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Rapaport TradeWire November 12, 2015
Nov 12, 2015 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
November 12, 2015
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Rough trading freezes as sightholders defer most goods at unprecedented
$70M De Beers sight with factories closing for extended Diwali break. Shortages
developing before important U.S. holiday season which is reducing sales. High
price to pay for high prices. Chinese single’s day (11/11) online sales lift
Far East sentiment (1derful). Chow Tai Fook cautions 1H profit -50% on weak HK
market. Richemont 1H jewelry sales +18% to $3.4B. Sotheby’s nets $141M (83% by
lot) with cushion, 12.03ct., fancy vivid blue, IF diamond selling for $48.5M ($4M/ct.).
Christie's fetches $109M (80% by lot) as cushion, 16.08ct., fancy vivid pink,
VVS2 diamonds sells for $28.5M ($1.8/ct.). Happy Diwali.
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| Diamonds |
1,189,157 |
| Value |
$8,158,941,701 |
| Carats |
1,324,505 |
| Average Discount |
-28.55% |
www.rapnet.com
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| The RapNet Diamond Index (RAPI) is the average price for the top 25 diamond qualities (D-H, IF-VS2). It is based on the 10 best priced diamonds for each quality. |
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Get Current Price List | Subscribe to Rapaport | Join RapNet |
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QUOTE OF THE WEEK
We recognize that there are challenges in the industry and that we’re still in a destocking period. So our focus was to be flexible to meet sightholder needs.
David Johnson, head of midstream communications at De Beers, on flexibility at the November sight
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MARKETS
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United States: Steady polished trading but
suppliers still waiting for holiday upswing. Buyers pushing for higher
discounts and getting better prices in Mumbai than New York. Good deals for cash
buyers...
Belgium: Polished trading quiet
with slow demand. Indian dealers away for Diwali. Sentiment improving in
anticipation of Christmas holiday season. Good demand for 0.25-1ct., G-J,
VVS-SI diamonds...
Hong Kong: Some improvement as Nov.
11 “single’s day” special online deals keep diamond traders busy. Indian
buyers and suppliers off the market for Diwali...
India: Market sentiment weak as
trading halts for Diwali break. Mumbai dealers away for a week (Nov. 7-13) and
factories to remain shut until end of the month...
Israel: Trading quiet for this
time of year. Buyers looking for deals at lower prices with suppliers
compromising on inventory that’s hard to sell. Dealers focused on filling U.S.
holiday orders...
Click here to continue reading
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INSIGHTS
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Beautiful Diamonds that Sell in Any Market
The hype surrounding Sotheby’s and Christie’s auctions in Geneva this week created a buzz in the diamond trade that is otherwise starved for excitement...
Click here to continue reading
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INDUSTRY
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U.S. Polished Diamond Imports -23% in September
U.S. polished diamond imports
fell 23% year on year to $1.6 billion in September, the second-lowest monthly
figure so far this year. Diamond imports by weight fell 19% to 923,229 carats,
at an average price of $1,774 per carat. Polished diamond exports, meanwhile,
fell 17% to $1.5 billion, driving net imports down 37% to $178.1 million. In
August, imports were $1.6 billion.
Rough diamond exports soared 199% to $14.9
million, while rough imports increased 16% in September to $34.8 million,
leaving net rough imports down 21% at $19.9 million. The net diamond account,
reflecting the difference between net imports and exports, dropped 50% to
$398.8 million.
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De Beers Sight Slumps to Estimated $70M
De
Beers recorded one of its smallest ever contract sales in November as the
November sight closed with an estimated value of $70 million. The rough diamond
supplier kept prices stable and enabled extra flexibility due to the slump in
sightholder demand.
“It was a small sight as we expected because of
the Diwali holidays,” said David Johnson, head of midstream communications for
De Beers. “We recognize that there are challenges in the industry and that
we’re still in a destocking period. So our focus was to be flexible to meet
sightholder needs.”
Sightholders could defer their entire November
allocations to December, or bring their December supply forward, among other
options. Most chose to defer.
