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Rapaport TradeWire January 14, 2016
Jan 14, 2016 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
January 14, 2016
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Sentiment improving after
positive U.S. Christmas season but low expectations for Chinese New Year.
Polished prices firm with supply shortages expected to support the market
through 1Q. Manufacturing increasing slightly but still estimated at 30% below
capacity. Rough demand improving with 5-7% price cut expected at next week’s De
Beers sight. Chow Tai Fook 3Q sales -11%. Luk Fook 3Q same-store sales -25%. Richemont
3Q jewelry maisons sales +2% to $1.8B. Birks 3Q same-store sales +3.5%. Michael
Hill 1H revenue +9% to $213M. U.S. Nov. polished imports -15% to $1.6B, polished
exports -16% to $1.4B. Israel 2015 polished exports -20% to $5B, rough imports
-31% to $2.8B.
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| Diamonds |
1,061,512 |
| Value |
$7,911,405,249 |
| Carats |
1,196,450 |
| Average Discount |
-27.74% |
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
Improved living and income standards are likely to be the focus of the [Chinese] government in the coming years as will be increased domestic consumption. So luxury brands can still expect an increase in the number of individuals purchasing luxury items in China, but on average at lower prices.
Ken Grant, director at FDKG Insight and publisher of Luxury Insights China for 4Q 2015
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MARKETS
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United States: Sentiment improving with
positive reports about jewelry sales over Christmas. Dealers returning to the
market and looking for diamonds but trading limited by shortages...
Belgium: Dealers more optimistic
about the market after solid U.S. Christmas season. Buyers making inquiries to
assess prices rather than place orders...
Hong Kong: Trading is focused on
filling last-minute orders before the wholesale market closes for the Chinese
New Year (Feb. 8)...
India: Polished trading okay
with steady U.S. post-holiday demand but some uncertainty about China...
Israel: Sentiment improving and
dealers gaining confidence to buy. Polished prices firm with shortages limiting
trading for RapSpec A2 (3X, none) diamonds...
Click here to continue reading
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INSIGHTS
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Adjusting to China’s New Normal
The diamond industry has a lot riding on the Chinese New Year season and recent events in Shanghai have done little to inspire confidence. As stocks plummeted and the Renminbi depreciated against the dollar, fresh concerns rose about China’s growth prospects, its impact on the global economy and on the diamond and jewelry trade...
Click here to continue reading
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INDUSTRY
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U.S. Polished Imports -15% in Nov.
U.S. polished diamond imports fell 15 percent
year on year to $1.62 billion in November. Diamond imports by weight declined
14 percent to 735,561 carats and the average price dipped 0.6 percent to $2,205
per carat. Polished diamond exports, meanwhile, fell 16 percent to $1.37
billion, driving net imports down 9.3 percent to $253 million.
Rough diamond imports soared 37 percent to $31.8
million, while rough exports more than doubled to $18 million, leaving net
rough imports down 9.4 percent to $13.8 million. The net diamond account,
reflecting the difference between net imports and exports, decreased 9.3
percent to $266.8 million.
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Element Six Takes Legal Action Against Synthetics Firm
Element Six, De Beers'
synthetics business, began legal action January 12 in Singapore against IIa
Technologies, alleging an infringement of patents.
Some patents for proprietary synthetic diamond
products and their manufacturing method have been infringed, in particular
Singapore patent numbers 115872 and 110508, Element Six claimed in a
statement. The Singapore-based grower of colorless type-IIa gems is “exploiting
Element Six patents for commercial gain,” potentially in both the industrial
and jewelry sectors, the statement alleged.
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Israel’s 2015 Polished Exports -20%
Israel’s polished diamond
exports slumped 20 percent to $5 billion in 2015 because of a drop in demand in
key markets and a mismatch between the prices of polished and rough gems,
according to the Ministry of Economy.
Polished imports declined 23 percent to $3.48
billion. Net polished exports, representing exports minus imports, fell 13
percent to $1.52 billion.
