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Rapaport TradeWire August 4, 2016
Aug 4, 2016 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
August 4, 2016
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Diamond
trading quiet. Polished prices soften in July with 1 ct. RAPI -1.7%, 0.30 ct.
-1.8%, 0.50 ct. -0.5%, 3 ct. -1.5%. India IIJS show opens with steady local
traffic but no foreign buyers. Rough demand stable as De Beers sells $520M in
July. Canada’s Gahcho Kué mine begins production that is expected to reach 4.5M
ct. a year. Rio Tinto 1H diamond revenue +3% to $342M, profits -29% to $22M.
Ben Moss to close all 54 stores. Belgium July polished exports -14% to $1.2B,
rough imports +17% to $907M. European Commission approves Antwerp ‘Carat Tax’.
Industry mourns passing of former Dominion Diamond CEO Robert Gannicott.
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| Diamonds |
1,222,355 |
| Value |
$7,954,529,172 |
| Carats |
1,314,815 |
| Average Discount |
-30.04% |
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
The complex and burdensome discussions on the control and valuation of the stock of diamond traders, an annually recurring grievance for many diamond-trading companies, will no longer occur as a result of the Carat Tax.
The Antwerp World Diamond Center lends its support to a new, simpler tax regime for Belgium’s diamond trade.
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MARKETS
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United
States: Sentiment
weak with quiet polished market. Stable demand for 1 ct., H-I, SI diamonds.
Good demand for 3X as prices softened…
Belgium:
Market at a standstill with the bourses closed from August 1 to 22. New Carat
Tax introduced for 2017 aiming to simplify tax calculation and ease tensions
with banks and authorities…
Israel:
Polished
trading seasonally slow in August. Dealers preparing for vacation before bourse
closes (August 15 to 28). Slight improvement at one-day Blue and White fair
with few overseas participants…
India:
Polished
trading quiet. Jewelers focused on IIJS show (August 4 to 8). Low expectations
for diamond and gold jewelry sales. Very few foreign buyers attending…
Hong
Kong: Jewelry
retailers discounting to clear stock during slow summer typhoon season. General
retail sales declines 11 percent in first half – worst drop in 17 years – due
to slowdown in tourism and economic growth…
Click here for deeper analysis
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RAPAPORT STATEMENT
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Diamond Prices Decline in July
Polished
diamond prices softened in July continuing the downtrend in the second quarter.
Diamond markets were seasonally quiet. Overall polished demand remains weak.
The RapNet Diamond Index (RAPI™) for one carat diamonds fell 1.7% in July. RAPI
for 0.30-carat diamonds dropped 1.8% and RAPI for 0.50-carat diamonds declined
0.5%. RAPI for 3-carat diamonds fell 1.5%.
Click
here to read the full statement
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INDUSTRY
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European Commission Approves Belgium ‘Carat Tax’
A new tax
system for Belgium’s diamond industry is expected to ease the trade’s tax
calculation even if it will result in a higher bill. Under the proposed ‘Carat
Tax,’ the tax calculation for diamond traders will be based on revenue rather
than profit, meaning that inventory valuations will be taken out of the
equation. The new regime will improve stability and make the industry more
appealing to banks, the Antwerp World Diamond Centre said. The tax still has to
be approved by Belgium’s Parliament and is likely to be adopted into law by
year-end. The European Commission approved it July 29.
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Belgium’s Polished Trading Declines
Belgium’s polished diamond exports fell 14% to $1.02 billion
in July and polished imports slid 17% to $840.4 million. This mirrored a trend
this year that has seen growth in rough shipments but a decline in polished.
Rough imports surged 17% to $907.7 million in July and rough exports jumped 14%
to $1.17 billion.
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India Could Get Jewelry Park
India’s Gem
& Jewellery Export Promotion Council (GJEPC) is planning to develop the
sector’s first industrial park to improve standards and bring manufacturers under
one roof. The dedicated zone in Mumbai will enable small-scale jewelry industry
members to manufacture plain gold and studded jewelry at a single venue.
