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Rapaport TradeWire May 19, 2016
May 19, 2016 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
May 19, 2016
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World Diamond Congress
focuses on transparency, responsibility, sustainability with discussions about
financing and regulatory requirements for compliance auditing. 2016 looking
better than 2015 but demand still sluggish. Mixed expectations for Las Vegas
shows with U.S. consumers cautious in election year. Steady rough demand and
stable prices at De Beers sight. Namibia signs 10-year supply deal with De
Beers. Chow Tai Fook warns 1Q profit down 40-50%. Sotheby’s Geneva sells $175M
(83% by lot) with pear-shape, 15.38 ct., fancy vivid pink, VVS2 diamond
fetching $31M ($2.1M/ct.). Christie’s Geneva sells $149M with rectangle, 14.62
ct., vivid blue, VVS1 ‘Oppenheimer Blue’ selling for $57.5M ($3.9M/ct.). WFDB
adds GJEPC as member, re-elects Ernie Blom president. Ronnie Vanderlinden
elected IDMA president.
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| Diamonds |
1,190,138 |
| Value |
$8,152,529,882 |
| Carats |
1,293,233 |
| Average Discount |
-28.75% |
www.rapnet.com
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| The RapNet Diamond Index (RAPI™) is the average asking price in hundred $/ct. of the 10 percent best priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet - Rapaport Diamond Trading Network. |
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Get Current Price List | Subscribe to Rapaport | Join RapNet |
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QUOTE OF THE WEEK
We must all contribute, cooperate and do all we can to maintain and strengthen consumer confidence in natural diamonds, for the benefit of the entire diamond supply pipeline.
Ronnie Vanderlinden, newly elected president of the International Diamond Manufacturers Association, speaking to delegates at the World Diamond Congress in Dubai this week
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MARKETS
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United States: Sentiment is weak as New
York trading slows. Dealers concerned about profitability as demand softened in
the past month, particularly for 3 to 4 ct. diamonds…
Belgium: Steady business despite
slower buyer traffic in Antwerp. Dossiers selling well with good demand for
0.30 to 1.25 ct., D-J, VS2-SI1, 3X diamonds…
Israel: Polished trading
seasonally quiet. Large delegation traveling to Las Vegas with mixed expectations
for JCK show. Liquidity squeezed with suppliers cautious to give clients credit
while bank lending is tight…
India: Stable market but
trading relatively quiet during summer holiday period. Steady U.S. and Far East
demand. Dealers looking for goods ahead of Las Vegas shows and expect trading
to improve in June…
Hong Kong: Polished trading slowed
from previous weeks. Steady demand from China with steady inquiries for 1 to 2
ct., D-J, VS-SI RapSpec A2 diamonds...
Click here for deeper analysis |
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INDUSTRY
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Diamond Congress Raises Compliance, Marketing Concerns
The biennial
World Diamond Congress (WDC) took place in Dubai with a focus on transparency,
responsibility, and sustainability that will help improve bankability of the
diamond industry. Discussions outlined the need for stronger financial and
compliance auditing and for the trade to implement “know-your-supplier”
measures that will inspire confidence that diamonds are ethically sourced and
responsibly managed.
The
three-day congress, which is a joint gathering of the World Federation of
Diamond Bourses (WFDB) and the International Diamond Manufacturers Association
(IDMA), also stressed an urgent need to boost consumer demand through effective
marketing. The trade urged the Diamond Producers Association to work with
the WFDB and IDMA sponsored World Diamond Mark in its marketing initiatives.
During the
congress, Ernie Blom was elected to a fourth term as WFDB president, while
Ronnie Vanderlinden was elected IDMA president.
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GJEPC Joins World Federation of Diamond Bourses
The
World Federation of Diamond Bourses (WFDB) accepted India’s Gem and Jewellery
Export Promotion Council (GJEPC) as its 31st member organization.
The council had to adjust its bylaws to comply with WFDB requirements given
that it is not a traditional bourse, WFDB president Ernie Blom told Rapaport News at the World Diamond
Congress. The GJEPC now has the federation’s largest member base representing
more than 6,000 diamond and jewelry exporters.