Rough imports for the year slumped 31 percent to
$2.78 billion and rough exports fell 28 percent to $2.2 billion. Consequently,
net rough imports, representing imports minus exports, slid 39 percent to $585
million. Israel’s net diamond account, the difference between net imports of
rough and net exports of polished, jumped 18 percent to $931 million.
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IDE Hires Eli Avidar as Managing Director
The Israel Diamond Exchange (IDE) has appointed Eli Avidar as managing director, replacing Moti Besser, who had completed two terms in the role.
Avidar, managing director of the Israel Diamond Institute Group of Companies (IDI) since January 2007, takes on the new position with immediate effect, according to an IDE statement January 13.
Avidar’s appointment comes after Yoram Dvash was elected president of the IDE in December. Soon after taking office he appointed a new board and committee heads and set up an advisory panel of former presidents.
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Temple St. Clair, Cartier Win GEM Awards
Temple St. Clair won the
Jewelers of America (JA) GEM Award for Jewelry Design at this year’s ceremony
in New York, which was held January 8.Her design achievements in 2015 included the launch of
her ‘Wings of Desire’ and the debut of her collection ‘Mythical Creatures from
the Golden Menagerie’ at the Musée du Louvre in Paris.
Cartier received the GEM Award for Watch Design.
The GEM Award for Media Excellence went to Rob Bates, news director of JCK. Joe
Thompson, editor-in-chief of WatchTime magazine, was the recipient of the 2016
GEM Award for Lifetime Achievement.
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Diamond-Backed Cryptocurrency to Launch
The companies behind the
world’s first diamond-backed cryptocurrency will start selling the digital
coinage this month. The asset class used is colored diamonds, which the
founders of the PinkCoin claim have not lost value since tracking began in
1959.
Precious Investments and its subsidiary BitGem
Asset Management (BAM) will launch the PinkCoin crowdsale – a crowdfunding
process in which investors acquire PinkCoin tokens – on January 18.
PinkCoin is based on the
Ethereum cryptocurrency platform and backed by a pool of fixed colored-diamond
assets kept in trust by BAM. The initial crowdsale will comprise 5 million
PinkCoin tokens and the initial diamond asset pool has been valued at $5
million, meaning each token will be worth $1 to begin with. The diamond pool
will be valued on a regular basis.
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JVC Publishes Quality-Assurance Guide
The Jewelers Vigilance Committee (JVC) has
published a guide that helps jewelers ensure the products they sell comply with
the law.
“Getting It Right – JVC’s Guide to Quality
Programs for Jewelers,” published with a grant from the International
Gemological Institute, provides “simple and useable” tools to implement
quality-assurance programs. The guide aims to increases awareness of elements
that jewelers should address to assure they are following the required
standards.
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AGS to Run Advert Campaign
The American Gem Society (AGS)
announced plans to launch a campaign in the U.S. to raise customer awareness
about its brand and members and attract younger customers.
“Buy It with Confidence” advertisements will
target men and “Love What You See. And What You Can’t” will be aimed at women.
Print advertisements will run in lifestyle magazines GQ, Glamour and Vogue in the first half of 2016 in
key regional markets to cover Valentine’s Day, Mother’s Day and the bridal
season. A print and digital-media advertisement campaign will run in a wedding
magazine,The Knot, throughout 2016.
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RETAIL & WHOLESALE
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Luk Fook’s 3Q Same-Store Sales -25%
Luk Fook reported group
same-store sales from self-operated shops dived 25 percent year on year in the
third quarter that ended December 31 as retail sentiment remained “sluggish.”
Revenue growth in Hong Kong and Macau slumped 26
percent year on year, while mainland-China sales dropped 10 percent. The dip
was from a “relatively higher base” last year.
Sales of gem-set jewelry fell 26 percent and
gold dropped 25 percent.