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RETAIL & WHOLESALE
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Pawnbrokers’ Pre-Merger Sales Grow
Pawnbrokers First
Cash Financial Services and Cash America International both reported an
increase in second-quarter revenue and raised their earnings guidance ahead of their planned
merger in the third quarter. First Cash sales grew 9.4% to $115.5 million
in the second quarter with record pawn receivable balances in Latin America and
“improving trends” in the U.S. Cash America’s revenue increased 2% to $241.2
million.
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Kering Watch Sales Lag in Tough Market
Kering’s
jewelry brands outperformed watches in the first half as revenue from
timepieces declined in a challenging market environment. Watch and jewelry
sales fell 4.4% from a year ago to an estimated $390 million (EUR 349 million),
according to Rapaport estimates. Revenue increased in each of the
group’s luxury categories except timepieces. Kering’s jewelry and watch brands
include Boucheron, Dodo, Girard-Perregaux, Pomellato and Ulysse Nardin. |
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Canadian Jewelry Chain Ben Moss to Close
Ben Moss
Jewellers will shut all 54 of its stores across Canada after a weak local
currency and the economic slowdown in Western Canada forced the company out of
business. The Winnipeg-based jeweler, which sells mid- to high-priced jewelry,
obtained court protection under the Companies’ Creditors Arrangement Act in
May. Going-out-of-business sales began July 30 at all remaining outlets, with
discounts of up to 40% on all merchandise, including the entire stock of gold
and silver jewelry and diamonds. |
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MINING
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De Beers July Sales Total $520M
De Beers sold
$520 million of rough diamonds in its sixth sales cycle of 2016. Sales declined
sequentially from a revised $564 million in the fifth cycle in
June. The miner reported “positive” sightholder sentiment but maintained a
cautious outlook for the rest of the year. Sales include the July sight in
Gaborone, Botswana, as well as auction revenue and supply to beneficiation and
government partners. Trading of De Beers boxes on the secondary market was stable
during the sight.
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Gahcho Kué Mine Poised for 1Q Launch
De Beers and Mountain Province started a formal ramp-up of
diamond production at the Gahcho Kué mine in Canada. Commercial operations are on
track to come on stream in the first quarter of 2017. Gahcho Kué is the world’s
largest new diamond mine and is expected to produce an average of 4.5 million
carats per year over a 13-year lifespan. De Beers holds a 51% stake and
Mountain Province owns the balance of shares. |
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Rio Tinto Diamond Sales Rise
Rio Tinto’s
diamond revenue increased 3% to $342 million in the first half of 2016. Net
earnings slid 29% to $22 million. The U.S. consumer market was steady but
demand from India and China continued to be slower, while rough prices were
varied across product types, the miner said. Production increased 2.1% to 9
million carats due to a continued ramp-up of underground operations at the
Argyle mine in Australia, which outweighed lower grades at the Diavik mine in
Canada.
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Dominion Mourns Death of Former Chairman
Dominion Diamond Corporation announced the death of former
chairman and chief executive officer Robert Gannicott at the age of 69.
Gannicott was chairman from June 2004 until April 2016 and CEO from September
1999 to July 2015. He passed away August 3 after an extended battle with
leukemia.
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Rio Tinto Launches Chain of Custody
Rio Tinto
announced a scheme to track diamonds from its Argyle mine through the supply
chain in response to growing consumer and trade interest in diamond provenance.
The miner will enforce its chain of custody initiative using a trademark and a
suite of marketing materials, including a Certificate of Authenticity, to which
authorized suppliers and retailers will have access. The certificate will
accompany accredited jewelry throughout the supply chain.
