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Rapaport TradeWire December 24, 2014
Dec 25, 2014 5:19 AM
By Rapaport
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Rapaport Weekly Market Comment
Dec. 24, 2014
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Diamond trading centers going on holiday. Dealers adjusting their expectations to meet new realities. Global demand is weak and there is an oversupply of diamonds throughout the distribution chain. Buyer’s market prevails with great opportunities for aggressive traders willing to take positions. Healthy U.S. market supporting the industry. U.S. sentiment improves as Dow surpasses 18,000, reaching record high after economy surges +5% in 3Q. U.S. Nov. jewelry sales +2% to $6.3B. India's Nov. polished exports +11% to$1.6B, rough imports +35% to $1.5B. The Rapaport Group wishes everyone a happy, healthy, prosperous and peaceful New Year.
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RapNet Data: Dec. 24
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| Diamonds |
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1,525,694 |
| Value |
$7,948,070,542 |
| Carats |
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1,447,589 |
| Average Discount |
-28.67% |
www.rapnet.com
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Get Current Price List | Subscribe to Rapaport | Join RapNet |
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QUOTE OF THE WEEK
U.S. consumers love a deal and want to feel special for having spent their money with you. The 'go-to' retailer today simplifies a shopper's life and preserves the consumer's penchant for 'things' with some level of quirkiness. Big box stores and brands make consumers offers they cannot refuse, so you must do the same and believe that your store can compete.
Frank Rich | Encore Príst Intl.
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Careers@Rapaport
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The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants and entry-level positions for our offices in New York, Antwerp and Mumbai. View jobs now.
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INDUSTRY
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Swiss Watch Exports -4%
Swiss watch exports declined 4% year on year to $2.14 billion (CHF 2.06 billion) in November as exports to Asia and Europe fell. Wristwatch exports decreased 4% to $2.01 billion, while other timepiece exports dropped 13% to $120.7 million. All major export categories of watches dropped by value during the month, with the steepest decline noted for exports of watches made from non-metallic materials -- down 18% to $46.1 million. The second largest drop occurred for gold-steel watches, which fell 8% to $260.5 million, while exports of gold watches dropped 2% to $801.1 million.
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U.S. Jewelry, Watch Sales +1%
U.S. jewelry and watch sales across all channels rose 1.4% year on year in November, according to preliminary government estimates. While the increase was disappointing compared with the previous two years, November's data is still subject to revisions in the months ahead. Jewelry and watch sector sales rose 4.9% in November 2012 and 6.5% in 2013.
Jewelry and watch sales totaled $7.128 billion in November, according to Rapaport News estimates. The sector's total has risen 2.1% to an estimated $63.58 billion for the first 11 months of the year.
Specifically, jewelry sales rose 1.5% year on year to $6.272 billion in November, following a 0.5 percent contraction in October. Jewelry sales have risen about 2% to $55.95 billion during the first 11 months of the year.
Watch sales improved 0.9% to $855 million in November, following a 1.6% decline in October. Watch sales have risen almost 2.5% to $7.63 billion in the first 11 months of the year.
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RETAIL & WHOLESALE
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Retailers Note Higher Rates of Organized Crime
Loss prevention executives estimated that organized retail crime groups in the U.S. will cost the industry $3.8 billion in fraudulent returns this Christmas season and $10.9 billion for the entire year, according to the National Retail Federation (NRF) 2014 Return Fraud Survey.
The NRF noted that 92.7% of retailers have experienced the return of stolen merchandise in the past year, which is down from 94.8% 2013; however, the survey confirmed that 78.2% of retailers experienced return fraud through organized retail crime groups, up from 60.3% one year ago.
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U.S. Online Retail Sales +15%
U.S. Christmas-season ecommerce spending rose 15% to $48.3 billion from November 1 through December 21, according to comScore Inc. The most recent week (December 15 to 21) posted a strong 18% rate of growth, representing $5.8 billion in ecommerce spending as tracked from desktops, according to the group. Even with the heaviest spending days completed, there is still another $5 billion in seasonal spending that comScore expects will further boost retail sales before the end of December.
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New Jersey Identifies Cash-For-Gold Violations
The New Jersey State Office of Weights and Measures identified 10,000 violations at 71 jewelry stores in connection with cash-for-gold schemes. The most recent round of investigations also resulted in the state confiscating 35 unauthorized scales from jewelers who were using them to weigh gold.