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Chow Tai Fook 3Q Sales -11%
Chow
Tai Fook reported group retail sales dropped 11 percent year on year in the
third quarter that ended December 31 as fewer tourists from mainland China
visited Hong Kong and on account of weaker local retail sentiment in Hong Kong
and Macau.
Same-store sales at the Hong Kong-listed group
dived 15 percent in value terms and slid 13 percent on a volume basis. Hong
Kong and Macau retail sales suffered the steepest decline, falling 20 percent
in total value. Same-store sales in the region plummeted 23 percent by value
and 21 percent by volume.
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Richemont’s 3Q Sales -4%
Richemont reported revenue – measured at constant exchange rates – declined 4 percent year on year in the third quarter that ended December 31 even as jewelry sales grew in most regions and product categories. Demand for watches was weak.
The slowdown reflected weaker trading in Europe than in the previous six months and continued challenging conditions in the Asia-Pacific region.
Total sales at actual rates during the three months increased 3 percent to $3.19 billion (EUR 2.93 billion), the Switzerland-based luxury group said in a statement January 14.
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Michael Hill’s Sales +9%; Mulls ASX Listing
Michael
Hill reported sales increased 8.7 percent year on year in the first half that
ended December 31.
Revenue grew to $213 million (AUD 306.3
million), while same-store sales advanced 4.8 percent to $201.5 million. The
group opened six new Michael Hill stores during the half year, giving a total
of 293 at the end of December.
The
results come as the jewelry retailer announced it is considering listing shares
on the Australian Securities Exchange (ASX) as the company – founded in New
Zealand – has over time moved its center of gravity to Australia.
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Birks Group’s 3Q Comparable Sales Rise
Jewelry retailer Birks Group
reported comparable-store sales rose 3.5 percent year on year in the third
quarter, defying difficult market conditions. Total consolidated net
sales – down 6.6 percent on a weaker Canadian dollar – also rose 1.2
percent on an ex-currency basis.
Comparable-store sales in Canada advanced 5.9
percent and in the U.S. grew 1.4 percent even though a stronger U.S. dollar constrained
tourist spending stateside.
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Pandora’s Sales +40% in 2015
Pandora
reported preliminary revenue surged 40 percent to $2.44 billion (DKK 16.7
billion) over the year to December 31, in line with its guidance released in November.
A “tailwind” from foreign-exchange rates of
about 11 percent was one percentage point higher than the previous estimate,
the Denmark-headquartered company said. The company had forecast sales of above
$2.34 billion in 2015.
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Holiday-Season Mobile Sales +59%
Mobile commerce in the U.S.
soared 59 percent year on year to $12.65 billion in November and December,
according to the latest holiday-season estimates from comScore.
The preliminary figure – sales from smartphones
and tablets – accounts for 18 percent of total digital commerce compared with
13 percent last year, according to a statement January 8. The company had
earlier forecast a 50- to 60-percent surge
in mobile commerce revenues during the same period.
Total digital spend is projected to have risen
13 percent to $69.08 billion, while final data showed online sales from desktop
computers increased 6 percent to $56.43 billion.
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MINING
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Dominion Adds Director from Activist Shareholder Group
Dominion Diamond Corporation added two new directors on its board, including one from an institutional investor that had put pressure on the Canada-based miner’s management after a share-price slump in 2015.
Josef Vejvoda, a portfolio manager at K2 & Associates Investment Management, was appointed after being “identified and proposed to Dominion by a group of shareholders,” according to a Dominion statement January 13. A shareholder group led by K2 “entered into an agreement with Dominion which includes a customary standstill on the part of the group,” the statement added.
Jim Gowans, a former De Beers executive, has also joined the board and will be appointed non-executive chairman by April 30.
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Rockwell to Close Johannesburg HQ
Rockwell
Diamonds will close its head office in Johannesburg and stop operations at its Saxendrift
mine as part of a strategic review to cut costs and improve cash flow. The
company has also issued all of its employees with retrenchment notices amid a
slump in processing, production and sales figures.
