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Rapaport TradeWire February 2, 2017
Feb 2, 2017 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
February 2, 2017
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Polished trading slow with Far East dealers on holiday during the Chinese New Year. Manufacturing profit margins squeezed with high rough prices and soft polished demand as 1 ct. RAPI -0.9% in Jan. U.S. 2016 jewelry sales +5% to $71.4B but consolidation continues as JBT reports 1,669 jewelry businesses closed in 2016. Signet makes key personnel changes to strengthen digital offering after lackluster holiday season. LVMH 2016 jewelry sales +5% to $3.7B. ALROSA 2016 production -2% to 37.4M cts., sales +34% to 40.1M cts. Belgium 2016 polished exports -10% to $11.8B, rough imports +9% to $12.1B. Rio Tinto to close U.S. office. Brendan Bell to step down as Dominion CEO. |
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| Diamonds |
1,273,522 |
| Value |
$7,655,960,304 |
| Carats |
1,352,757 |
| Average Discount |
-30.35% |
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 [Tiffany] brand is definitive and iconic, yet continues to push and evolve with the times.
Lady Gaga after collaborating with Tiffany & Co. for the jeweler's new campaign
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MARKETS
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United
States: Polished
market stable but quieter than expected for this time of year. Dealers
surprised by strong rough market while polished and retail sectors sluggish…
Belgium: Cautious
polished trading during Antwerp Fair. Steady orders for specific goods with
very little inventory buying…
Israel:
Polished
trading quiet. Growing concerns about low profitability amid continued strength
in the rough market. Steady demand for 0.30 to 2.99 ct., F-I, SI2-I1, RapSpec
A3+ diamonds…
India: Trading
subdued with limited transactions as foreign buyers push for deeper discounts.
Very few large orders in place from retailers building up inventory…
Hong
Kong: Dealer
market on vacation with retailers focusing on Chinese New Year season. Busy
shopping period calms as consumers spend holiday week with family or traveling…
Click here for deeper analysis |
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| RAPAPORT STATEMENT
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Polished Prices Slide Despite Buoyant Rough Market
Diamond
manufacturing profits were squeezed in January amid strong rough demand while
polished prices softened. The RapNet Diamond Index (RAPI™) for
1-carat diamonds fell 0.9% during the month and was down 6.8% from a year ago.
Manufacturers raised polished production as they expect trading to improve
after the holiday season. However, the high level of rough sales was not
supported by activity in the polished and retail sectors, with jewelers
reporting disappointing December sales.
Purchase the full Rapaport Monthly Report – February 2017
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INDUSTRY
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U.S. Jewelry Market Shrinks in 2016
The
number of jewelry businesses operating in the U.S. fell 6% to 26,725 last year, according to the Jewelers Board of
Trade. Some 1,518 businesses simply discontinued, unrelated to financial failure or
merger, an increase of 63% from the previous year. Consolidation from
mergers or takeovers increased 3.5% to 118, while bankruptcies fell 15% to 33. The number of jewelry retailers leaving the industry grew 43%
to 1,269.
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Prices of Blue Diamonds Reach All-Time High
The
Fancy Color Diamond Index climbed 0.4% in 2016 due to continued strength in
demand for blues and pinks, the Fancy Color Research Foundation reported.
Prices of blue diamonds jumped 5.5% to an all-time high due to low supply. Prices of pink diamonds increased
1.4%, while yellow-diamond prices fell 4%.
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Global Weakness Hits Antwerp Diamond Trade
Belgium’s
polished diamond trade fell last year due to the economic slowdown in India
and China, the Antwerp World Diamond Centre (AWDC) said. Polished exports slid
10% to $11.8 billion, while imports fell by the same margin to $11.39 billion.
Belgium’s rough trade performed better, with imports growing 8.6% to $12.09
billion and exports up 11% to $12.73 billion last year.
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Rio Tinto to Close New York Marketing Base
Rio
Tinto Diamonds will shut its North American sales and marketing office in the
first quarter as part of a cost-cutting exercise. The New York representative
base was set up a decade ago to serve as a gateway to the U.S. retail sector.
The miner will continue to collaborate with its ‘Select Diamantaire’ clients on
marketing initiatives in the country. Brandee Dallow (pictured), who headed the
New York operation, will leave Rio Tinto when the office closes.
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RETAIL & WHOLESALE
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U.S. Jewelry Sales Rise Amid Higher Prices
U.S.
jewelry sales increased 4.8% to $71.4 billion in 2016, government data showed. Sales
at specialist jewelry stores climbed 3% to $25.3 billion in the first 11
months, according to separate data, which lags by a month. Sales grew as
prices rose with the consumer price index (CPI) for jewelry jumping 6.2% during
the year. Watch sales increased 5.3% to $9.5 billion with the CPI for watches
advancing 5.2%.
Image: Newscast
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LVMH Growth Highlights High-End Resilience
LVMH
Moët Hennessy Louis Vuitton reported jewelry and watch sales increased 9% to $1.05
billion (EUR 982 million) in the fourth quarter and by 5% to $3.71 billion for
the full year. The group, which includes Bulgari, Chaumet, Tag Heuer, Hublot
and De Beers Diamond Jewellers, said it shrugged off political and economic
uncertainty with growth driven by improvements in China, South Korea and the
Middle East. |
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Pandora Enters Burgeoning Indian Jewelry Market
Pandora
is opening its first stores in India to capitalize on expected growth in the
country. The Danish jeweler, known for its charm bracelets and silver
jewelry, is planning about 50 concept stores in the next three years, in
addition to shop-in-shops, with five concept stores projected for 2017. The
jeweler selected Pan India Charms & Jewellery as its official
distributor in the country.
