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Rapaport TradeWire December 1, 2016
Dec 1, 2016 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
December 1, 2016
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Holiday season begins with
optimism as stock markets hit record high on Black Friday. Foot traffic flat, average
spend -3% to $289 over Thanksgiving weekend, reports NRF. Millennial shift to online
purchases continues with Cyber Monday sales +13% to $3.5B, according to Adobe Digital Insights. Polished market stable with
buying opportunities in India due to rupee liquidity crisis. Shrenuj nears deal
to ease $450M debt as De Beers sight suspended. Christie’s HK sells $79M (80%
by lot). Tiffany 3Q sales +1% to $949M, profit +5% to $95M. Lukoil 3Q Grib
diamond sales +33% to $62M. Alan Bronstein elected president of Natural Color
Diamond Association.
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| Diamonds |
1,296,155 |
| Value |
$7,964,274,890 |
| Carats |
1,361,974 |
| Average Discount |
-30.33% |
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 weekend results underline the importance of brands effectively converging digital and physical channels to deliver a single, seamless shopping experience to consumers, particularly during the high-volume holiday season.
Shelley Kohan, vice president of retail consulting at RetailNext, on Black Friday's shift online
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MARKETS
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United
States: Positive sentiment as stock market rally and strong dollar lift
expectations for holiday season. Jewelers expect sales bump in coming weeks…
Belgium: Trading quiet with steady low-volume orders for the holiday season. Some
dealers buying bargains (“Metzios”) amid Indian liquidity crisis…
Israel:
Polished trading stable with steady orders from U.S. independent
retailers. Demand from larger chains has slowed. Little inventory buying as
jewelers focus on selling during holiday season…
India: Polished trading quiet with dealers very cautious after rupee currency
cancellation. Domestic demand slow. Opportunistic foreign buyers looking for
bargains during liquidity crunch…
Hong
Kong: Steady traffic at Jewellery Manufacturers Association Show (Nov. 24-27)
but diamond sales weak…
Click here for deeper analysis
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INDUSTRY
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Cautious ALROSA Seeks to Steady Rough Prices
ALROSA pledged to keep rough diamond prices stable in an effort to support manufacturers’ profit margins after demand improved this year. Sales jumped 54% in the first nine months of the year with prices generally steady at its monthly sales, chief executive officer Andrey Zharkov said. The miner plans to increase diamond production by 5% to 38.85 million carats next year, Russian news service TASS cited Zharkov as saying.
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Shrenuj Nears Debt Deal to Ease Liquidity Crisis
Shrenuj
& Co. is close to securing at least $100 million in funding to ease its
debt crisis. The Mumbai-based company is in the final stages of preparing the
deal, which it expects to announce in mid-December, sources said. Shrenuj has bank
debts amounting to $450 million, of which $35 million is overdue. A strain on
liquidity has forced the company to scale down its diamond-cutting
operations in Botswana, while its De Beers sightholder status was suspended in July.
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Blue Diamond Tops Billing at Christie’s Hong Kong
Christie’s
garnered $79 million (HKD 611 million) at its Hong Kong Magnificent Jewels
auction, selling 80% by lot and 84% by value. The highlight was the sale of a
marquise-cut, 4.29-carat, fancy vivid blue, internally flawless diamond ring
for $11.8 million, or $2.7 million per carat. Christie’s also sold the
oval-shaped, 10.05-carat ‘Ratnaraj’ ruby and diamond ring for $10.2 million, which at just over $1 million per
carat was the third-highest average price on record for a ruby.
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Sotheby’s Hong Kong Jewelry Auction Fetches $3.5M
Sotheby’s
notched sales of $3.5 million (HKD 26.8 million) at its Important Jewels and
Jadeite auction in Hong Kong. The most expensive item was an early 20th-century
gem-set and diamond dragon bracelet, which fetched $266,000, double its
pre-sale upper estimate of $103,160. A brilliant-cut round, 6.01-carat,
D-color, internally flawless diamond failed to sell, having had a low-end
pre-sale estimate of $515,800. The auction was sold 56% by lot and 37% by
value.