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Gemfields Ramps Up Ruby Output
Gemfields
reported ruby and corundum production from its Montepuez mine in Mozambique jumped
23% to 10.3 million carats in the fiscal year ending June 30. Output was above
the miner’s forecast of 8 million carats. The increase was driven by a 68% surge
in the volume of “higher-quality” rubies recovered. Sales totaled $73.1
million. Emerald and beryl production from the Kagem mine in Zambia was
flat at 30 million carats while sales amounted to $101.3 million.
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GENERAL
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GIA Job Fair Draws Large Crowd
The
Gemological Institute of America (GIA) Jewelry Career Fair attracted 600 people
at the Javits Center New York on July 25. Participants included high-profile
industry figures, GIA students and recruiters. Job seekers had the opportunity
to meet 42 companies looking to fill hundreds of positions and synch up with 24
career coaches.
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GIA Allocates $2M for Scholarships
The GIA will
offer $2 million of scholarships next year for its Gemology and Jewelry
Manufacturing Arts programs, courses and laboratory programs. Applications are
open on the GIA’s website until September 30. The scholarships are available
for distance e-learning courses and for campus-based programs in
Bangkok, Carlsbad, Hong Kong, London, Mumbai, New York and Taiwan, as well as
at GIA branches in Botswana and Dubai. |
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London Bourse Reaches Out to Workshops
The London Diamond
Bourse (LDB) launched a new membership category that enables workshop owners to
maintain a presence in the city’s diamond district after soaring rents have
forced them to leave. The LDB is offering mounters, setters and polishers space
in the bourse to meet customers and letting them use the exchange’s postal
address.
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ECONWATCH
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Diamond Industry Stock Report
Stocks suffered globally this past week with the major
indices falling. U.S. retail and jewelry stocks declined almost across the
board. Far East shares also largely lost value, led by Chow Tai Fook (-6.3%) as
Hong Kong retail sales showed their heaviest drop in 17 years. Kering (+6.4%)
outperformed otherwise sluggish European stocks on promising first-half
results. Miners had a mixed week, with Rockwell Diamonds (-14%) falling and
Gemfields (+14%) gaining on higher-than-forecast production figures.
View the detailed industry stock report
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Aug 4 (11:25 GMT) |
July 28 (11:36 GMT) |
Chng. |
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| $1 = Euro |
0.90 |
0.90 |
0.00 |
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| $1 = Rupee |
66.93 |
67.04 |
-0.12 |
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| $1 = Israel Shekel |
3.83 |
3.82 |
0.00 |
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| $1 = Rand |
13.75 |
14.26 |
-0.51 |
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| $1 = Canadian Dollar |
1.31 |
1.32 |
-0.01 |
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| Precious Metals |
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Chng. |
| Gold |
$1,360.28 |
$1,341.95 |
$18.33 |
1.4% |
| Platinum |
$1,159.50 |
$1,145.69 |
$13.81 |
1.2% |
| Silver |
$20.40 |
$20.37 |
$0.03 |
0.1% |
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| Stock Indexes |
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Chng. |
| BSE |
27,714.37 |
28,208.62 |
-494.25 |
-1.8% |
| Dow Jones |
18,355.00 |
18,472.17 |
-117.17 |
-0.6% |
| FTSE |
6,720.87 |
6,736.61 |
-15.74 |
-0.2% |
| Hang Seng |
21,832.23 |
22,174.34 |
-342.11 |
-1.5% |
| S&P 500 |
2,163.79 |
2,166.58 |
-2.79 |
-0.1% |
| Yahoo! Jewelry |
997.54 |
1,020.52 |
-22.98 |
-2.3% |
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INDIA MARKET REPORT
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Polished Trading Activity
Polished
trading quiet. Jewelers focused on IIJS show (August 4 to 8). Low expectations
for diamond and gold jewelry sales. Very few foreign buyers attending. Good
demand for 1 ct., G-J, VS-SI diamonds. U.S demand steady. Chinese and domestic
Indian demand cautious. Rough trading stable after last week’s De Beers sight..
Read the Polished Diamond Trading Report |
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