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Rapaport TradeWire August 21, 2015
Aug 20, 2015 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
August 21, 2015
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U.S. demand supporting
the market with great opportunities for cash buyers. Chinese consumer diamond
demand plunges as Shanghai stock market drops 8% this week. Low expectations
for September Hong Kong show. Indian domestic market cautious as the rupee
falls below 65/$1. De Beers sightholders hoping for sharp rough price cut. Gem
Diamonds 1H sales -21% to $118M, profit -24% to $26M. Belgium’s July polished
exports -13% to $1.2B, rough imports -36% to $779M. Swiss watch exports -9% to
$2B with exports to Hong Kong -29% to $278M. Reuven Kaufman re-elected NY DDC
president.
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RapNet Data: August 20
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| Diamonds |
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1,329,598 |
| Value |
$8,282,138,107 |
| Carats |
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1,361,544 |
| Average Discount |
-26.44% |
www.rapnet.com
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| The RapNet Diamond Index (RAPI) has been revised to reflect the average price of the 10 best priced diamonds in each category. |
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Get Current Price List | Subscribe to Rapaport | Join RapNet |
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QUOTE OF THE WEEK
They (investors) want assets that show their true value and are stable, which diamonds provide. So I believe they will turn to diamonds in the long run.
Michael Huang | Managing Director of Hong Kong's Diamond Index Group | discussing impact of recent yuan devaluation on diamond prices.
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MARKETS
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United States: Polished trading is stable. Buyers are looking for opportunities as suppliers’ inventory levels remain high. There are shortages of certain categories.
Belgium: Antwerp’s diamond district remains very quiet and likely to continue so until operations resume on Monday, August 24 after the summer break. Rough dealers are eyeing next week’s De Beers sight with cautious sentiment on the rough secondary market.
Hong Kong: Sentiment is weak in the Far East with China’s recent stock market and currency declines weighing on dealer and consumer confidence.
India: The polished market is quiet with steady U.S. demand compensating for weak Far East and domestic trading. The depreciation of the rupee to above INR 65 per U.S. dollar has added caution to the local diamond market.
Israel: Activity in the bourse is relatively quiet and there’s still a feeling that dealers took extended vacations while the market is slow. Some expect more buyers in Ramat Gan from next week or at least during the International Diamond Week which starts on August 30.
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INSIGHTS
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Is Diamond Demand Determined in Beijing and Washington?
Don’t be surprised if diamantaires are suddenly talking about Zhou Xiaochuan and Janet Yellen. The actions of the two – who respectively lead the People’s Bank of China and the U.S. Federal Reserve -- may put additional pressure on diamond demand and ultimately polished prices.
Simply put, the sudden depreciation of China’s yuan and a looming U.S. interest rate hike couldn’t come at a worse time for the diamond market.
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INDUSTRY
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UAE Gold-Buying Rush
Shoppers
in the United Arab Emirates have purchased an estimated 13 tons of 22-carat
gold and jewelry in the three weeks since July 20 as the yellow metal’s price
fell by an average of $34 (Dh 125) a gram, according to Gulf News. Gold dropped
to a five-year low of $1,080 per ounce on July 20.
Based
on these estimates, sales reached $408 million (Dh 1.5 billion) during what is
historically a lean period for the local gold trade.
"Local
spending on gold during the three weeks remained consistently high on all days,
except for the one day when China devalued its currency and consequently, gold
prices had a spike," said Abdul Salam K.P., a treasurer at the Dubai Gold
and Jewellery Group and a director at Malabar Gold & Diamonds.
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Belgium’s July Polished Trade Slides on Weak Far East Demand
Belgium’s polished exports fell 13 percent year on year to $1.2 billion as data published by the Antwerp World Diamond Centre (AWDC) indicated steady U.S. but lagging Far East demand.
Polished exports to the U.S. rose 2 percent to $436 million and to Switzerland by 36 percent to $88 million, but fell to all other destinations. Belgium’s polished exports to Israel slumped 20 percent to $121.8 million, while exports to India slid 31 percent to $52.7 million. Belgium’s polished exports to Hong Kong decreased 22 percent to $213 million.
Total polished imports declined 1 percent to $1.01 billion during the month, with imports from India down 23 percent to $124.7 million and from Israel contracting by 20 percent to $101.3 million. Belgium’s July net diamond account, representing total polished and rough exports minus tough imports, fell 54 percent to $429 million.
