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Rapaport TradeWire- October 10, 2003
Oct 10, 2003 11:38 AM
By Rap News
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Rapaport TradeWire – October 10, 2003
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News: U.S. retail demand increasing with outlook for internet sales improving. DTC holiday advertising campaign, “Celebrate Her,” will push three-stone diamond jewelry, solitaires and right hand rings. 4/4 market strong especially in F, VV1. Far East demand for I-J, VVS goods increasing. Indian market weak with pre-Christmas slow-down and rumors of more business failures. Russia and U.S. discuss future partnerships at NY Diamond Dealers Club. Belgium’s polished exports up 20% to $774 million in September. India’s September polished exports up 36.3% to $867.2 million.
=== Retail Rap ===
News: Overall U.S. retail chain sales for week ending October 4 up 4.8% year-to-year, and up 1.3% from the previous week, according to Bank of Tokyo-Mitsubishi (BTM) analysts. Instinet Research reports average same-store sales for the week up 3.1% year-to-year, after last week's 3.2% gain. Sales this past week were led by a pickup in customer traffic and purchases. Easier comparisons also helped at the end of the five-week fiscal month to push up year-over-year pace of sales and tenor of the sales. The full monthly September sales, which will be reported in the coming days, are expected to increase by at least 3.5% based on retail industry-wide comparable store sales growth compared with the same month the prior year.
=== Retail Quote ===
“We were especially encouraged by the strength of sales across the company in September, at least partially reflecting the arrival of fall’s cooler temperatures in the eastern half of the country. It remains to be seen whether this sales trend in permanent or if it reflects sales taken from October and the fourth quarter.”
- Terry J. Lundgren, president and chief executive officer, Federated
=== World News ===
--- Belgium's Polished Exports Up 20% in September
Belgium’s upward trend in polished diamond trade activity continued in September increasing by 28.2% to $1.437 billion. Belgium’s polished exports increased 20% to $774 million in September compared to $645.2 million in September last year. In terms of quantity, Belgium’s September polished exports increased 14.6% to 1.047 million carats compared to 913,000 in September last year. For the nine months ended September 2003 Belgium’s polished exports increased 11.1% to $5.2 billion and 9.8% to 7.580 million carats by value and weight respectively.
The rise in polished exports were driven by significant increases in polished exports to Belgium’s largest destination markets of the U.S., Hong Kong and Israel, which together comprised 63% of Belgium’s total polished exports in September. Belgium’s September polished exports to the U.S., Hong Kong and Israel increased by 32.2%, 21.9% and 73.4% respectively.
Belgium’s polished imports during September jumped 39.4% to $663.2 million compared to $475.5 million in September 2002. By quantity, polished imports rose 19.4% to 984,000 million carats compared to 824,000 million carats in September 2002. For the nine months ended September 30, 2003 Belgium’s polished imports increased 14.7% to $4.8 billion and 5.7% to 7.5 million carats by value and quantity respectively.
--- India's Polished Exports Up 36% in September
India’s rough imports during September reached $542.6 million, down 3% compared to $559.1 million in September 2002 according to provisional data released by the Gems and Jewellery Export and Promotion Council (GJEPC). In terms of quantity, rough imports totaled 16.1 million carats in September, down 19.7% on September 2002. For the six months ended September 30, 2003 India’s rough imports totaled $3.333 billion, down 2.4% on a comparable basis compared to $3.56 billion in the previous corresponding period. In terms of quantity, India’s rough imports declined 21.3% to 83.8 million carats during the same period compared to 106.5 million carats in the corresponding period in 2002.
India’s polished exports increased 36.3% to $867.2 million compared to $636.1 million in September 2002. In terms of quantity, polished exports increased 16.5% to 4 million carats. For the six months ended September 30, 2003 India’s polished exports increased 12.7% to $3.835 bllion compared to $3.403 billion in the previous corresponding period. During the same period, India’s polished exports actually by 8% in quantity terms to 17.5 million carats.