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Gold Jewelry Demand Slides as Prices Rise
Global
gold-jewelry demand slumped in the first quarter as the price of the metal rose
and Indian jewelers went on strike, according to the World Gold Council.
Demand slid 19% year on year to 481.9 tonnes in the first three months of the
year compared with the same quarter a year ago. The price of gold jumped 17%
from the previous quarter to $1,237 per ounce. Demand in India fell 41% and in
China by 17%.
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Kingold Jewelry Sees Sales Jump
China’s
Kingold Jewelry reported revenue and profit surged in the first quarter because
of a stronger showing by the company’s branded products.
Total revenue soared 37% year on year to $282.2 million and profit more than
doubled to $15.2 million. Gross margin climbed to 10.1% from 5.2% as the unit
price of branded sales rose and costs fell.
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RETAIL & WHOLESALE
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‘Oppenheimer Blue’ Breaks Auction Record
Christie’s
smashed the world auction record for a jewel as it sold the ‘Oppenheimer Blue’
diamond ring for $57.5 million (CHF 56.8 million) in Geneva.
The rectangular-cut, 14.62-carat, fancy vivid blue, VVS1 diamond went for well
above Christie’s upper estimate of $46.1 million, fetching $3.9 million
per carat. Christie’s sold $148.6 million of jewelry at the Magnificent Jewels auction
or 100 percent by lot.
The
auctioneer also expects a cut-cornered rectangular modified brilliant, 5.03-carat,
fancy vivid green, VS2 diamond dubbed the ‘Aurora Green’ to fetch up to $20
million (HKD 155 million) in Hong Kong later this month.
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Pink Diamond Sells for $32M at Sotheby's
Sotheby’s claimed
to set a new record for any jewelry auction bringing in a total of $175.1
million at its Magnificent Jewels
and Noble Jewels sale in Geneva. The auction sold 83% by lot.
Leading the sale was a pear-shape, 15.38-carat, VVS2, fancy
vivid pink diamond which sold to an Asian buyer for $31.6 million (CHF 30.8
million), or $2.1 million per carat. In addition, a 7.32-carat, fancy vivid blue, internally flawless diamond
ring went for $17.1 million, or $2.3 million per carat, and a fancy intense
blue diamond brooch fetched $13.7 million
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Chow Tai Fook Profit Set to Slump
Chow Tai
Fook warned profit is expected to plummet 40 to 50% in the fourth fiscal
quarter because of weaker consumer sentiment in Greater China.
Gross profit margin was negatively affected by the unrealized hedging loss on
gold loans versus a gain last year and a change in the product mix to more gold
sales. Sales declined 26% in the three months to March 31.
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Macy’s Targets Jewelry to Drive Sales Rebound
Macy’s is
embarking on a nationwide initiative to offer better-quality jewelry and
improve the skills of its selling staff to mitigate tough market conditions.
The department store plans to roll out the project across 350 stores by
year-end 2016. The program was piloted in 40 outlets in fall of last
year. Macy’s sales declined 7.4% from a year ago to $5.77 billion in the
first fiscal quarter that ended April 30.
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U.S. Jewelry Prices Rise in April
The U.S. consumer price index (CPI) for jewelry
rose 1.5% in April from the previous month as prices returned to an
upward trend that was briefly interrupted in March.
Prices
have now advanced in each month since December with the exception of March,
when the index fell
3.1%. The April CPI figure is a 5% jump
from a year ago, according to seasonally unadjusted data from the U.S. Bureau
of Labor Statistics. |
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MINING
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De Beers and Namibia Strike Long-Term Deal
De
Beers and Namibia signed a 10-year sales agreement that will “significantly
increase” the quantity of rough diamonds made available for beneficiation in
the country.
Under the deal, $430 million worth of diamonds will be offered each year to Namibia-based
sightholders through the Namibia Diamond Trading Company. All special stones recovered
by Namdeb – the De Beers-government diamond mining joint venture – will be made
available for sale in Namibia.The pact also provides for
15% of run-of-mine production from Namdeb to be made available for independent
sales through Namib Desert Diamonds, a newly created parastatal.