Image: Jorge Royan |
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Signet Shakes Up Senior Management
Signet
Jewelers announced several strategic and operational appointments following
disappointing holiday sales. Bryan Morgan, VP of supply-chain
management and repair, was promoted to COO to replace Ed Hrabak who is
retiring. Sebastian Hobbs, currently U.K. managing director, was named
president and chief customer officer, a new position created to improve the
consumer experience. Brian Tilzer,
chief digital officer at CVS Health, was appointed to Signet’s board. |
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MINING
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ALROSA Caps 2016 Output to Reduce Stocks
ALROSA’s
diamond production fell 2% to 37.4 million carats in 2016 as the miner focused
on reducing excessive inventory from the previous year. Sales volume increased
34% to 40.1 million carats while the value of sales exceeded $4.3 billion.
ALROSA said it reduced output at its alluvial deposits to align with the weak diamond
market environment in 2015. Fourth-quarter production increased 10% to 9.5
million carats driven by its underground operations, while the company is
planning to raise output 6% this year.
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First Gahcho Kué Diamond Sale Disappoints
Mountain
Province failed to sell a quarter of the goods offered at its inaugural sale
of rough diamonds from the Gahcho Kué mine. The company withdrew mostly brown
and lower-quality supply from the tender due to insufficient bids as tight
liquidity limited Indian buyers. The January sale took place in Antwerp and
fetched $6.3 million from 49,420 carats. Production at Gahcho Kué, a
joint venture with De Beers, launched in September, with output reaching 862,000 carats in 2016.
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Lucapa Buys Lesotho Diamond Mine
Lucapa
Diamond Company acquired a 70% stake in the Mothae mine in Lesotho for $9
million. The company expects the resource will complement its high-value Lulo mine
in Angola since it also contains large,
premium-value and type-IIa diamonds. The miner received a 10-year mining
lease and a right to extend by another decade from the Lesotho government,
which owns the remaining 30% of the mine. Mothae was previously owned by Lucara Diamond Corporation.
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First Liqhobong Rough Sale Set for February
Firestone
Diamonds will hold its maiden sale of rough diamonds from the Liqhobong mine in
Antwerp from February 6 to 10, with results expected the following week. The
company plans to host another sale toward the end of March and two sales per
quarter thereafter. Production at the Lesotho-located mine was launched in
October with more than 20 special stones above 10.8 carats and several fancy
yellow diamonds among the mix.
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GENERAL
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Dominion CEO Quits Before Company's Move to Calgary
Dominion
Diamond Corporation’s chief executive Brendan Bell will stand down when the miner
moves its headquarters from Yellowknife to Calgary. A process is underway to find
a replacement, with Bell (pictured) committing to the role until June 30. Bell said the
move was necessary to reduce operating costs, but he could not continue as CEO
for personal reasons. Bell joined Dominion in July 2013, effectively serving
as CEO since November 2014. |
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RJC Unveils New Self-Assessment Guide
The
Responsible Jewellery Council introduced an updated self-assessment workbook in
a revised format designed to help members understand its code of practice. The
group, which monitors sourcing practices in the jewelry market, explained the
new publication tailors self-assessment questions toward the activities of its
members and includes instructions to help companies plug compliance gaps ahead
of an audit.
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ECONWATCH
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Diamond Industry Stock Report
Signet (-7.2%) led the declines in U.S. retail stocks after it announced a shake-up of its senior management team. European luxury shares were also down, headed by Richemont (-2.2%), after the Cartier owner also revealed several leadership changes. Chow Tai Fook (+5.9%) led resurgent Far East stocks, while Indian jewelry shares improved.
View the detailed industry stock report
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Feb 2, 2017 (12:25 GMT) |
Jan 26, 2017 (13:30 GMT) |
Chng. |
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| $1 = Euro |
0.93 |
0.93 |
-0.01 |
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| $1 = Rupee |
67.32 |
68.16 |
-0.84 |
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| $1 = Israel Shekel |
3.76 |
3.79 |
-0.03 |
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| $1 = Rand |
13.40 |
13.35 |
0.05 |
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| $1 = Canadian Dollar |
1.30 |
1.31 |
-0.01 |
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| Precious Metals |
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Chng. |
| Gold |
$1,221.30 |
$1,190.47 |
$30.83 |
2.6% |
| Platinum |
$1,006.55 |
$975.65 |
$30.90 |
3.2% |
| Silver |
$17.67 |
$16.87 |
$0.80 |
4.7% |
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| Stock Indexes |
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Chng. |
| BSE |
28,226.61 |
27,708.14 |
518.47 |
1.9% |
| Dow Jones |
19,890.94 |
20,068.51 |
-177.57 |
-0.9% |
| FTSE |
7,147.91 |
7,178.49 |
-30.58 |
-0.4% |
| Hang Seng |
23,184.52 |
23,374.17 |
-189.65 |
-0.8% |
| S&P 500 |
2,279.55 |
2,298.37 |
-18.82 |
-0.8% |
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INDIA MARKET REPORT
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Polished Trading Activity
Trading
subdued with limited transactions as foreign buyers push for deeper discounts.
Very few large orders in place from retailers building up inventory. Suppliers
waiting for Hong Kong International Jewellery Show (Feb. 28) to assess Far East
demand and sustainable polished price levels. Steady rough trading after large
De Beers and ALROSA sales. Manufacturers raising production in anticipation
that polished trading will improve in February and March.
Read the Polished Diamond Trading Report |
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Tags:
Rapaport
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