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Belgium’s Polished Exports -27%
Belgium’s
polished diamond exports fell 27% year on year to $929 million in October,
according to data from the Antwerp World Diamond Council. By volume, polished
exports dropped 14% to 484,158 carats, while the average price of the exports
decreased 15% to $1,919 per carat.
Polished imports fell 25% to $880 million in
October and the country’s net polished exports, representing the excess of
exports over imports, tumbled 51% to $49.4 million.
Rough imports dropped 14% to $962 million during
the month, while rough exports increased 1% to $1.01 billion. Net rough
imports, representing imports minus exports, fell to negative $48.9 million
compared with a surplus of $121 million one year earlier.
The country’s October net diamond account, or
total exports of rough and polished less total imports, was positive $98.2
million compared with a deficit of $20 million in October 2014.
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Sarine Posts 3Q Loss, Revenue -53%
Israel’s Sarine
Technologies, a diamond manufacturing equipment maker, reported revenue fell 53%
in the third quarter to $9.5 million in the period to September 30. It posted a
loss of $1.4 million, compared with a profit of $5.7 million a year ago. Revenue
from India, the largest contributor to sales, plummeted 64% to $6 million.
Results were dampened by higher
prices of rough and increased polished inventory, which impacted business
activity, the company said. Performance was particularly affected by the
disappointing De Beers’ July and August sights and ALROSA’s September tender,
it added.
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DDC Expands Arbitration to Cover Disputes with Non-Members
Members of the Diamond
Dealers Club (DDC) of New York will be able to use the organization’s
arbitration services to resolve disputes over transactions with non-members
following an expansion of the service.
DDC members can now take cases to the trade
group’s arbitration program by putting an arbitration clause into memos or
invoices, or on their letterhead, the DDC said in a statement.
The move is aimed at increasing the safety and
efficiency of diamond and jewelry transactions, the statement said.
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RETAIL & WHOLESALE
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Blue Moon Sold for Record $48.5M
Sotheby’s has auctioned the
12.03-carat Blue Moon diamond for $48.5 million, or $4 million per carat,
setting what the auctioneer claims is a world record for a diamond of any
color.
The internally flawless diamond sold at a
Sotheby’s sale in Geneva on November 11, breaking the previous record set when
the auction house sold the 24.78-carat Graff Pink diamond for $46.2 million in
the same city in 2010. It was expected to go for between $35 million and $55
million. The stone was sold by New York jewelry company Cora International to a
Hong Kong-based buyer, later reported to be Hong Kong real estate investor
Joseph Lau. The previous day, he purchased the 16.08-carat ‘Sweet Josephine’
pink diamond for $28.6 million at Christie’s auction (see story).
Total sales at Sotheby’s auction were $139.1 million, with 83% of lots sold.
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Christie’s Sells Pink Diamond for $29M
Christie’s
sold a 16.08-carat pink diamond for $28.6 million (CHF 28.7
million) at its auction in Geneva on November 10.
The large stone with a rare pink hue, set in a
platinum and gold ring surrounded by a double row of pavé-set white diamonds,
was sold to an unidentified Chinese client based in Hong Kong, who renamed it ‘Sweet Josephine.’ Its pre-sale estimate was $23 million to $28 million. The origin of the
diamond and the identity of its seller were not disclosed.
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Pandora’s Revenue +37%
Danish jewelry retailer
Pandora’s revenue jumped 37 percent to $563.7 million (DKK 3.9 billion) year on
year in the third quarter that ended September 30.
The company closed 116 unbranded stores in the
Americas during the third quarter, mostly in the US, it said. The overall
number of points of sale in the Americas was cut by 212, or 6 percent, to
3,124, compared with the third quarter last year. Globally, the number of
points of sale dropped by 308 to 9,533.
Ring sales jumped 79 percent to $88.7 million.
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Gitanjali’s Profit, Revenue Surge
India’s Gitanjali Gems sales
surged 40% to $520.5 million (INR 34 billion) in the second quarter. Profit
soared 113% to $6.2 million in the three months to September 30, the company
said in a statement.