There were some alleged cash-for-gold violations at locations not associated with jewelry, including at a bail bonds business and a sneaker store. New Jersey doesn't prohibit businesses from offering to buy jewelry from consumers, as long as they comply with all applicable rules.
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Winsome to Close Goa Operation
Embattled Winsome Diamonds and Jewellery Ltd. informed the Bombay Stock Exchange (BSE) that the diamond company's board approved closing its industrial operation in Goa. The board met on December 20 and passed the measure with a majority in favor, according to the filing.
On December 22, the BSE filed a notice seeking clarification from Winsome Diamonds on the rationale behind the decision and the benefits and/or impact from closing the operation.
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Small Biz Hopeful; Shoppers Value Local
Small business retailers in the U.S. reported a net negative 4% change in the number who recorded sales increases during the past three months, according to the NFIB. However, business owners were more optimistic about expected sales gains heading into December. The NFIB's general business conditions index jumped to 13 points at the first of the month, the highest level for Christmas season since 2010.
Meanwhile, numerous small-town newspapers across the U.S. have been reporting on an increasingly popular consumer trend to "shop local" and avoid big name stores, and crowds, for gift shopping this year. Analysts surmise that with a recession mentality still firmly planted in the U.S., consumers are seeking a higher level of satisfaction from gift buying by supporting local retailers that offer unique items.
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Strive to be a Digital Genius
L2 Business Intelligence for Digital ranked 82 jewelry and watch brands for an annual IQ Index report that measured the success of each retailer's omnichannel implementation. The highest rating L2 defines is "genius," or those brands with an omnichannel competence that differentiates it from the competition and consistently delivers a high-performance, seamless digital mindset across ecommerce, social media and marketing.
The "genius" score was earned by David Yurman, Tiffany & Co., Alex and Ani and Swarovski, and together these brands set the bar for where jewelers need to be. The next level, which is admirable, is "gifted" and these brands are experimenting and innovating across the digital channel with a consistent presence and marketing tone. Some of the "gifted" brands included Van Cleef & Arpels, Chopard, Cartier, Pandora, Hearts On Fire, Movado and De Beers.
L2's "average" digital IQ score was earned by brands -- including Boucheron, Birks, Mikimoto and Rolex -- that are simply functional and predictable, while being siloed by the retailer's platform. The bottom two categories, "challenged" and "feeble," have much room to improve as they only offer limited ecommerce or none at all and struggle to reach a cohesive digital presence. Some of the challenged brands included Chaumet, Fabergé ad Harry Winston, while a couple of the big brands under "feeble" included Graff and H.Stern.
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U.S., India Assign Trademarks
The U.S. Patent & Trademark Office (USPTO) issued the trademark "Orchidea" to Lili Diamonds of Israel on December 9, with registration number 4651030. Yisroel Feder of Clifton, New Jersey, received the trademark "Who's Your Jeweler?" from the USPTO on December 9 with registration number 4652426. The USPTO also issued the trademark "Lux Crown" to La More Design Inc. of New York on December 16, with registration number 4656086.
In India, the Office of The Trade Marks Registry issued the trademark "Ganesh & Co. Jewellers" on December 8, with registration number 1700722. Ganesh & Co. Jewellers filed for the trademark on June 19, 2008 and has been using the name in commerce since November 3, 1943 as a manufacturer of jewelry that is made with silver, gold, diamonds and precious gemstones.
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MINING
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Mountain Province Lists on the Nasdaq
Mountain Province Diamonds Inc. was approved for listing its shares on the Nasdaq under the symbol "MDM." The junior miner's common stock will continue to trade on the New York Stock Exchange until December 30. Mountain Province Diamonds trades on the Toronto Stock Exchange under the ticker symbol "MPV.TO."
In other news, De Beers Canada Inc. and Mountain Province, joint partners in the Gahcho Kué diamond project, entered into an impact benefit agreement with the Deninu Kue First Nation people. The agreement outlines a framework to develop economic, environmental and cultural programs with Deninu Kue First Nation members and it marks the final arrangement with local residents that is required for exploration projects in the region.