--- Strengthening Rand Threatens De Beers
Gary Ralfe, De Beers managing director, said in a statement on October 8, 2003, that the company will have to cut costs and jobs to combat the continuing strength of the rand, which is impacting on dollar-based revenues, and which is posing “a serious and immediate challenge to the company.” Ralfe said older and more marginal underground operations are being most severely affected.
“I am keenly aware of the impact on employees and on morale, and I assure you that, throughout the process, we will examine all avenues reasonably open to us to avoid, wherever possible, redundancy and retrenchment,” Ralfe added. The avenues include redeployment of staff; a freeze of all recruitment; and consideration of voluntary separation combined with early retirement where appropriate.
--- NWT Premier to Step Aside
Northwest Territories (NWT) Premier Stephen Kakfwi announced on October 1, 2003, that he will not run in the November 24, 2003 territorial election. As minister of Resources, Wildlife and Economic Development, Kakfwi saw the NWT through the establishment of a Canadian diamond industry. He was elected to the territorial legislature in 1987 and elected Premier in January 2000.
Before launching a draft National Diamond Strategy, Kakfwi made headlines by accusing De Beers on September 10, 2003, of dealing in conflict diamonds. He hastily retracted his statement and later that month rushed to defend De Beers’ honor following speculations that the company was considering contravening its agreements to manufacture its Snap Lake stones in the NWT.
According to Kakfwi, the decision not to run is based, in part, on the progress that has been made on critical issues in the Mackenzie Valley pipeline including resource revenue sharing and Aboriginal equity. He will serve out the remainder of his term until a new government is sworn in: “Then I will begin to explore my options. I do know that my future will involve working for the North and for Aboriginal people.”
--- Former Israeli Sightholders Speak Out
Gary Ralfe, De Beers managing director, told Israel’s leading diamantaires and members of the Israel Diamond Manufacturers Association (IsDMA) at a meeting on October 2, 2003, that companies that lost their sights could only re-apply in two years time when De Beers allocates new sights worldwide. De Beers dropped several prominent Israeli diamantaires from its sightholder listincluding Schnitzer & Co., Lustig Brothers Ltd. and Arie Rieger Diamonds.
According to Shmuel Schnitzer, Israel Diamond Exchange president, they were “caught by surprise” at being dropped, but have not yet decided whether or not they will re-apply in two years. David Lustig, Lustig Brothers president, says he cannot know what will be in the future, but if he thinks the company has a chance to be reinstated, they will re-apply. Lustig was not surprised at being dropped: “I just knew.” Although management at Arie Rieger Diamonds were reluctant to comment on whether they were surprised at having lost their sight, they hinted that the company might re-apply.
--- Russian Delegation Meets With DDC
Leaders of the Russian diamond industry, including government officials and the heads of diamond manufacturer Smolensk Kristall met with Diamond Dealers Club (DDC) officials in their New York City Diamond District offices on Tuesday, October 7, 2003, to discuss possible future partnerships between Russian and American diamond dealers. Yuri Rebrik, general director of Smolensk Kristall, said that factory management wants to become more involved in the American market and is currently exploring ways to do so, including investing more in stateside advertising and developing its jewelry production business.
Rebrik also said that Smolensk is beginning to develop ongoing relationships with West Coast jewelry retailers and developing branding, although he declined to specifically say which American companies. Rebrik was among a Russian delegation that included Viktor Maslov, Smolensk region governor; Yuri Isakov, deputy permanent representative of the Russian Federation to the United Nations; and Maxim Shkadov, deputy general director of Smolensk Kristall.
In calling for closer relations between DDC and the Russian industry, Club President Jacob Banda announced the formation of a committee, chaired by the organization's Secretary Sylvain Ringer, to pursue this goal. Other DDC officials present at the meeting included Vice President David Abraham, Treasurer Elliot Krischer and Board Chairman Ronnie Vanderlinden.