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Shrenuj’s Revenue, Profit Grow
Shrenuj & Company Ltd., a polished diamond and jewelry manufacturer based in India, reported to the Bombay Stock Exchange that its revenue rose 6% year on year to $218 million (INR 14.2 billion) during the second quarter that ended on June 30. The company's profit increased 2% to $3.2 million (INR 208.1 million).
By segment, loose diamond revenue increased 6% to $192.4 million (INR 12.5 billion), while sales of studded jewelry rose 8% to $31.4 million (INR 2 billion) during the period. Intersegment sales jumped 62% to $5.9 million (INR 382.8 million).
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Asian Star’s Revenue Slips
Asian
Star Company Limited reported to the Bombay Stock Exchange that its revenue
dropped 2% year on year to $127.8 million (INR 8.3 billion) during the second
quarter, with all of the India-based manufacturer’s group segments reporting
declines. Asian Star’s net profit was down 6% to $2.8 million (INR 184.3
million).
Group
sales of loose diamonds fell 2% to $117.2 million (INR 7.6 billion), while
sales from the company’s diamond jewelry division decreased by 15% to $15.2 million
(INR 990.9 million).
Despite
the decline in the group’s loose diamond sales, the company outperformed the
general diamond market. As of July 1, the RapNet Diamond Index (RAPI) showed that
average prices in size ranges up to 3 carats had plunged 12% since last year to
26%, with Asian Star’s loose diamond operation specializing in the production
of polished diamonds between 0.01 carat and 2 carats.
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GSI Surat Offers Melee, Star Batch Testing
Gemological
Science International (GSI) announced it has become the first and only laboratory
in India to begin batch testing for star and melee-sized diamonds using
state-of-the-art technology.
In
response to increased demand for Fourier Transform Infrared Spectrometry (FTIR)
services, GSI said it will offer cost-effective testing with a mid-IR
spectrometer used for both routine and advanced laboratory analysis.
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Richline Website Focuses on Wearables
Richline Group, a jewelry marketer and
manufacturer, has created a new website called “Wearable Style News” featuring
articles and interviews on wearables.
The website highlights leading designers,
technologists and manufacturers, and includes interviews with Uri Keren, CEO
and co-founder of Hermes Innovation, Scott Amyx of the smart wearables
consultancy Amyx+McKinsey and Amanda Parkes, chief of technology and research
at Manufacture NY.
Richline
Group is a subsidiary of Warren Buffett’s Berkshire Hathaway Inc.
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RETAIL & WHOLESALE
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Swiss Watch Exports Sharply Lower in July
July was not a good month for the Swiss watch industry with exports 9.3% lower than in July 2014 at CHF1.9 billion ($1.95 billion), according to the Federation of the Swiss Watch Industry. Asian markets all reported sluggish sales and weighed heavily on this result. Overall, sales in Asia were down by 21.4%.
All the price segments were down in July. Watches costing 200-500 francs were the worst affected (-14.5%). Above 500 francs, the value fell by 8.0% overall and the number of pieces by 10%. The leading Asian markets were all down, some very steeply. The fall in China was particularly strong (-39.6%), along with the United Arab Emirates (-29.8%) and South Korea (-19.7%). Sales to the U.S. were stable. Exports to Europe showed some improvement.
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Emma Hill to Chair Michael Hill
The founder and namesake of jewelry chain
Michael Hill International will retire following the company’s annual
shareholders meeting, to be held on November 4. He will be replaced as
chairperson by his daughter, Emma Hill.
The younger Hill began working for the
chain as a teenager and currently serves as deputy chairman of the company. She
is credited with establishing the company’s Canadian subsidiary, Michael Hill
Canada, in 2002 and served as its general manager until 2007.
Michael
Hill will remain on the company’s board as a non-executive director and retain
his stake as majority owner.
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Titanium Rings Tough to Cut in Emergencies
British
medical journal The Emergency Medical
Journal reported that titanium wedding rings are causing problems in hospital
emergency rooms because the metal is too tough to cut off.
While
other metals, such as gold and silver, are easy to cut, doctors from the U.K.’s
Sheffield Teaching Hospital told the journal that special equipment, such as
dental saws, drills and diamond-tipped saws, is required to remove a titanium
ring from a patient’s finger if it has become dangerously swollen.
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AGS Introduces Gamification App
The
American Gem Society (AGS) released its first gamification application to raise
awareness about jewelry and increase customer engagement.
Gamification
is the process of applying game mechanics, such as levels and timing, in
non-game contexts, like websites. The new AGS app features five quizzes
comprised of timed, multiple-choice questions designed to be fun yet
challenging, with topics including jewelry facts, celebrity jewelry, jewelry in
music and movies, and royal jewelry.
