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Rapaport TradeWire September 18, 2015
Sep 17, 2015 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
September 18, 2015
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Positive mood at important Hong Kong show which is exceeding seller expectations. Dealer and retailer demand is price sensitive with strong focus on SI-I1 goods for the U.S. market and top grade 3X cut quality. Manufacturers maintaining reduced (-30% to -50%) polished production through Nov. Diwali season. ALROSA cuts rough prices 8%-10%, allows 50% deferrals at Sept. sale. Dominion 2Q revenue -24% to $210M, loss of $19M vs. profit of $27M a year earlier. Gem Diamonds sells 357ct. Letšeng rough diamond for $19M (~$54,000/ct.). India’s Aug. polished exports -8% to $1.8B, rough imports -22% to $610M. UAE appointed 2016 Kimberley Process chair.
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RapNet Data: September 17
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| Diamonds |
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1,321,787 |
| Value |
$8,688,037,141 |
| Carats |
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1,405,830 |
| Average Discount |
-27.90% |
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
Like everyone, we’re waiting to see what the Christmas season will be like. If things don’t improve, we’ll have to go back to the drawing board and rethink our strategy.
Jacob Thamage, Botswana’s Diamond Hub program coordinator
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MARKETS
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United States: Trading activity was subdued in the Diamond Dealers Club of New York with most businesses closed Monday and Tuesday for the Jewish New Year. The local trade is waiting to gauge price and demand trends at the Hong Kong Show.
Belgium: Antwerp was also quiet due to the Jewish New Year and with many dealers in Hong Kong. Opinion was undecided at press time whether the show will signal an improvement in Far East demand and trigger better global trading.
Hong Kong: Initial reports signaled that the show was better than expected in the opening days. There was steady traffic although fewer Chinese and Indian buyers were reportedly in attendance than in previous years.
India: Local trading was slow during Paryushan, which ran from September 10 to 17. Fewer dealers traveled to the Hong Kong show because of the festival but some are expected to make the trip over the weekend.
Israel: Like in New York and Antwerp, Ramat Gan trading was quiet with the bourse closed for the Jewish New Year holiday. Fewer Israelis exhibited at the Hong Kong show than in past years but there is still a sizeable delegation in the Israel Diamond Institute’s pavilion.
Click here to continue reading
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INSIGHTS
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Blinging Down Botswana’s Economy
It’s a long way from New York’s Madison Avenue advertising agencies to Gaborone, but for Botswana a lot is riding on the success of the ad campaign De Beers will launch in the coming weeks...
Click here to continue reading
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INDUSTRY
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India’s Polished Exports Dip
India’s
polished diamond exports fell 8% year on year to $1.76 billion in August,
according to provisional data published by the Gem and Jewellery Export
Promotion Council (GJEPC). The volume of exports dropped 21% to 2.835 million
carats as the average price declined 6% to $619 per carat.
Polished
imports, meanwhile, slumped 53% to $241 million during the month. Net polished
exports, calculated by subtracting imports from exports, rose 8% to $1.51
billion.
Rough
imports dropped 22% to $610 million in August, while rough exports fell 24% to
$88 million. India’s net rough imports, or the excess of imports over exports,
declined 22% to $522 million, representing the amount of goods that stayed in
the country for manufacturing.
During
the first eight months of the year, India’s polished exports fell 6% to $14.34
billion, while polished imports declined by 44% to $2.47 billion. Net polished
exports, however, rose 10% to $11.87 billion.
Rough imports dropped 23% to $9.33 billion and
rough exports slid 19% to $829 million in the eight-month period. Net rough
exports declined 23% to $8.5 billion.
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De Beers IIDGR to Offer Synthetic Melee Testing in India
De
Beers International Institute of Diamond Grading & Research (IIDGR) plans
to introduce a low-cost, high-volume synthetic melee screening and referrals
testing service in India next month.
The
new service will use IIDGR’s proprietary technology to support the wider Indian
industry in the detection of undisclosed synthetic diamonds.
