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Market Comments 1/22/2015
Jan 22, 2015 6:00 PM
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Polished market improves with steady U.S. demand for I1-I2 clarity diamonds. Dealers lacking in confidence as buyers push for lower prices. Far East markets cautious ahead of Lunar New Year as China’s 2014 GDP growth slows to 7.4%. De Beers reduces prices as sightholders defer 20% to 25% of rough at Jan. sight. Okavango sells 3.2M Cts. for $552M ($168/ct.) in 2014. Rio Tinto’s 4Q diamond production -37% to 2.8M Cts. Swiss watch industry hurt by currency appreciation. Luk Fook 3Q same-store sales -7%. India's Dec. polished exports flat at $1.5B, rough imports -13% to $1.4B, net diamond account +62% to deficit of $314M. Platinum Guild International appoints Huw Daniel as CEO.
Fancies: Ovals and Cushion doing well with good U.S. demand and limited availability. Some fancy prices coming under pressure but fine cut stones are holding up better than rounds. Pears OK. Princess relatively weak. U.S. demand supporting market for commercial-quality fancies, especially for goods under the carat. Larger sizes quiet with limited buying. Far East fancy demand weak. Buyers are very selective and insisting on excellent-shape proportions. Significant price differentials between excellent- and average-cut fancies. Off-make, poorly-cut fancies illiquid and very hard to sell, even at very deep discounts.
Global Comments
United States: Polished trading is slow in New York as dealers are waiting to see if retailers require inventory after the Christmas shopping season. There is some concern that there could be more end-of-season returns than usual and wholesalers have yet to receive significant restocking orders. Jewelers are preparing for Valentine’s Day, tweaking their bridal and fashion jewelry lines that garner interest ahead of the day. Diamond dealers note good demand for piqué goods and steady demand for melee. There is also stable demand for fine-quality fancy shapes for the high end.
Belgium: Activity in Antwerp is slow and trading confidence is weak. Buyers are offering low prices which suppliers are not meeting. Some suppliers are prepared to lower prices in order to raise their liquidity levels but most are holding out until market conditions stabilize. Far East demand is slow and there has not been the usual rush for goods ahead of the Chinese New Year. There is steady European demand for 1-carat, F-H, VS-SI goods. There is rising concern about suspected widespread undisclosed synthetic diamonds mixed into parcels of smaller-size natural diamonds.
Hong Kong: Polished trading has improved slightly ahead of the Chinese New Year holiday. However, competition among diamond suppliers is fierce and buyers are pushing for lower prices. A buyer’s market prevails for graded diamonds below 2 carats. There is stable demand for parcels sold by established, reputable companies, while lesser-known companies find demand for their parcels to be weak amid fear of undisclosed synthetic diamonds. Sentiment is being affected by rumors circulating that diamantaires are shutting down or downsizing their local offices.
India: Trading activity has picked up with many foreign buyers in the market, notably from the U.S. and Israel. There is good U.S. demand for 0.30-carat to 1-carat, G-I, I1-I2 diamonds. There is also improving demand for 0.30-carat to 1-carat, IF-VVS goods ahead of the Chinese New Year. In fancies, there is stable demand for pear, oval, emerald and marquise shapes in the 0.30-carat to 0.90-carat, SI-I1 categories. However, overall orders have been mainly demand-specific with little inventory re-stocking taking place. Liquidity among manufacturers and dealers continues to restrict trading, partly due to delays in overseas payments. Manufacturers have reduced their production by 20 percent to 30 percent and have shifted to polishing piqué goods to satisfy steady U.S. demand. There is also rising concern about undisclosed synthetics found in parcels, with much talk about how to detect them. Rough trading is stable after De Beers reportedly lowered prices at this week’s De Beers sight.
Israel: Polished trading has started to improve in Ramat Gan after a tough start to the year. There is good U.S. demand for SI-I1 goods. Hong Kong demand remains soft ahead of the Chinese New Year, with particularly weak demand for VVS goods. Local diamantaires have high expectations that trading will improve in the coming weeks, boosted by the upcoming International Diamond Week (February 8-12).
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