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Sharjah Jewelry Show Set to Expand
The 39th MidEast
Watch & Jewellery Show, to be held October 6 to 10, will be 50% larger this
year as the current decline in gold and diamond prices is expected to
invigorate demand, according to the Khaleej
Times.
The show will occupy all six halls at the 30,000-square-meter exhibition center
this year, versus its 20,000-square-meter span in the previous year. Expo
Centre Sharjah is organizing the event, which will showcase gold and diamond
jewelry, diamonds, precious stones, pearls and watches from Brazil, China,
India, Italy, Japan, Thailand, Turkey, the U.K. and the U.S.
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India Awards Jewelry Trademarks
India’s Trade Marks Registry approved the
trademark “RL Jewels” for use in the company’s sale of jewelry made with metal,
precious stones or imitation jewelry.
Tara Jewels received approval for the
trademark “Tara Jewellers” for use in the sale of diamonds, diamond jewelry and
jewelry made with precious metals or gemstones.
The registry also approved the trademark
“Vishal Diamonds Necklace and Necklace and Solitaire” for use in the sale of
jewelry of all kinds, timepieces and goods made or coated with precious metals.
Ivy Jewellery received approval for the
trademark “FIDDA” for use in the sale of diamonds and other precious gemstones
and jewelry made from these materials.
Swastik Jewels was approved to use the
trademark “Swastik” in the sale of diamond, gold and silver jewelry.
Chintamani Jewellers India received
approval for the trademark “Chintamani Jewellers” for the sale of precious
metals and gemstones, including diamonds.
The trademark registry also approved the
trademark “Desire” for use in the sale of precious metal jewelry and jewelry
made with diamonds and other gemstones.
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MINING
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Gem Diamonds’ Revenue Drops
Gem
Diamonds reported that its sales totaled $118 million in the first half versus
$148.9 million a year earlier, according to its filing with the London Stock
Exchange.
The
company recovered 50,019 carats from the Letšeng mine at an average value of $2,264
per carat during the period, as well as 35,283 carats from the Ghaghoo mine.
Commenting
on the results, CEO Clifford Elphick said, “Letšeng continues to consistently
produce the large, exceptional-quality diamonds. Prices for these goods have
remained firm, despite the current challenging conditions in the diamond
market.”
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Botswana Diamond Producers Cut 1,000 Jobs
Botswana’s diamond manufacturers have laid
off almost 1,000 cutters and polishers in the past 12 months as higher rough
prices, combined with relatively lower polished prices, have negatively
impacted profitability, according to Mmegi BusinessWeek. At their peak, the
producers employed about 3,700 workers.
The latest manufacturer to let staff go was
Diacore, part of Botswana’s Steinmetz Diamond Group, which slashed 50 jobs at
its Gaborone factory, Mmegi reported.
Companies that have scaled back their workforce
in the past year include Moti Ganz Botswana, Leo Schachter & Company,
Eurostar Botswana, Shrenuj & Co, Safdico Botswana, Zebra Diamonds, A.
Dalumi Diamonds and Laurelton Diamonds, a subsidiary of Tiffany & Co.
Polishing
outfits Teemane Manufacturing Co. and Diamond Manufacturing Botswana have also closed
shop.
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Zimbabwe’s Diamond Reserves Decline
Diamond
production in Zimbabwe is expected to fall to 3.5 million carats this year from
the 5.9 million carats mined last year due to a significant decline in alluvial
diamond reserves in the Marange diamond fields, according to Bernama, the
government’s official news agency.
In a
mid-term fiscal policy review presented to Parliament last month, Finance
Minister Patrick Chinamasa said output for this year would not meet initial
projections.
"Diamond
output for the first half of 2015 is estimated at 1.44 million carats, compared
with 1.447 million carats recorded for the same period in 2014," he stated.
"Diamond output for the entire 2015 is projected at 3.5 million carats,
down from the initial projection of 6.5 million carats."
Chinamasa
also said the country needs to expedite its consolidation of diamond-mining
operations. The consolidation process will make the government the major
shareholder with a 50% stake, while private firms with existing ventures will
share the remaining 50% stake.
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NDTC Pays $4.6M Dividend to State
Namibia
Diamond Trading Company (NDTC) paid the Windhoek government $4.6 million (NAD 60
million) in dividends, Agence Africaine de Presse reported.
Namibia
Diamond Trading Company (NDTC) was established in 2007 to sort, value and sell
diamonds produced by Namdeb, a joint venture between the Namibian government
and the Diamond Trading Company, owned by De Beers. The collaboration also aims
to make rough diamonds available to the local manufacturing sector as part of
the government's efforts to create jobs.
