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Market Comments 4/8/2015
Apr 8, 2015 6:00 PM
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De Beers sight estimate revised lower to $500M as buyers refused about 30% of rough diamonds offered for sale. Rough buyer price resistance is rational and healthy for the market as it protects cutter liquidity and profitability, while reducing oversupply of diamonds during period of relatively weak polished demand. Sightholders have done the right thing by refusing to overpay for rough to safeguard future allocations. Mining companies are encouraged to lower rough prices to levels that ensure reasonable manufacturer profitability and a sustainable diamond trade. THE RAPAPORT PRICE LIST WILL NOT BE PUBLISHED ON APRIL 10 DUE TO THE JEWISH HOLIDAY OF PASSOVER.
Fancies: Emeralds gaining ground as Oval demand slows. Pears and Cushions stable, Princess and Hearts weak. Prices for curve-shapes improving slightly. Straight-shape fancies not hot. Prices for 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 stable. 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 diamond trading in New York slowed with the approach of the Passover and Easter holidays. Demand remains order-specific with little inventory restocking by jewelers taking place, particularly among independents. Major jewelers, such as Signet Jewelers and Tiffany & Co., reported that their inventory levels grew during the fiscal year that ended January 31, 2015 and that they’re doing more in-house manufacturing. This suggests that some of the major jewelers have less need for goods in the market. There is stable demand for 1-carat to 2-carat, SI-I diamonds. Demand for fancy shapes is mixed with improving demand for emerald cuts.
Belgium: Market sentiment is weak as trading has slowed. Activity is expected to remain slow in the coming week as Easter Monday is a public holiday and many businesses will be closed during Passover. Demand is order-specific mainly from the U.S. and China with buyers exhibiting little urgency for goods. There is some investment diamond demand as buyers take advantage of lower prices and react to negative interest rates by seeking to store their money in physical assets. There is stable demand for melee goods, and for 1-carat to 2-carat, L-M, SI diamonds with some shortages emerging due to reduced manufacturing levels. Rough trading has slowed after sightholders refused a large amount of goods at the recent De Beers sight.
Hong Kong: Trading is quiet as the Easter holiday approaches, which will last from Friday until next Wednesday. There is demand for parcels of 0.30-carat to 0.50-carat and 0.70-carat diamonds, while 0.60-carat and 0.80-carat diamonds are moving slowly. There are mixed signals regarding demand for 1-carat to 2-carat, SI diamonds as some suppliers are selling at significant discounts compared with the rest of the market. There is stable demand for 1-carat to 3-carat, L-M, VVS2-VS2, diamonds and for polished larger than 5 carats.
India: The market is cautious as trading activity has slowed. Rumors of bankruptcies among local diamantaires has led to greater restraint. Suppliers are also concerned about long overdue payments from Chinese buyers. Local diamantaires have become hesitant to offer goods on memo or credit as liquidity has tightened. There is steady demand for 1-carat, triple EX diamonds and good demand for 2-carat, VVS-SI diamonds. Demand is soft for diamonds larger than 3 carats. There is steady demand for 0.30-carat and 0.50-carat to 0.70-carat dossiers, while 0.40-carat and 0.80-carat dossiers are moving slowly. There is steady demand for cushion, radiant and pear cut, 1-carat and 2-carat diamonds. Rough trading is weak as manufacturers maintain their operations at low capacity. Demand was weak at the recent rough tenders, De Beers sight and ALROSA contract sale.
Israel: The market is quiet as the Passover holiday nears. The bourse trading floor will be operating until 1 P.M. on Sunday, April 5 through Wednesday, April 8 and will be closed on Thursday, April 9 due to the holiday. Many traders will be on vacation over the seven-day holiday through next week. Most people in the market will welcome the break as trading has been slow in the past month with government data showing a significant drop in the country’s polished diamond exports during the first quarter. U.S. demand is stable with steady demand for 1-carat to 2-carat, G-M, SI diamonds. Rough trading is slow with mixed expectations for the Israel Diamond Exchange’s upcoming International Rough Diamond Week taking place in the bourse April 12 to 16.
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