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Sarine Profit Signals Manufacturing Recovery
Sarine
Technologies said third-quarter sales jumped 82% to $17.3 million due to
stronger polished demand in key markets and a recovery in the rough sector. The
company, which supplies equipment to diamond manufacturers, reported a profit
of $4 million versus a loss of $1.4 million a year ago. Sales still lag the
$20.4 million revenue reported two years ago, despite the significant
growth from 2015.
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RETAIL & WHOLESALE
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Black Friday Sales Decline
Sales
and foot traffic at physical stores in the U.S. fell over the Thanksgiving and
Black Friday weekend as more retail business moved online, initial figures
showed. In-store sales declined 4.2% and traffic fell 4.4%, according to
RetailNext. ShopperTrak said foot traffic was flat on Black Friday and declined
1% across the two days. The average spend fell 3% from last year to $289 over
the weekend, according to the National Retail Federation.
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Cyber Monday Pulls Ahead
Online retail activity over Black Friday and Cyber Week increased from last year. Sales from desktop
computers climbed 17% to $1.29 billion on Thanksgiving and jumped 19% to $1.97
billion on Black Friday, ComScore reported. Online sales during Cyber
Monday rose 12% to $3.4 billion with toys and electronics driving ecommerce
spending, according to Adobe Digital Insights.
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Tiffany Sparkles With Rare Sales Rise
Tiffany
& Co.’s sales increased 1% to $949.3 million in the three months that ended
October 31 marking the jeweler’s first sales rise in two years. An improvement
in fashion jewelry drove growth, partly offsetting flat engagement and wedding
jewelry and weak high-end statement pieces. At constant exchange rates, sales
were flat, while comparable store sales fell 3%. Net earnings increased 5% to
$95.1 million.
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Hearts On Fire Hit by U.S. Challenges
Revenue
generated by the Hearts On Fire jewelry brand declined in the first fiscal half
because of tough conditions in the U.S. retail market, its Hong Kong-based parent Chow Tai Fook reported. Hearts On Fire sales slid 9% to $41.8 million (HKD
324.5 million) in the six months ending September 30, while its operating loss
widened 21% to $8.5 million. The brand’s wholesale revenue slumped 14%, while
its retail revenue increased 12%.
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MINING
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Lukoil’s Diamond Mine Sales Jump
Lukoil’s
diamond revenue from its Grib mine in Russia rose 33% to $61.9 million (RUB 4
billion) in the third quarter. Sales more than doubled to $232.3 million in the
first nine months from $108.4 million a year ago. Lukoil, Russia’s largest oil
producer, started recovering rough diamonds at Grib in September 2014 and production
continues to ramp up to full capacity.
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Lucapa Secures Angola Exploration Permit
Lucapa
Diamond Company received approval to explore the Lulo Diamond Project in Angola
for another five years. Lucapa has already stepped up its kimberlite
exploration program in anticipation of the government approval, with two rigs
drilling the priority kimberlite targets and a third due to arrive in Angola in
December. The Lulo alluvial mine is the source of several large rough diamonds,
including the biggest in Angola’s history that fetched $16 million in
February.
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DiamondCorp Battles to Save Lace Mine
Deloitte began talks with stakeholders in the
Lace Diamond Mine (LDM) as parent company DiamondCorp continues to assess the
viability of its troubled South African operation. LDM entered
business rescue earlier this month after torrential rain left the South
African mine flooded, resulting in a suspension of operations for more than 12 weeks.
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Two Diamond Mines for Sale in South Africa
Rockwell
Diamonds placed two of its mines on the selling block in an attempt to turn the
company’s fortunes around. The junior miner started a process to sell the
Remhoogte/Holsloot and Saxendrift mines in South Africa to streamline its
operations. The turnaround plan encompasses measures to accelerate production at
the Wouterspan mine, which includes moving its Holsloot processing plant to the site.