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Gem Diamonds' Letšeng Sales Leap
Gem
Diamonds reported revenue from its Letšeng mine in Lesotho rose in the first
three tenders of the year. Sales jumped 13% to $87.8
million compared with the first three tenders last year. Sales volume surged 26%
to 45,311 carats, outweighing a 10% drop in the average price to $1,938 per
carat.
Production
at Letšeng soared 28% to 28,698 carats in the first quarter. Meanwhile, output
from the company’s Ghaghoo mine in Botswana fell 5% to 11,029 carats as it
slowed the mine’s development during the weak market.
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ALROSA’s Diamond Reserves Jump 8%
ALROSA’s
diamond reserves grew 8% to 658 million carats as of January 1 compared to its
last assessment in 2013. The miner reported a higher evaluation of its Mir and
International pipes, while the inclusion of alluvial deposits such as AO
Nizhne-Lenskoe also contributed to the increase.
The evaluation was undertaken in accordance with the Joint Ore Reserves
Committee (JORC) code. An earlier evaluation that followed Russian
state classification standards showed reserves of 1.11 billion carats. |
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Lucapa Sells More Lulo Diamonds
Lucapa
Diamond Company reported an average price of $1,150 (AUD 1,580) per carat from
a sale of diamonds recovered at the Lulo mine in Angola, a frequent source of
large diamonds. The miner sold a parcel of 1,862 carats for $2.1 million.
Since the sale, Lucapa recovered three more “special” stones from the mine,
weighing 60 carats, 35 carats and 21 carats, as well as a 13-carat fancy yellow
diamond. The company also announced
a $7 million upgrade plan for the mine.
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Renard Mine Development Beats Expectations
Stornoway
Diamond Corporation said progress on its Renard Diamond Project in Canada has
been better than expected as it aims to start production this year.
At the end of April, progress was at 92.1% versus a plan of 84.1%. First
ore processing is expected by the end of September.
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GENERAL
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Massive Rough Diamond to Star at Israel Show
The
Diavik Foxfire, the largest rough diamond ever found in North America, will
feature at the third International Rough Diamond Week in Israel next week. The
show is scheduled to be held at the Israel Diamond Exchange (IDE) in Ramat Gan
from May 22 to 26.
Rio Tinto discovered the 187.7-carat diamond at its Diavik mine in Canada’s Northwest
Territories last fall. It is being shown at select diamond centers around the
world ahead of an auction next month.
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New Graduate Jewelry Scheme in India
The
Indian Institute of Gems & Jewellery (IIGJ) introduced a graduate scheme
that it said is the first to combine jewelry design and manufacturing with
management.
The IIGJ has tied up with the Welingkar Institute of Management to offer
budding jewelers a three-year course. The IIGJ is a project of India’s Gem
& Jewellery Export Promotion Council (GJEPC).
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ECONWATCH
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Diamond Industry Stock Report
There were sweeping declines in industry stocks this past week, especially in the U.S. amid speculation that the Federal Reserve could increase interest rates. Nordstrom (-26%) suffered the steepest decrease. Mining stocks mostly fell, led by Stellar Diamonds (-11.5%), with Lucara Diamond Corp. (-6.8%) losing value after large rough diamond discoveries and sales had given it a boost in previous weeks. India was generally stronger, headed by Goldiam Intl. (+8.9%).
View the detailed industry stock report.
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INDIA MARKET REPORT
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Polished Trading Activity
Stable market but
trading relatively quiet during summer holiday period. Steady U.S. and Far East
demand. Dealers looking for goods ahead of Las Vegas shows and expect trading
to improve in June. Domestic demand sluggish with relatively weak sales during
Akshaya Tritiya gold buying season. Manufacturing levels stable. Rough trading
steady with sightholders reporting good value in De Beers boxes during sight
week.
Read the Polished Diamond Trading Report |
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