“India is the world’s largest center for diamond
cutting and polishing,” said Jonathan Kendall, president of IIDGR. “Launching a
new low-cost, high-volume service in India for screening synthetic melee and
testing referrals will support both trade and consumer confidence as more
businesses will be able to use our technology to provide greater assurance to
their customers.”
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UAE Appointed KP Chair for 2016
The United Arab Emirates (UAE) has become the first Arab country to take up the position of Kimberley Process (KP) chair, effective in 2016.
The Dubai Multi Commodity Centre (DMCC) and the UAE Economic Ministry’s authority for the Kimberley Process Certification Scheme welcomed the appointment, which was confirmed by a vote.
The UAE will use this opportunity to focus on the areas with the greatest impact on the growth and development of the diamond industry, according to a DMCC statement. These areas include expanding the reach of the KP and bringing the flow of conflict diamonds to an end globally, while strengthening ties between the three pillars of the KP (government, industry and civil society).
The UAE is also expected to emphasize the importance of providing assistance to newly admitted countries with technical matters, training and consensus building.
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Ex-Kimberley Diamonds Boss Arrested
Alexandre
Alexander, the former head of Australian-based mining company Kimberley
Diamonds, was arrested by the Australian Securities and Investments Commission
(ASIC) on charges of misleading the stock market, Australian Broadcasting Corp.
reported.
Alexander,
48, who is also known as Alexandre Dergouchine, has been charged with four
counts of making false and misleading statements to the Australian Securities
Exchange (ASX) between October 2013 and March 2014. Each charge carries a
maximum penalty of five years in jail and a $34,000 fine.
ASIC is alleging that Alexander authorized
market statements which failed to disclose the fact that Kimberley Diamonds
assumed it would obtain a 30% increase in the price of its rare fancy yellow
diamonds.
Between
March 2013 and May 2014, Kimberley Diamonds tried to negotiate an increase in
the price of the yellow diamonds it sold to the luxury jewelry retailer Tiffany
& Co. When those negotiations stalled in May, the company's shares fell by
41.5% and its revised earnings dropped from $7.5 million to $1.5 million.
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Rio Tinto to Hold Israel Specials and Colored Rough Tender
Miner
Rio Tinto will hold a “Specials and Colored Rough Tender” of large and fancy
colored rough stones at the Israel Diamond Exchange from October 11 to 15. The
tender system will be conducted by sealed-bid auction.
Rio Tinto stated that clients who are invited to participate will be offered large,
high-value, single stones, parcels and natural colored rough diamonds in a wide
range of sizes, shapes, qualities and colors, including pinks and fancy
yellows.
More information, as well as registration, is available from Helene Wendelen at
+32.3.303.6868 or via email at: helene.wendelen@riotinto.com.
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RETAIL & WHOLESALE
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Six Birmingham Jewelers to Supply $155M John Lewis Store
Six Birmingham jewelers will supply the city’s new John Lewis store, according to a statement on the Birmingham-based National Association of Jewellers’ website.
Designers James Newman, Kate Smith, Becca Williams, Rhiannon Lewis, Collette Waudby and Fei Liu will comprise the first group to supply more than 500 pieces of jewelry to the new store, which is valued at $155.2 million (GBP 100 million).
“This project has been over three years in the making and will allow John Lewis to access talented and upcoming designers from the Jewellery Quarter, providing a unique customer experience,” Jilly Cosgrove, board member of the Jewellery Quarter Development Trust, explained. “Each group of designers will rotate on a six-month basis, allowing us to demonstrate the breadth of talent here in the quarter.”
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Kay Jewelers Debuts Star Wars Collection
Kay
Jewelers introduced a new Star Wars collection as part of its Charmed Memories
compilation, which features hand-crafted charms that allow guests to celebrate
special moments, interests and passions.
Available
at stores across the U.S. and online at Kay.com, the collection features some
of the most popular Star Wars characters, including Darth Vader, R2-D2 and the
storm troopers, as well as iconic quotes and themes from the films on charms
that can be combined to create a unique bracelet or added to an existing piece.