--- ALROSA Listed in Russia’s Top Twenty
ALROSA was one of the Russia’s top twenty leading companies between 2001 and 2002 according to “Expert – RÀ” rating agency. ALROSA was seventeenth on the production sales rating, the seventeenth most profitable company and the third largest capital raiser via the Russian corporate bond market.
According to ALROSA, these results were achieved despite a 10% drop in world diamond prices in 2002, credit payments to the Russian Savings Bank (Sberbank) for the restoration of Lensk city, which was damaged by floods, and serious capital investments in launching the Nyurba ore-mining and processing enterprise.
According to ratings by Russia’s Company magazine, ALROSA was the fourteenth largest tax bearer, the fifteenth company with the greatest proceeds, the nineteenth largest employer, and the thirteenth “enterprise with the greatest weight in the Russian economy.”
=== Retail News ===
--- JWT Unveils DTC Holiday Campaign
J. Walter Thompson (JWT) has announced that its Holiday ’03 advertising campaign for the Diamond Trading Company (DTC) will feature a theme of “Celebrate Her” in an effort to promote three-stone diamond jewelry, solitaire diamonds and diamond right hand rings. The new theme will be reflected in the new “Seize the Day” print ads. The ads will run in the top 13 media markets throughout the United States, including New York and Los Angeles, starting November 1 and running through the end of the year. The ads will also appear in two national and 15 regional newspapers through December. A new television commercial, entitled “Faces,” will also run at the core of the holiday advertising push, debuting on networks nationwide on Thanksgiving Day. However, until that time, the DTC will rely on its standard commercials, “Hands” and “Declaration,” running them in heavy rotation.
In addition, the Diamond Promotion Service (DPS) has developed all new marketing materials synergistic with the “Celebrate Her” theme. Free ad slicks and counter cards, as well as free, downloadable photography, ad slicks and advertising copy lines are all available on its trade website, www.dps.org.
--- Jewelry Counterfeiters to Pay Tiffany Damages
Tiffany & Co. has been awarded damages of $573,818 from the owners of the website www.finest4less.com that sold counterfeit Tiffany & Co. merchandise. Judge Victor Marrero issued an order finding the defendants liable on September 11, 2003, in the U.S. District Court, Southern District of New York.
Tiffany has an active campaign to prevent counterfeiting and trademark infringement. The company released a statement on October 7, 2003, saying that the Tiffany & Co. name is “a symbol of the finest design and highest quality and the company is committed to maintaining its reputation and protecting its loyal customer base from such duplicity.” It stressed that Tiffany merchandise is only available from the company’s stores, boutiques, catalogs and its website: “The company does not offer its goods for resale in the U.S., nor are there overruns or off-price outlets.”
--- Tiffany To Open Seventh Florida Store
Tiffany & Co. has announced that it plans to open a 5,300-square-foot store at The Gardens of the Palm Beaches mall in Palm Beach Gardens, Florida in mid-2004. The company said the decision to open its seventh store in Florida is based on its overwhelming success in the state. Tiffany’s other stores in Florida are in Bal Harbour, Boca Raton, Coral Gables, Palm Beach, Tampa and Orlando.
--- IDI Deems HK Fair a Success
At the September Hong Kong Jewellery & Watch Fair 2003, Israel was the third largest exhibiting non-Asian country. The exhibitors were received with great enthusiasm by buyers, reports the Israel Diamond Institute (IDI), which organized the Israeli presence at the show.
According to IDI feedback, Israeli diamantaires made significant business contacts at the fair and closed important transactions. They also had the opportunity to meet major players in the rapidly developing Chinese market and Chinese buyers showed great interest in Israeli diamonds. Fair organizers report that the largest number of visitors from outside of Hong Kong came from Mainland China, with 3,232 Chinese participants.