The miner will transfer Johannesburg-based key
senior executives to its operations in the country’s Middle Orange River (MOR)
region on a full-time basis, saving about $484,097 (ZAR 7.9 million) per year.
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Peregrine Unveils Chidliak-Sample Results
Peregrine Diamonds reported an
overall diamond grade of 0.88 carats per tonne from an 814-dry tonne bulk
sample from the Chidliak Diamond Project in Nunavut, Canada. The material was
taken from the CH-7 kimberlite pipe at the mine, which it owns outright.
The Toronto-listed exploration company recovered
717.65 carats of commercial-size diamonds, including “53 diamonds one carat or
larger and 183 diamonds over 0.50 carat in size.” The largest individual gem
was a 5.33-carat white octahedron with no inclusions.
Diamond breakage was high, with 75 to 90 percent
of gems damaged, more than double what is typical for large-diameter
reverse-circulation (RC) drilling programs.
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GENERAL
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4th India Diamond Week to Begin in New York
The
fourth edition of India Diamond Week will be held in New York from January 18 to
21.
The event, run by India’s Gem & Jewellery
Export Promotion Council (GJEPC) and New York’s Diamond Dealers Club (DDC),
will host about 15 diamond companies from India at the DDC’s premises. Diamond
wholesalers and dealers who are members of the DDC and trade diamonds in New
York, as well as buyers from Chicago, Los Angeles, Canada and Florida, are
expected to attend the event.
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ECONWATCH
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Diamond Industry Stock Report
U.S. stocks were mixed as retailers reported holiday sales, led by Birks Group (+11%). Far-East stocks reflected market turmoil in the region, with Luk Fook (-13.5%) slipping the most on disappointing 3Q sales. Goenka Diamond (+18%) led mixed Indian stocks, while most miners across global markets suffered.
View the detailed industry stock report.
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Jan. 14 (11:45 GMT) |
Jan. 7 (10:40 GMT) |
Chng. |
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| $1 = Euro |
0.91 |
1.09 |
-0.171 |
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| $1 = Rupee |
67.49 |
66.87 |
0.6 |
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| $1 = Israel Shekel |
3.94 |
3.94 |
0.00 |
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| $1 = Rand |
16.62 |
16.06 |
0.56 |
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| $1 = Canadian Dollar |
1.44 |
1.41 |
0.02 |
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| Precious Metals |
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Chng. |
| Gold |
$1,092.25 |
$1,096.60 |
-$4.35 |
-0.4% |
| Platinum |
$844.88 |
$868.45 |
-$23.57 |
-2.7% |
| Silver |
$14.09 |
$13.99 |
$0.10 |
0.7% |
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| Stock Indexes |
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Chng. |
| BSE |
24,772.97 |
24,851.83 |
-78.86 |
-0.3% |
| Dow Jones |
16,151.41 |
16,906.51 |
-755.10 |
-4.5% |
| FTSE |
5,842.17 |
5,903.77 |
-61.60 |
-1.0% |
| Hang Seng |
19,817.41 |
20,333.34 |
-515.93 |
-2.5% |
| S&P 500 |
1,890.28 |
1,990.26 |
-99.98 |
-5.0% |
| Yahoo! Jewelry |
981.65 |
974.15 |
7.50 |
0.8% |
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INDIA MARKET REPORT
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Polished Trading Activity
Polished trading okay
with steady U.S. post-holiday demand but some uncertainty about China. Dealers
projecting 2016 will be better than last year as shortages are supporting the
market. Limited supply and firm prices for RapSpec A2 and better diamonds (3X,
none). Still a lot of RapSpec A3 and lower quality diamonds available with
suppliers more flexible on price for these goods. Manufacturing still estimated
30 percent below capacity with little fresh polished supply expected in the
market in 1Q. Rough demand stable ahead of January De Beers sight and ALROSA
sale.
Read the Polished Diamond Trading Report
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