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Pease & Curren Offers Jewelry Recycling Scheme
Precious
metals refiner and recycler Pease & Curren introduced a retail jewelry
recycling and precious metals reclamation program for U.S. jewelry retailers
and bench jewelers with multiple locations or larger facilities.
The company said its Corporate Retail Advantage
will provide customers with customized reporting on the gold or precious metals
processed, while a refining consultant will offer suggestions for waste
reduction and ways to maximize the return on recycling and refining.
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Malabar Gold to Invest $125M in New Outlets
Malabar
Gold and Diamonds, one of the world's largest gold and diamond retailers,
announced that it will open 21 retail stores across the GCC, India and Far East
in the next six months with an investment outlay of $125 million.
The
company will open eight stores in the UAE, five outlets in Saudi Arabia, three
in Oman and one in Malaysia, as well as four more stores in India, taking the
chain to 155 stores. One 12,000-square-foot store in Abu Dhabi will constitute
the largest jewelry retail outlet in the Middle East.
The move is part of the $700 million expansion
announced by Malabar in 2013 that is expected to more than double the number of
its outlets to 220 by the end of 2018.
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Sotheby's Kicks Off Fall Auction Season with Important Jewels Sale
Sotheby’s
fall New York auction season opens with next week’s Important Jewels sale on
September 24 and September 25. Public exhibition of the sale items begins
September 19.
The
jewelry auction will feature items of notable provenance from the collection of
Dolores Sherwood Bosshard, including formal pieces by Harry Winston and Van
Cleef & Arpels and daytime jewels by David Webb, Sterlé and Cartier.
Jewels
owned by cosmetics heiress Estee Lauder and former U.S. first lady Mamie Doud
Eisenhower are also slated to be sold.
Among
the exceptional diamonds and gemstones on offer will be a pair of platinum, emerald
and diamond pendant ear clips by Harry Winston with a pre-sale estimate of
$650,000-$750,000, as well as a platinum and diamond ring set with a 10.19-carat,
D color, cushion-cut, internally flawless, type IIA diamond with a pre-sale
estimate of $1.3 million to $1.6 million.
The
complete sale catalog is available online at www.sothebys.com.
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Richemont China Watch Sales Point to Improvement
Luxury watch-maker Richemont
yesterday reported 4 percent constant-currency group sales growth for the five
months to August 2015. Sales in Europe rose 26 percent, Japan 48 percent and
Americas just 2 percent. Asia-Pacific sales were 18 percent lower, with Hong
Kong and Macau even weaker, the company said.
Compagnie Financiere Richemont SA
owns a portfolio of independently managed brands, including: Cartier, Van Cleef
& Arpels, A. Lange & Sohne, Baume & Mercier, Officine Panerai,
Piaget, Vacheron Constantin, Lancel and Montblanc.
This may be the first indication
of a recovery for the high-end luxury watch industry in respect to a turnaround
in China, according to Bloomberg analyst Deborah Aitken. The company said
mainland China sales resumed growth, with retail sales expanding at a strong
double-digit rate, offsetting falling wholesale sales there. Swiss watch
exports to China were 4 percent lower in January to July vs. a year earlier,
and 21 percent lower in Hong Kong, according to Aitken’s September 16 research
note.
Mainland China is the
third-largest market for Swiss watch sales, accounting for 6 percent of total
Swiss watch exports. Hong Kong still ranks first, though with a decreased
weighting of 15 percent this year vs. 20 percent in 2014. August Swiss watch
exports are due for release on September 22.
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MINING
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Paragon Reports Better-Than-Expected Mothae Results
Paragon
Diamonds PLC reported on the results of two independent studies that have been
conducted on the Mothae kimberlite project in Lesotho, which Paragon is in the
process of acquiring.
The
studies, to be used as components for the project’s pre-feasibility and
pre-economic studies, were carried out by The MSA Group and the results
"exceed management's initial expectations," the company said.