Simcha Lustig, IDI Chairman, applauded the participation of Israeli companies: “The Israeli industry, as a global leader in the manufacture and export of polished diamonds, is constantly seeking to expand its marketing reach. The Far East has been and remains a major market for Israeli diamonds. The countries of the region, and China in particular, are among the major growth markets of the future and we will continue to enhance our activities there. The IDI will continue to develop marketing opportunities to reach these countries, such as participation in local trade fairs and organizing visits of business delegations.”
=== Stock Watch ===
Thurs. Thurs. Change($) Change(%)
Oct. 2 Oct. 9
Finlay(FNLY) $14.78 $14.61 ($0.17) -1.15%
Friedman's(FRDM) $12.65 $12.24 ($0.41) -3.24%
JC Penney(JCP) $21.64 $22.65 $1.01 4.67%
Neiman(NMGA) $43.58 $46.40 $2.82 6.47%
Nordstrom(JWN) $25.86 $28.21 $2.35 9.09%
Signet(SIGY) $54.42 $56.00 $1.58 2.90%
Tiffany(TIF) $38.48 $40.77 $2.29 5.95%
Wal-Mart(WMT) $57.01 $58.96 $1.95 3.42%
Whitehall(JWL) $11.15 $11.24 $0.09 0.81%
Zale(ZLC) $45.46 $48.10 $2.64 5.81%
Dow Jones Avg. 9487.80 9680.01 192.21 2.03%
=== Africa News ===
--- De Beers Says No Ruling on Angola Case
De Beers has renounced claims made by Angola’s state diamond company Endiama that it had won a lawsuit De Beers Angola Prospecting Limited (Debap) filed against the company and the state in June 2002 to defend its rights contained within three agreements for diamond exploration in Angola entered into in 1996.
In the face of unresolved procedural complications, an arbitration panel initiated by Debap, ordered the legal proceedings to be terminated on September 25, 2003. According to a De Beers statement, the panel made no ruling on the merits of Debap’s claim. Due to an unrealistic four-month deadline interrupted by a moratorium on legal proceedings and the fact that Endiama and the state had not filed their defences against Debap’s claim before the panel’s termination, the arbitration process “failed to get off the ground.”
According to De Beers: “Contrary to statements made by Endiama in the Angolan press, the Tribunal (panel) did not order Debap’s claim ‘to be set aside,’ nor did it rule that ‘accepting Debap’s claim could represent a serious disregard of Angolan sovereign rights.’ On the contrary, while terminating the proceedings on procedural grounds, the panel assiduously avoided making any ruling on the claim itself. Debap considers its underlying rights to be unaffected by this decision and reserves its rights in this matter.”
=== Mining News ===
--- Trivalence Completes Sixth Diamond Sale
Trivalence Mining Corporation completed its sixth diamond sale of 2003 in Antwerp, Belgium on September 29, 2003, selling goods from its 85% owned Aredor alluvial diamond mine in the Republic of Guinea, West Africa. The sale of gem-quality stones resulted in proceeds of $600,893.44 from a total of 1,108.74 carats, for an average price of $541.96 per carat. The next diamond sale from the Aredor mine is expected to be around mid-November 2003. Trivalence’s next diamond sale overall will be in mid-October 2003, when goods from the company’s 100%-owned Palmietgat, South Africa mine go on sale.
--- Diagem Brazil Mining Increases 38%
Diagem International Resource Corp., has announced that diamond production has increased 38% during week six at its commercial mining operations on the Fazenda Chicoria Diamondiferous Gravel Resource Block #1 in the Juina Diamond Province, State of Mato Grasso, Brazil. A total of 334.22 carats were recovered from 962 diamonds, including 55 diamonds between one and five carats and two diamonds between five and 10 carats. The average diamond size was 0.35 carats and the grade per cubic meter of material was 0.27 carats.
--- De Beers Canada Delays Victor By One Year
De Beers Canada has made the decision to delay development of its Victor diamond project, located in the James Bay Lowlands of northern Ontario, by at least one year pushing back the anticipated start of diamond production at the mine site to 2008. According to a company spokesperson, this decision was due to the delay in the Canadian government’s environmental assessment process.