“The ministry would like to guarantee our
partners in the diamond industry of the government's commitment to promote and
continuously lobby for the sustainable growth, stability and viability of the
diamond industry through an increased supply of rough diamonds to the
factories,” said Mines and Energy Minister Obeth Kandjoze.
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GENERAL
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Gold Jewelry Demand Drops
Global demand for gold jewelry sank 20%
year on year to $19.7 billion during the second quarter, according to the World
Gold Council (WGC), magnifying the impact of a 7% decline in the average price of
gold to $1,192 per ounce. By volume, gold jewelry demand dropped 14% to 513.5
tons.
In its Gold Demand Trends report, the WGC
attributed the decrease primarily to plummeting consumer demand in India, as
well as lower consumer demand from China – the world’s largest gold market.
In contrast, jewelry demand increased in
the U.S. and Western Europe. By volume, U.S. demand rose 2% to 25.5 tons, while
demand from Western Europe grew 1% to 14.6 tons.
Total
gold demand, including jewelry, investment, industrial and central bank demand,
slid 18% by value to $35.1 billion during the quarter and fell 12% by volume to
914.9 tons.
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U.S. Jewelers Secure Trademarks
The U.S. Patent & Trademark Office
(USPTO) assigned the trademark “Get Your Sexy On” to the Florida-based company
I Do Diamond Ring Boutique.
Robert “Zelig” Sharfe received the
trademark “Zelig Diamond Co,” which was approved for use with diamond jewelry.
The
USPTO issued the trademark “SWH” to Texas resident Stephen W. Hale. The
trademark is approved for use with nearly all types of jewelry and watches,
from inexpensive bead jewelry to jewelry containing diamonds and precious
metals.
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STATS
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Belgium
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July 2015 $Mil. |
% Chng. |
YTD 2015 $Mil |
% Chng. |
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| Polished exports |
$1,195 |
-13% |
$8,491 |
-5% |
| Polished imports |
$1,012 |
-1% |
$8,146 |
-3% |
| Net polished exports |
$183 |
-48% |
$345 |
-34% |
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| Rough imports |
$779 |
-36% |
$7,133 |
-21% |
| Rough exports |
$1,025 |
-43% |
$7,420 |
-25% |
| Net rough imports |
$(246) |
57% |
$(288) |
66% |
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| Net diamond account |
$429 |
-54% |
$633 |
-54% |
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ECONWATCH
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Diamond Industry Stock Report
Industry stocks were mixed this week. U.S. advancers included Blue Nile (6%) and Signet (5.6%), while decliners were led by retailers Kohl's (-11%) and Walmart (-5.5%). Asian stocks followed a drop in the Hang Seng index (-6.6%), led by Chow Sang Sang (-3.2%). Indian jewelry-related shares were mainly up, pulled by Goldiam Intl (21.7%) and Renaissance Jewelry (9.3%). View the detailed industry stock report.
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Aug. 20 |
Aug. 13 |
Chng. |
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| $1 = Euro |
0.8942 |
0.92 |
-0.026 |
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| $1 = Rupee |
65.5904 |
63.73 |
1.9 |
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| $1 = Israel Shekel |
3.883 |
3.81 |
0.07 |
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| $1 = Rand |
12.9394 |
12.76 |
0.18 |
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| $1 = Canadian Dollar |
1.3132 |
1.32 |
-0.01 |
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| Precious Metals |
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| Gold |
$1,141.01 |
$1,088.02 |
$52.99 |
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| Platinum |
$1,018.00 |
$947.50 |
$70.50 |
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| Silver |
$15.47 |
$15.44 |
$0.03 |
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| Stock Indexes |
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Chng. |
| BSE |
27,607.82 |
28,298.13 |
-690.31 |
-2.4% |
| Dow Jones |
17,348.73 |
17,472.06 |
-123.33 |
-0.7% |
| FTSE |
6373.06 |
6,740.12 |
-367.06 |
-5.4% |
| Hang Seng |
22757.47 |
24,375.28 |
-1,617.81 |
-6.6% |
| S&P 500 |
2079.61 |
2,091.84 |
-12.23 |
-0.6% |
| Yahoo! Jewelry |
1005.35 |
1,040.87 |
-35.52 |
-3.4% |
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INDIA MARKET REPORT
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Polished Trading Activity
Local polished market is seeing slight increase in sales. Domestic diamond demand facing tough time due to weakening of rupee against dollar, adding to already-tight credit in local market. Manufacturing continues to remain at very low level. Read the polished diamond trading report.
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