The
findings indicate that there is potential to “significantly increase” the
project's net present value from original estimates for average diamond values
of up to $2,000 per carat. The project is believed to contain over 20.0 million
tons of ore, suggesting a potential mine life of over 10 years.
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ALROSA Expected to Cut Rough Prices by 10%
ALROSA
will lower rough diamond prices at its September sale by 8% to 10%, Russian
news agency Interfax reported, citing unnamed sources.
“Preliminarily,
the drop is 10% in the framework of the market situation,” one of the sources
was quoted as saying. Another said ALROSA would cut prices by 6% to 13%,
stating that “On average, it's around 8%, for our assortment of +9 to 8
grainers [between 0.65 and 2 carats]. This is not far from the drop at the De
Beers [auction] in August.”
According
to the quoted sources, 50% deferrals will be allowed, a higher percentage than
in August. Unlike De Beers, ALROSA did not lower prices in August.
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Gem Diamonds Sells 357-ct. Letšeng Diamond
Gem
Diamonds announced that it sold an exceptional 357-carat white diamond for
$19.3 million. The diamond was recovered at the Letšeng mine in Lesotho and sold
in Antwerp
“The
Letšeng mine has produced two remarkable over-300-carat diamonds during the
year to date,” said CEO Clifford Elphick. He said the sale in Antwerp achieved
a top price “despite current market conditions, providing further evidence of
the price resilience of Letšeng's large top-quality diamonds.”
Since Gem Diamonds' acquisition of Letšeng in
2006, the mine has produced four of the 20 largest white gem-quality diamonds
to ever be recovered.
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Dominion Diamond’s Sales Drop
Canada’s
Dominion Diamond Corporation, the world’s third-largest producer of rough diamonds
by value, reported a 24% slump in second-quarter sales amid subdued demand in
Asia. Sales in the quarter that ended on July 31 dropped to $209.7 million from
$277.3 million one year ago. Dominion reported a loss before income tax of $2.8
million, compared with a quarterly profit of $38.2 million a year ago.
The
Canadian miner lowered prices during its latest sale in August in response to
muted demand from Chinese retailers, largely for the middle-size range of
polished diamonds, which has brought fiscal year-to-date average prices down by
about 5%, in line with market prices.
The rough diamond market “failed to maintain any
of the momentum evident at the end of Q1 fiscal 2016,” the company stated in
its quarterly report. “Polished prices continued to stagnate as slow retail
growth in China instigated a more cautious approach to purchasing by jewelers.”
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Trans Hex Sees Subdued Trading
Trans
Hex reported that it earned $17.5 million (ZAR 236.1 million) from May, June
and September tender sales of production from its wholly owned South African
operations. The sales included 20,570 carats at an average price of $896 per
carat.
Production
at those operations amounted to 20,839 carats for the five months that ended on
August 31.
The
company said challenging market conditions and low demand from China and India
have “slowed trading considerably, in a market which is already feeling the
pressure of a global downturn.” Trans Hex expects trading and rough diamond
prices to “remain subdued for the remainder of 2015.”
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Stornoway Trims Loss as Flagship Project on Track
Stornoway Diamond
Corporation, an exploration and
development company listed on the Toronto Stock Exchange, pared its quarterly loss from a year
ago as construction at its Renard Diamond Project continued in line with
planned schedule and budget.
Net loss for the three
months that ended July 31 fell by $1.4 million (CAD $1.8 million) to $7.3
million, compared with a loss of $8.7 million in the previous year,
the company said in a statement on September 14.
“Construction progress
continues to track ahead of plan, principal engineering is nearing completion,
and all major facilities are on track to be enclosed and heated prior to the
onset of cold weather conditions,” Matt Manson, president and chief executive
officer of Stornoway, said in
the statement.
While engineering
progress at the Renard site was pegged at 80 percent, slower than the planned
87 percent, the overall advancement of construction stood at 35 percent, which
is above the 33 percent expected during the three months.
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GENERAL
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AGTA Announces Board of Directors' Election Results
The
American Gem Trade Association (AGTA) announced the results of its annual board
of directors' election.