--- Dunsmuir Reports Results From Nanuq Project
Dunsmuir Ventures Ltd. has reported the results of its recently completed summer exploration program on the Nanuq project in the Western Churchill Province, Nunavut. Kimberlite indicator mineral (KIM) results obtained for samples collected near the head of the main Nanqu indicator train suggest that the train is actually a composite, comprised of overlapping KIM trains. This implies that multiple kimberlitic sources may be present in the immediate area. Also, some samples from the train-head region have had extremely high KIM counts for this region.
Results of a 12,00 line kilometer, high resolution, airborne magnetic survey have also been received and preliminary interpretation of the data suggests that multiple magnetic anomalies are present in the vicinity of the main Nanuq train. In the coming months, Dunsmuir will fully examine all data and choose targets for follow-up. The work, which will include ground magnetic surveys and drilling will begin in early 2004.
--- Etruscan Completes $8.63 Million Financing
Etruscan Resources has completed a $8.63 million equity financing underwritten by Sprott Securities Inc. A total of 6.8 million common shares of the company were issued at a purchase price of $1.27 per common share for a total of $8.63 million. Purchasers of the shares include Sprott Asset Management Inc., which have purchased on behalf of its managed accounts. Etruscan will use the net proceeds of this financing to purchase the Youga Gold deposits and the rights to the contiguous exploration permits.
--- Sudbury To Acquire NWT Diamond Property
Sudbury Contact Mines Limited has entered into an option agreement with Trigon Exploration Canada to earn up to a 65 percent interest in Trigon’s RAM diamond exploration property in the Northwest Territories (NWT). Sudbury has paid Trigon a nonrefundable $37,300 deposit and can earn an initial 51 percent interest in the RAM property by issuing 75,000 shares from treasury to Trigon after the executive of a defintive option and joint operating agreement by December 31, 2003 and the funding of $1.08 million of exploration work on the property by September 30, 2005. The company may also earn an additional 14 percent interest in the property by funding a subsequent $2.24 million dollars’ worth of exploration.
The RAM property consists of approximately 197,420 hectares of contiguous claims in the southeastern Slave Craton in the NWT. The claim block is centered 140 kilometers northeast of Yellowknife and 85 kilometers southwest of the Snap Lake diamond deposit. Exploration work will begin before the end of 2003 and will involve till sampling traverses in order to prioritize areas for geophysical survey later in the upcoming winter. This could ultimately lead to exploration drilling by the spring of 2004.
========== CONFIRMED DTC SIGHTHOLDERS =============
The list of newly confirmed sightholders is being updated on our website www.diamonds.net.
Rapaport is compiling a list of all companies that are confirming their status as DTC Supplier of Choice (SOC) sightholders. We ask all firms that have been appointed as new SOC sightholders to confirm their status by sending an email to Sheryl Katz at sheryl@diamonds.net or by contacting her via telephone +972-50-766-976.
=== Indian Diamond Market Update ===
--- Market Slows Down ---
The Indian market has witnessed a slight slow-down in trading activities rather than the usual fast-paced end to Christmas-buying before the Diwali holidays. There are rumours of several more business failures. The market is shaky and many are bracing for what may become a whole string of failures. Right now, however, there is good movement of pique goods in all categories.
There is a reasonably good movement of rough in the market with both ends of the size spectrum contributing well to the overall movement and deals are being made provided the price is right.
Trading will slow to a close by October 18th, with inventory being the major activity after that. The market will remain closed until the first week of November.
--- POLISHED:
-1 point: Very good demand: $125-$175 whites.
Good demand: $90-$125 naats.
-2 point: Very good demand: $160-$140 whites.
Good demand: $125-$150 whites; $125-$175 white naats.
Fair demand: $100-$175 TTLB & $160-$190 TTLC.
2-7 point: Very good demand: $40-$80 whites; $190-$225 whites.
Good demand: $150-$190 & $250-$315 whites; $210-$270 white naats.
