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Rapaport TradeWire April 20, 2017
Apr 20, 2017 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
April 20, 2017
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Dealers return from spring break
in optimistic mood despite low trading volumes. Steady influx of new polished
production entering the market. Large Indian manufacturers raising production,
while small factories still acclimatizing to demonetization and low levels of
demand. Dealers shifting focus to U.S. ahead of Las Vegas shows. Jewelers
discounting to bring consumers back to stores this Mother’s Day. Luk Fook 4Q
same-store sales +2%, gold -1%, gem-set jewelry +11%. Firm rough premiums on the
dealer market. ALROSA 1Q production +9% to 8.9M cts.,
sales +17% to 14.1M cts. Rio Tinto 1Q production -8% to 4.2M cts. Dubai
2016 rough exports +29% to $9.8B, rough imports +16% to $6.3B.
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| Diamonds |
1,264,743 |
| Value |
$7,607,099,685 |
| Carats |
1,355,074 |
| Average Discount |
-30.12% |
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
Surat has made a mark in the diamond industry, but there is now a need to look at the entire gems and jewelry sector. Our aim should not only be ‘Make in India,’ but also ‘Design in India.’
Indian Prime Minister Narendra Modi at the inauguration of Hari Krishna Exports' cutting factory in Surat.
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MARKETS
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United
States: Polished market steady
although many businesses closed last week for the Passover holiday. A lot of
goods out on memo…
Belgium: Dealers slowly returned from
the long Easter weekend relatively positive about the market…
Israel:
Diamond trading quiet given it
was a short week due to Passover. Dealers focused on US market with rising
expectations for upcoming Las Vegas shows…
India: Dealers relatively upbeat
despite decline of foreign buyers during Passover and Easter…
Hong
Kong: Quiet week due to holidays,
but polished trading generally slow compared to busy first-quarter period…
Click here for deeper analysis |
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INDUSTRY
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Pink & Blue Diamonds Could Fetch $68M
Sotheby’s
will offer a pair of pear-shaped diamonds at its May 16 Geneva auction,
claiming they are the “most valuable” earrings ever to go under the hammer. The
stones will be presented as separate lots, with the 14.54-carat “Apollo Blue” —
the largest fancy vivid blue, IF diamond to go on auction —
expected to sell for $38 million to $50 million. Its counterpart, the 16-carat,
fancy intense pink, VVS2-clarity “Artemis Pink” diamond, is valued at $12.5
million to $18 million.
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Dubai Sees Jump in 2016 Diamond Trade
The Dubai Diamond Exchange
(DDE) gained 268 new members in 2016 for a total of 945 companies, according to
the Dubai Multi Commodities Centre (DMCC), which hosts the bourse in its
tax-free zone. Rough imports there rose 16% to $6.3 billion, with volume
increasing 13% to 70.1 million carats for an average of $89.76 per carat — 2%
higher than the previous year. Rough exports jumped 29% to $9.77 billion, and
volume rose 26% to 79.9 million carats; the average export price grew 3% to
$122 per carat.
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US Polished Trade Slows in February
US polished diamond
imports slid 15% to $1.49 billion in February, while polished exports dropped
11% to $1.75 billion, government data showed. Net polished imports stood at
negative $257 million, compared with negative $214 million last year, meaning
exports exceeded imports. Rough imports to the US rose 14% to $50 million,
while rough exports leapt 37% to $31 million, leaving net rough imports 10%
lower at $20 million.The
US net diamond account for the month stood at negative $237 million compared
with negative $192 million a year earlier.
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RETAIL & WHOLESALE
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Luk Fook Gets Long-Awaited Jewelry Sales Growth
Luk Fook Holdings recorded
its first quarterly growth for same-store sales in three years, reporting a 2%
rise across its 199 self-operated stores during the fiscal fourth quarter. By
location, same-store sales grew 11% in mainland China, and 1% in Hong Kong and
Macau. The jeweler attributed the Hong Kong improvement to better market sentiment
and an increase in high-value gem-set jewelry sales in March. Luk Fook opened four
self-operated locations in China during the quarter for a total of 133 there,
alongside 47 stores in Hong Kong, 10 in Macau and nine in other areas.
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Judge to Review Signet Workplace Policies
Signet Jewelers has appointed former federal judge
Barbara Jones to review its policies on equal opportunities and workplace
expectations. Following last month’s Washington Post report about
alleged claims of sexual harassment and discrimination at Signet’s Sterling
Jewelers division, company shares fell 10%; at press time, they were down 30% since
the beginning of the year. In the aftermath, Signet established a committee on respect
in the workplace, which recruited Jones to conduct the review. A partner at
Bracewell LLP, Jones has extensive experience dealing with workplace compliance
issues, Signet said.
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MINING
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Alrosa Sales Volume Spikes
Alrosa’s sales far exceeded production in the first
quarter, helping the miner reduce excess inventory from 2015. Production rose
9% year on year to 8.9 million carats, and the company cited sales of 14.1
million carats — a 17% jump from last year, according to Rapaport records.
