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Market Comments 10/15/2015
Oct 15, 2015 6:00 PM
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Current rough prices unsustainable and unacceptable. Cutters
reject about 50% of De Beers sight. ALROSA prices -15% so far this year. We
believe rough prices need to fall at least another 20% to ensure profitability.
1ct. RAPI -3% in Sept., -6.3% in 3Q. U.S. good before Christmas, Far East slow
after weak Golden Week. U.S. and Israeli dealers “cherry-picking” Indian goods
before Mumbai shuts for Diwali (Nov. 7-13). Chow Tai Fook 2Q gem jewelry
same-store sales -13%, Luk Fook -26%. LVMH Jan.-Sept. jewelry, watch sales +22%
to $2.7B. Belgium Sept. polished exports -12% to $1.4B, rough imports -35% to
$870M. India Sept. polished exports -28% to $1.9B, rough imports -29% to $1.1B.
Fancies: Demand
soft. Pears, Ovals and Cushions steady, Princess, Hearts slow. Prices for
curves improving slightly. U.S. demand supporting market for commercial-quality
fancies, especially for sizes under 1-carat. 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.
United States: Buyers’ market in U.S. as
suppliers lower prices. Buyers limiting purchases to fill specific orders, leaving
suppliers with large inventories of unsaleable goods. Good demand for
SI-I2-clarity diamonds, while demand for carat sizes is stronger than for pointer-sizes
(0.30-0.90ct.). Retail sales stable with jewelers expecting a slightly better
holiday season than last year. Engagement ring demand strong as fourth quarter
is traditionally a popular period for marriage proposals.
Belgium:Polished trading is quiet. Dealers report some
improvement in European demand following dismal third quarter. Trading is
expected to slow through during Diwali holiday (Nov. 7-13). Good demand for 1-2ct.,
G-H, VS-SI diamonds, with weak demand for small goods. Some orders for the
holiday season, but jewelry retailers have reduced inventory levels. Rough
trading very quiet as manufacturers continue to refuse high-priced rough from
De Beers and ALROSA.
Hong Kong: Trading is slow with very few orders and no inventory
buying. Buyers are cautious and afraid that polished prices will soften
further. Trading was affected by weak Golden Week (Oct. 1-8) with fewer Chinese
tourist shoppers and closing of some retail shops. Sales in Mainland China better
than Hong Kong but some smaller chains have been consolidating to fewer stores.
Expectations for better jewelry sales in the coming months as the wedding season
develops over the Chinese New Year period (Feb. 8).
India: Trading
weak with some U.S. and Israeli buyers “cherry picking” goods before the Diwali
break. Steady U.S. demand for SI-I2 clarity diamonds. Domestic Indian demand
cautious as fresh bankruptcy rumors surface. Chinese buyers able to get better
prices from Indian suppliers in Shenzhen than in Mumbai. Cutters maintaining
polished production at 30 to 50 percent below pre-2014 Diwali levels. Rough
trading slumped and is expected to stay quiet until year-end. Gold jewelry
demand anticipated to rise with start of the 10-day Navratri
festival (Oct. 13-21),
an auspicious time to buy gold. The rupee continues to fluctuate, trading at
64.8 / $1 at press time.
Israel: Polished trading improved slightly with
conclusion of the Jewish holiday period. Dealers looking to fill specific U.S. orders.
Far East is slow. Some buyers visiting India and are willing to pay firm prices
for select goods that are expected to be in short supply over Diwali vacation. Sentiment
is weak amid bankruptcy rumors. Stable demand for 3ct.-plus, G-H, VS-SI
diamonds, while demand is weak for 0.30-0.40ct., H-J, VS-SI goods.
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