Fair demand: $90-$125 whites; $60-$90 white naats, $150-
$200 TTLB & TTLC.
8-18 point: Very good demand: $90-$125 whites; $230-$330 +14-point
whites.
Good demand: $225-$275 whites; $300-$400 whites.
Fair demand: $175-$250 TTLB & $70-$100 TLB naats.
20 point: Very good demand: for less than $350 whites.
Good demand: $200-$250 white naats.
25 point: Very good demand: $100-$350 whites.
Good demand: $250-$300 white naats.
Fair demand: $400-$450 whites; $350-$450 white naats.
33 point: Good demand: $450-$550 whites; $600-$650 whites; $700-$800
whites; $300-$350 white naats; $450-$750 +38-point whites.
50 point: Very good demand: $200-$700 whites.
Fair demand: $900-$1,200 whites; $2,000-$2,700 whites.
75 point: Good demand: $700-$1,400 whites.
1 carat+: Very good demand: $2,000-$3,500 +2-carat whites.
Good demand: $800-$1,200 G,H,I colors; $200-$500 whites & white naats.
Fair demand: $500-$800 whites.
Princess: -3 point: Very good demand for $160-$230 whites.
+3 point: Very good demand for $200-$250 whites
+9-18 point: Very good demand for $250-$300 whites.
25 point: Fair demand for $375-$425 whites.
33 point: Good demand for $500-$600 whites.
Marquise: -6 point: Very good demand for $250-$310 whites.
Good demand $375-$425 whites.
+7-18 point: Very good demand for $175-$250 whites.
Good demand for $475-$550 whites.
20 point: Very good demand for $275-$325 whites.
25 point: Very good demand for $325-$375 whites.
33 point: Very good demand for $400-$475 whites.
50 point: Very good demand for $550-$650 whites.
1 carat+: Good demand for $900-$1,200 whites.
Tapers: Good demand: $225-$300 2mm-2.5mm whites; $300-$350 2.5mm -3mm
whites.
Fair demand: $150-$200 2mm-3.5mm TTLB.
--- ROUGH:
1-7 point: Very good demand & movement for $10-$25 makeables; $65-$98 rounds & $83-$105 sawn princess. Some movement for $8-$16 TTLC & $3-$14 TTLB.
8-20 point: Very good demand for $85-$116 makeables; $70-$105 sawn princess; $80-$120 rounds. Good movement for $18-$35 makeables; $12-$35 cleavage; $12-$20 & $29-$55 naats. Some movement for $15-$35 kapps.
21-49 point: Demand for $35-$68 cleavage; $70-$116 marquise; $45-$70 LB flats; $74-$106 white flats. Good movement for $40-$63 & $80-$104 baguettes. Some movement for $42-$75 TTLC.
0.5-1 carat: Very good demand for $127-$165 & $78-$105 makeables. Demand for $55-$75 baguettes, $85-$110 long princess. Good movement for $85-$119 cleavage; $83-$125 OW shades; $60-$115 flats.
1-3 carat: Very good demand for $744-$1,063 +3-carat makeables. Good demand for $125-$215 cleavage. Good movement for $127-$170 OW makeables; $95-$120 LB flats & $120-$170 white flats. Some movement for $63-$102 & $115-$185 marquise.
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Are you interested in trading
Rough or Polished diamonds?
Contact the Rapaport Trading Department
Trade@Diamonds.net
Rapaport Offices in New York, Las Vegas
Antwerp, Vicenza, Ramat Gan, Mumbai and
Hong Kong.
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Tags:
Alrosa, Angola, Belgium, China, Conflict Diamonds, De Beers, De Beers Canada, DTC, Economy, ENDIAMA, Finlay, Government, Guinea, Hong Kong, IDI, India, Israel, Israel Diamond Exchange, Israel Diamond Institute, Jewelry, NY Diamond Dealers Club, Production, Russia, Sightholders, Sights, Signet, South Africa, Tiffany, United States, Zale
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