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Peregrine to Raise $2M
Peregrine Diamonds Ltd. announce a non-brokered private placement of 10,441,189 common shares at a price of 21 cents per share for gross proceeds of $2,192,649. Proceeds from the placement will be used for Peregrine Diamonds' mineral exploration projects in Canada. The placement is subject to regulatory approval.
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Lucara to Divest From Mothae
Lucara Diamond Corp. announced plans to sell its 75% stake in the Mothae diamond mine in Lesotho. While the project held diamonds, all development options for the site had failed to meet the company's investment criteria. The current book-value of the project, along with rehabilitation provision costs, was close to $21 million, according to Lucara's estimates. Lucara added that the government, which owns 25% of Mothae, indicated that it was committed to support the project should any potential new owners express interest to buy.
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Kelvin Grade Improves
Kennady Diamonds Inc. recorded a grade of 2.59 carats per tonne of ore from its Kelvin summer/fall mini-bulk sample program, an increase of 40% from the diamond grade recovered from a 25 tonne mini-bulk sample earlier in the year. The summer/fall sample was recovered by drilling at the north lobe of the Kelvin kimberlite and was processed by dense media separation at the Geoanalytical Laboratories Diamond Services of the Saskatchewan Research Council.
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Diamcor to Raise $3M
Diamcor Mining Inc. intends to complete a private placement on a brokered and non-brokered basis of up to 3 million units at a price of 86 cents (CAD 1) each for gross proceeds of up to $2.6 million (CAD 3 million). Each unit will consist of one common share and one-half of one common share purchase warrant. Each whole warrant will entitle the holder to purchase one share at an exercise price of CAD 1.25 for a period of 36 months following the date of issuance.
The offering is subject to the approval of the Toronto Stock Exchange's venture exchange. Proceeds will be used to support the continued advancement of Diamcor's Krone-Endora at Venetia diamond project in South Africa, the acquisition of additional operational items aimed at enhancing the effective treatment of larger material in the +26.0mm size fractions, and for general and administrative purposes.
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STATS
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India
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Nov. $Mil. |
%Chng. |
YTD $Mil. |
%Chng. |
| Polished exports |
$1,559 |
11% |
$20,758 |
7% |
| Polished imports |
$882 |
125% |
$7,092 |
9% |
| Net exports |
$677 |
-5% |
$13,666 |
6% |
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| Rough imports |
$1,545 |
36% |
$16,102 |
10% |
| Rough exports |
$94 |
19% |
$1,389 |
-17% |
| Net imports |
$1,451 |
37% |
$14,713 |
13% |
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| Net diamond account |
($774) |
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($1,047) |
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ECONWATCH
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Diamond Industry Stock Report
Retailers mainly flat except for Birks (+13%) and Charles & Colvard (+16%). Indian shares all lower except for Vaibhav Gems (+5%). ALROSA (+11%) led mining share gains. Gold closed down $23 an ounce this week to $1,174.90 before the market closed for the Christmas holiday. View the extended stock report.
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Dec. 24 |
Dec. 18 |
Chng. |
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| $1 = Euro |
0.820 |
0.814 |
0.006 |
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| $1 = Rupee |
63.47 |
62.99 |
0.5 |
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| $1 = Israel Shekel |
3.93 |
3.94 |
-0.01 |
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| $1 = Rand |
11.65 |
11.56 |
0.09 |
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| $1 = Canadian Dollar |
1.16 |
1.16 |
0.00 |
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| Precious Metals |
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| Gold |
$1,174.90 |
$1,198.20 |
-$23.30 |
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| Platinum |
$1,185.00 |
$1,195.00 |
-$10.00 |
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| Stock Indexes |
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Chng. |
| BSE |
27,208.61 |
27,126.57 |
82.04 |
0.3% |
| Dow Jones |
18,030.21 |
17,778.27 |
251.94 |
1.4% |
| FTSE |
6,609.93 |
6,466.00 |
143.93 |
2.2% |
| Hang Seng |
23,349.34 |
22,832.21 |
517.13 |
2.3% |
| S&P 500 |
2,081.88 |
2,061.23 |
20.65 |
1.0% |
| Yahoo! Jewelry |
1,244.60 |
1,230.53 |
14.07 |
1.1% |
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INDIA MARKET REPORT
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Polished and Rough Trading Activity
The market is quiet as overseas demand dropped considerably and the domestic trade is sluggish. Sentiment is weak and the market is facing severe liquidity issues.
Read the full report.
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