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GENERAL
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Cartier Insists Walmart Not Authorized Distributor
Cartier
distanced itself from an
$18,000 diamond watch sold online by Walmart on Black Friday and said the department store is not one of its official retailers.
Walmart listed the Cartier Roadster XL Chrono men’s timepiece on its ecommerce
site with an advertised price roughly 60% off the manufacturer's suggested
retail price of $46,500. Cartier said it had no knowledge or involvement
in selling or marketing the item and could not confirm its authenticity.
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Richemont to Cut 211 Swiss Watch Jobs
Richemont
is on the cusp of another round of layoffs at its Swiss watchmaking operations
as demand for timepieces sank this year. The company plans to cut 211 jobs at
Piaget and Vacheron Constantin, Swiss trade union Unia said. This follows 300
layoffs across Piaget, Vacheron Constantin and Cartier in May, according to
Unia. Sales at Richemont’s specialist watchmakers slid 17% in the six
months to September 30, mirroring a decline in Swiss watch exports.
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Bronstein to Lead Color Diamond Association
The
Natural Color Diamond Association elected Alan Bronstein of Aurora Gems (pictured) as
president, replacing JFine Inc.’s Jordan Fine in the position. Jose Batista of
Rio Diamond Corp. was voted in as vice-president, sharing the role with Breanne
Wittrock. Scott West of L.J. West Diamonds will take over the roles of
secretary and treasurer from Jeffrey Post of Gem Platinum. All members will start
their new positions in January.
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ECONWATCH
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Diamond Industry Stock Report
After the U.S. market hit a record on Black Friday, retail stocks fell as early holiday sales data pointed to a shift away from physical stores to online shopping. Charles & Colvard (-11.4%), Macy's (-6%) and Nordstrom (-4.5%) led the declines, but Tiffany (+4.2%) gained on better-than-expected results. European and Far Eastern luxury stocks were solid, led by Hong Kong-based Chow Sang Sang (+4.5%). Indian industry stocks showed a limited recovery after recent slides following the government's clampdown on cash transactions, led by Gitanjali Gems (+14%). Mining stocks were mixed.
View the detailed industry stock report
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Dec 1 (13:54 GMT) |
Nov 24 (13:30 GMT) |
Chng. |
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| $1 = Euro |
0.94 |
0.95 |
-0.01 |
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| $1 = Rupee |
68.37 |
68.72 |
-0.34 |
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| $1 = Israel Shekel |
3.83 |
3.88 |
-0.04 |
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| $1 = Rand |
14.10 |
14.23 |
-0.13 |
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| $1 = Canadian Dollar |
1.34 |
1.35 |
-0.01 |
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| Precious Metals |
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Chng. |
| Gold |
$1,168.52 |
$1,185.20 |
-$16.68 |
-1.4% |
| Platinum |
$904.75 |
$916.25 |
-$11.50 |
-1.3% |
| Silver |
$16.38 |
$16.32 |
$0.06 |
0.4% |
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| Stock Indexes |
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Chng. |
| BSE |
26,559.92 |
25,860.17 |
699.75 |
2.7% |
| Dow Jones |
19,123.58 |
19,083.18 |
40.40 |
0.2% |
| FTSE |
6,708.46 |
6,811.33 |
-102.87 |
-1.5% |
| Hang Seng |
22,878.23 |
22,608.49 |
269.74 |
1.2% |
| S&P 500 |
2,198.81 |
2,204.72 |
-5.91 |
-0.3% |
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INDIA MARKET REPORT
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Polished Trading Activity
Polished
trading quiet with dealers very cautious after rupee currency cancellation.
Domestic demand slow. Opportunistic foreign buyers looking for bargains during
liquidity crunch. Larger manufacturers with legitimate invoicing relatively
unaffected with steady U.S. orders. Rough demand stable since manufacturers returned
from Diwali break.
Read the Polished Diamond Trading Report |
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