However, diamond sales
slumped 30% to $99 million and profit from the diamonds division plunged 65% to
$1.2 million. Revenue from the jewelry segment surged 71% to $42.8
million, the statement said. Overall revenue from India jumped 69% to $216.8
million and sales from the rest of the world grew 25% to $303.8 million.
Revenue increased 39% to $948.6 million for the half year to September 30, the
company said.
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Chow Tai Fook Expects Profit Drop
Hong Kong-based Chow Tai Fook,
the world’s largest listed jeweler, warned its profit for the six months ended
September 30 could be half of the comparable period last year due to weak
consumer sentiment in Hong Kong and Macau, according to a statement to the Hong
Kong stock exchange.
The jeweler said it also expects to report lower
gross profit margins due in part to a change in its product mix with an
increased sale of gold products. The company expects to report results for the
period on November 24.
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Christie’s To Auction Thatcher’s Diamond Jewelry
Former
UK Prime Minister Margaret Thatcher’s emerald and diamond necklace by Chaumet,
dating back to about 1930, will be among the items Christie’s will auction next
month in London.
Christie’s will tender the piece valued at
$181,200 (GBP 120,000) to $271,900 alongside 150 other items from the Iron
Lady’s collection on December 15, it said on its website.
A George III pavé-set diamond flower brooch from
the 1800s, comprising old cushion, pear and circular-cut diamonds, will also be
on sale. Its value is expected to be $12,100 to $15,100. A further 200 lots
will be available in online-only bids from December 3 to December 16.
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Sotheby’s Revenue +46%
Sotheby’s revenue increased 46 percent to $137.9
million year on year in the third quarter that ended September 30. The net loss
was cut 35 percent to $17.9 million, or 0.26 per diluted share, the auctioneer
said in a statement.
The company also said net auction sales
increased 15 percent because of a change on its events calendar. Auction
commission revenues decreased, largely due to significantly weaker sales in
higher-margin categories, including jewelry.
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Shrenuj’s Diamond Sales +19%
Shrenuj & Company Ltd.
reported that sales increased 16 percent to $458.7 million (INR 30.3 billion)
year on year in the first half to September 30. Net profit for the period
slumped 44 percent to $4 million, the Indian polished diamond and jewelry
manufacturer said in a statement November 10.
Diamond sales advanced 19 percent to $414.1
million, while sales of studded jewelry increased 2 percent to $61.1 million.
Profit on diamonds before tax and finance costs increased 13 percent to $16
million, while profit on studded jewelry fell 34 percent to $2.1 million.
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Alibaba Settles $5bn in First 90 Minutes of ‘Singles Day’
Five
billion dollars were settled through third-party online payment platform Alipay
in the first hour and a half of the ‘Singles Day,’ an annual Chinese festival
for bachelors, Alibaba Group said in a statement. More than $14 billion in sales was reported by the company.
Sales to the tune of $3.9 billion were recorded
in the first hour from midnight on November 11, of which $2.9 billion, or 74
percent, was through transactions made on mobile phones.
Singles Day takes place on November 11 each year
because the date in numbers has four “ones” in a row and has become a key day
in the retail calendar.
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MINING
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Letšeng Sales +7%
Gem Diamonds' rough diamond
sales advanced 7 percent to $65.6 million year on year in the third quarter to
September. It sold 25,460 carats from its Letšeng mine in Lesotho, an increase
of 8 percent, and average prices fell 1 percent to $2,578 per carat. Recovery
increased 4 percent to 29,460 carats.
Recovery guidance for the full
year was adjusted upwards to 105,000 to 108,000 carats, with sales expected at
between 103,000 and 105,000.
It also
recovered 31,922 carats from Ghaghoo, a Botswanan mine that opened in September
2014.
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Lucara’s 3Q Revenue Flat, Profit +6%
Lucara Diamond Corp., which
operates the Karowe mine in Botswana, reported that revenue was flat at $90.9
million year on year in the third quarter to September 30. Profit for the
period increased 6% to $44.2 million.