Alrosa — which is on track to meet its 39.2 million-carat 2017 production
target — benefited from abnormally strong Indian demand in the first quarter as
midstream players recovered from demonetization faster than expected, according to VTB Capital analysts.
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Argyle Decline Weighs on Rio Tinto Output
Rio Tinto’s diamond production fell 8% year on year in
the first quarter, as its Argyle mine in Australia yielded a reduced volume and
lower grade of ore. Group output dropped to 4.152 million carats, with Argyle’s
production down 11% to 3.016 million carats. At Canada’s Diavik mine, which the
company owns jointly with Dominion Diamond Corporation, first-quarter
production was flat, with Rio Tinto’s 60% share at
1.136 million carats. Rio Tinto maintained its forecast to recover 19 million
to 24 million carats this year.
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GENERAL
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Israel Bourse Issues Ethics Code
The Israel Diamond
Exchange (IDE) has introduced an ethical code of conduct to improve
transparency and business practices. The code — which was initiated during the
term of previous bourse president Shmuel Schnitzer and took more than two years
to complete — requires members to show respect for clients, colleagues,
employees and suppliers; comply
with all legal regulations; show responsibility toward other members; train and
mentor new industry members; compete fairly; and strive for excellence and
professionalism, among other things.
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GIA Launches Synthetics Detector for Jewelry
The Gemological Institute
of America (GIA) has unveiled a new machine for identifying synthetic diamonds,
including stones mounted in jewelry. Using advanced spectroscopic technology,
the machine can pinpoint natural, untreated diamonds above approximately 0.005
carats with D to Z color. The GIA will start selling the device later this year
at a price that is “accessible to the trade,” it said. The institute is also
researching how to extend the instrument’s capabilities so it can screen pink
diamonds and other materials.
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Ex-Rio Tinto Exec to Chair Gem Diamonds
Gem Diamonds has appointed
Rio Tinto and McKinsey & Co veteran Harry Kenyon-Slaney to succeed Roger
Davis as chairman, effective June 6. Kenyon-Slaney, a senior adviser to
McKinsey, has more than 33 years’ experience in the mining industry, Gem
Diamonds said. A geologist by training, he is also a partner at Audley Capital
Advisors and a member of Bridon Bekaert Ropes Group’s board of directors. He filled several roles at Rio Tinto, including CEO of
energy and CEO of diamonds and minerals.
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ECONWATCH
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Diamond Industry Stock Report
Financial markets fell this week, dragging diamond and
jewelry stocks down. JC Penney (-7.5%) led the US retail decline despite
reports it would delay some planned store closures due to better-than-expected
sales. Chow Tai Fook shares (+4.3%) were the sole gainer among Far East jewelry
retailers, with further reports of a turnaround in jewelry sales in Hong Kong
and China. Among the mining companies, Gem Diamonds (-9.8%) fell, even as this
week’s appointment of a new chairman brought hope the company would restore
growth.
View the detailed industry stock report
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Apr 20, 2017 (12:30 GMT) |
Apr 13, 2017 (11:45 GMT) |
Chng. |
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| $1 = Euro |
0.93 |
0.94 |
-0.01 |
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| $1 = Rupee |
64.63 |
64.44 |
0.19 |
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| $1 = Israel Shekel |
3.66 |
3.65 |
0.01 |
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| $1 = Rand |
13.17 |
13.58 |
-0.41 |
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| $1 = Canadian Dollar |
1.35 |
1.32 |
0.03 |
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| Precious Metals |
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Chng. |
| Gold |
$1,280.05 |
$1,286.60 |
-$6.55 |
-0.5% |
| Platinum |
$971.50 |
$971.00 |
$0.50 |
0.1% |
| Silver |
$18.20 |
$18.46 |
-$0.26 |
-1.4% |
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| Stock Indexes |
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Chng. |
| BSE |
29,422.39 |
29,461.45 |
-39.06 |
-0.1% |
| Dow Jones |
20,404.49 |
20,591.86 |
-187.37 |
-0.9% |
| FTSE |
7,113.56 |
7,311.43 |
-197.87 |
-2.7% |
| Hang Seng |
24,056.98 |
24,261.66 |
-204.68 |
-0.8% |
| S&P 500 |
2,338.17 |
2,344.93 |
-6.76 |
-0.3% |
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INDIA MARKET REPORT
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Polished Trading Activity
Dealers relatively upbeat
despite decline of foreign buyers during Passover and Easter. Local trading steady
with good demand for dossiers, particularly for 1 ct., J-L, VS-SI diamonds.
Some concern about slower-than-usual US demand ahead of Las Vegas shows.
Manufacturers maintaining steady production, with large factories operating at
full capacity. Demonetization still affecting smaller units, but dealers report
improved liquidity in the market. Rough demand firm.
Read the Polished Diamond Trading Report |
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