opportunity to travel to India and Israel to look for goods, but for most the vacation period came as a welcome relief as trading was relatively weak in July. Buyers are willing to delay purchases until some price stability sets in and most are content to keep their inventories low. In general, Antwerp is in a wait-and-see mode until dealers return.
Hong Kong: The market remains relatively quiet with dealers expected to remain in summer vacation mode until the end of August. There are still deals being done with steady demand for 0.30-carat to 0.50-carat, G-M, VS-SI, triple EX diamonds. Similarly, jewelry retail sales are slow and buyers from Mainland China have reduced their purchases for now. Sales are expected to improve as the October 1 National Day Golden Week approaches.
India: Polished trading is stable with steady domestic and foreign buyer demand in Mumbai. Many Antwerp-based expatriate Indians are visiting looking for goods during the ongoing vacation period in Antwerp. There is steady demand for under 1-carat, G-M, VS2-I2 commercial-quality diamonds, with SI-clarity goods in strong demand. Overall, buyers are cautious and looking to fill existing orders rather than build inventory. Activity is expected to rise in September around the Hong Kong show. Rough trading is stable while another large De Beers sight is expected in mid-August. Tight liquidity and low profit margins remain a concern among cutters as manufacturing is starting to ramp up in preparation for the holiday season.
Israel: Trading is slow with many dealers already in vacation mode. The Israel Diamond Exchange officially closes for the summer from August 10 to 24. There are foreign buyers in the bourse looking for deals before the break, while most local dealers are looking toward the Hong Kong show to boost trading. There is steady U.S. demand for below 1-carat, G-J, SI-I2 commercial-quality diamonds.
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