Production at Lucara’s Karowe mine slipped 5% to
100,651 carats, but mining performed well, the company said, having recovered
160 special stones of more than 10.8 carats. The company’s special stone
production had an average size of 33.49 carats, a 34% increase on the 2014 full
year.
The company held one exceptional stone tender
and a regular tender during the quarter, which between them generated proceeds
of $89.2 million from the sale of 76,156 carats, or $1,171 per carat.
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Murowa Working to Boost Production
Zimbabwe’s Murowa mine,
formerly controlled by Rio Tinto, is set for a return to diamond production,
after earlier fears that it was
shutting down following the key investor’s exit.
The mine is working on boosting production,
Zimbabwean newspaper The Chronicle cited Lovemore Chihota, chairman of operator
Murowa Diamonds, as saying. Rio Tinto pulled out of the project in June,
selling its 77.8 percent stake to RioZim.
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GENERAL
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GIA to Hold Synthetics Seminars in Israel
The
Gemological Institute of America (GIA) will organize two seminars on methods of
treating diamonds and recognizing synthetics at the Israel Diamond Exchange in
mid-November.
GIA researchers James Shigley and Brenda Harwick
will speak at the event, which will be held on November 15 and 16, the Israel
Diamond Institute said on its website.
Identifying Diamond Treatments will focus on
laser drilling, fracture filling, high-pressure, high-temperature (HPHT)
treatment, irradiation and other treatment processes.
Identifying Synthetic
Diamonds will give information on HPHT and diamond growth using chemical vapor
deposition and ways of distinguishing them from natural stones.
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ECONWATCH
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Diamond Industry Stock Report
Chinese retailer stocks were down after both Chow Tai Fook
(-9%) and Luk Fook (-7%) issued profit warnings. U.S. retailers were generally
stable except Macy’s (-20%). Miners’ shares were largely flat this past week,
but there were sizable falls for the UK’s Petra Diamonds (-29%), Anglo
American (-19%) and Canada’s Dominion Diamond Corporation (-14%). True North
was the strongest mining stock (+13%). In India, there were sharp declines for
India’s C. Mahendra (-18%), Classic Diamond (-11%) and Goldiam International
(-9.5%).
View the detailed industry stock report.
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Nov. 12 (10:00 GMT) |
Nov. 5 (07:53 GMT) |
Chng. |
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| $1 = Euro |
0.93 |
0.92 |
0.010 |
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| $1 = Rupee |
66.01 |
65.75 |
0.3 |
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| $1 = Israel Shekel |
3.90 |
3.90 |
0.00 |
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| $1 = Rand |
14.21 |
13.95 |
0.26 |
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| $1 = Canadian Dollar |
1.33 |
1.32 |
0.01 |
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| Precious Metals |
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| Gold |
$1,087.45 |
$1,108.85 |
-$21.40 |
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| Platinum |
$979.50 |
$979.50 |
$0.00 |
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| Silver |
$14.42 |
$15.02 |
-$0.60 |
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| Stock Indexes |
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Chng. |
| BSE |
25,866.95 |
26,475.41 |
-608.46 |
-2.3% |
| Dow Jones |
17,702.22 |
17,867.58 |
-165.36 |
-0.9% |
| FTSE |
6,255.82 |
6,412.88 |
-157.06 |
-2.4% |
| Hang Seng |
22,888.92 |
23,026.49 |
-137.57 |
-0.6% |
| S&P 500 |
2,075.00 |
2,102.31 |
-27.31 |
-1.3% |
| Yahoo! Jewelry |
1,050.48 |
1,058.30 |
-7.82 |
-0.7% |
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INDIA MARKET REPORT
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Polished Trading Activity
Market sentiment weak as trading halts for Diwali break. Mumbai dealers away for a week (Nov. 7-13) and factories to remain shut until end of the month. Sightholders didn’t bother traveling to Gaborone for Nov. sight. Rough inventories low with demand expected to improve when polished production resumes in December after Diwali.
Read the Polished Diamond Trading Report
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