Jeffrey
Bilgore of Jeffrey Bilgore, LLC was elected president. Cynthia Renée (Marcusson)
of Cynthia Renee Inc. and Avi Raz of A & Z Pearls Inc. were re-elected as
directors to the board. Kusam Malhotra of K & K Int'l. and Jeff Mason of
Mason-Kay Inc. were newly elected.
The directors will take office in February 2016
and serve three-year terms.
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GIA Unveils Japanese Website
The
GIA debuted its Japanese-language website as part of the organization’s
outreach efforts to that country’s consumers and lab clients.
Translations at the site include more than 1.8
million words in the Gem Encyclopedia, Analysis & Grading, Professional
Education, Research & News and About GIA sections.
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Auctioneer Bonhams Names International Jewelry Director
London
auction house Bonhams has named Daniel Struyf to the newly created role of
international jewelry director. He will be responsible for expanding the
company’s market share and lead its 30-person jewelry.
Struyf previously worked with Christie’s in New
York, Hong Kong and Geneva, Olympic Diamond Corporation in New York and Hong
Kong, and Antwerp’s Backes & Strauss.
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STATS
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India
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August $Mil. |
%Chg. |
YTD $Mil. |
%Chg. |
| Polished Exports |
$1,755 |
-8% |
$14,336 |
-6% |
| Polished Imports |
$241 |
-53% |
$2,466 |
-44% |
| Net Exports |
$1,514 |
8% |
$11,870 |
10% |
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| Rough Imports |
$610 |
-22% |
$9,330 |
-23% |
| Rough Exports |
$88 |
-24% |
$829 |
-19% |
| Net Imports |
$522 |
-22% |
$8,501 |
-23% |
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| Net Diamond Account |
$933 |
34% |
$3,369 |
N/A |
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ECONWATCH
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Diamond Industry Stock Report
Industry retail stocks were generally positive this past week, with Charles & Colvard (+5.7%) leading gains. The notable decliner was Birks Group (-23.5%). Sarine Tech (+11.3%) led advances in the Far East. Mining shares were down as a group, led by Kennady Diamonds (15.9%) and Dominion Diamonds (-9.4%).
View the detailed industry stock report.
| (10:30 GMT) |
Sept. 17 |
Sept. 3 |
Chng. |
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| $1 = Euro |
0.8829 |
0.8933 |
-0.010 |
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| $1 = Rupee |
66.171 |
66.5304 |
-0.4 |
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| $1 = Israel Shekel |
3.8707 |
3.8979 |
-0.03 |
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| $1 = Rand |
13.3706 |
13.8406 |
-0.47 |
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| $1 = Canadian Dollar |
1.3199 |
1.3217 |
0.00 |
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| Precious Metals |
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| Gold |
$1,117.71 |
$1,107.90 |
$9.81 |
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| Platinum |
$964.40 |
$990.60 |
-$26.20 |
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| Silver |
$14.86 |
$14.76 |
$0.10 |
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| Stock Indexes |
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Chng. |
| BSE |
25,963.97 |
25,463.55 |
500.42 |
2.0% |
| Dow Jones |
16,739.95 |
16,253.57 |
486.38 |
3.0% |
| FTSE |
6,216.86 |
6,187.33 |
29.53 |
0.5% |
| Hang Seng |
21,854.63 |
21,562.50 |
292.13 |
1.4% |
| S&P 500 |
1,995.31 |
1,942.04 |
53.27 |
2.7% |
| Yahoo! Jewelry |
1,009.66 |
1,007.45 |
2.21 |
0.2% |
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INDIA MARKET REPORT
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Polished Trading Activity
The market was sluggish, with demand muted by the Jain ‘Paryushan’ festival and the Hong Kong show. Indian visitors to the show reported seeing few buyers among the otherwise low attendance. Manufacturing remains slow as small and medium-size operators find it difficult to buy rough at current price levels. Locals anticipate 10% reductions at ALROSA sight.
Read the polished diamond trading report.
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