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Rapaport Weekly Market Comment June 23, 2016

Polished markets cautious. Hong Kong show begins with low expectations for Chinese demand after relatively weak JCK Las Vegas show. Prices stable at De Beers sight with boxes selling at mid-single-digit premiums amid concerns that rough market fails to reflect sluggish polished demand. Manufacturing steady. Swiss May watch exports -10% to $1.6B. Luk Fook FY revenue -12% to $1.8B, profit -41% to $124M. Shrenuj FY revenue -34% to $266M, loss of $6M vs. profit of $3M in previous year. India May polished exports +13% to $1.9B, rough imports +15% to $1.5B. Rio Tinto merges diamond and copper units to be headed by Arnaud Soirat.

RapNet Data: June 23
Diamonds 1,227,660
Value $8,191,947,803
Carats 1,320,274
Average Discount -29.29%

RAPI Chart
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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  At first I wanted to scream. Then I said in a low hoarse voice 'God, it’s a diamond! It’s a diamond, it’s a big diamond!’

Lucara trainee Tiroyaone Mathaba, 27, on discovering the 1,109-carat Lesedi La Rona

United States: Polished trading quiet in New York ahead of July vacation period. Post-Las Vegas demand weaker than previous years but U.S. still considered the best market

Belgium: Cautious activity in Antwerp. Dealers waiting for this week’s Hong Kong show to gauge Chinese demand. U.S. demand quiet but stable

Israel: Polished trading quiet and buyers cautious. Large Israeli delegation exhibiting at Hong Kong show. Good U.S. demand for 1 to 2 ct., G-J, SI-I1 goods

India: Polished trading slow with very few foreign buyers in the market and sluggish local Indian demand. Suppliers and buyers traveling to Hong Kong show uncertain about Chinese demand

Hong Kong: Market focused on show which starts Thursday (June 23-26). Expectations low as buyers from mainland China remain cautious and Hong Kong retailers endure significant slowdown in customer foot traffic and sales...

Click here for deeper analysis

Rich New Diamond Mine Ready to Sparkle

Patrick Evans, president and CEO of Mountain Province, took time out to speak with Rapaport News about the prospects for the Gahcho Kué mine in Canada’s Northwest Territories...

Click here to read the interview

De Beers Opens Selling Platform to Trade

De Beers is piloting a program allowing businesses to sell rough diamonds from its online auction platform. The service is available for single stones larger than 5 carats and fancy-color diamonds. It will only be open to businesses that adhere to standards set by De Beers covering integrity of diamond sellers, product disclosure and provenance.

Shrenuj Downsizing After Somber Results

Shrenuj & Company is “rationalizing” its workforce after reporting an annual loss. Employees have started tendering their resignations, the Mumbai-based diamond and jewelry manufacturer said. Revenue on a standalone basis slumped 34% to $265.7 million (INR 17.89 billion) in the fiscal year that ended March 31. The company also reported a $6 million loss versus a $3.1 million profit a year ago. Revenue from the diamond segment dived 37%.

JAPAC Lobbies on Synthetics Wording

The Jewelers of America Political Action Committee (JAPAC) criticized a planned change to the Federal Trade Commission’s “Guides for the Jewelry, Precious Metals, and Pewter Industries” that would allow the term “cultured” when referring to synthetic diamonds. A JAPAC-led delegation of jewelers raised the issue with lawmakers in Washington, D.C., and said officials expressed interest in supporting their cause. Delegates also pushed for legislation that would eliminate the sales-tax advantage that online retailers have over brick-and-mortar businesses.

India’s Diamond Trading Advances in May

India’s polished diamond exports jumped 13% year on year to $1.97 billion in May, according to the Gem & Jewellery Export Promotion Council. Polished imports soared 27% to $249.1 million, leaving net polished exports 11% higher at $1.72 billion. Rough imports leapt 15% to $1.52 billion and rough exports increased 7.9% to $127 million, leaving net rough imports 16% higher at $1.4 billion. India’s net diamond account, the difference between net polished exports and net rough imports, declined 3.8% to $329 million.

Antwerp Says Diamonds Are ‘in our DnA’

Antwerp’s diamond industry is aiming to invigorate the Belgian city’s reputation as a global capital for the sector through a new campaign. Entitled ‘Diamonds and Antwerp, it’s in our DnA,’ the initiative celebrates more than 550 years during which the city has been “synonymous” with the precious stones, according to the Antwerp World Diamond Centre. The program will involve a festive diamond-themed period starting in October 2017.

Graff Reveals 105-Carat Diamond

Graff Diamonds unveiled a pear-shaped, 105.07-carat, D, flawless diamond at the opening of Graff’s new store at the Place Vendôme in Paris. The gem was cut and polished by the jeweler’s own gemologists from a 314-carat rough stone discovered last year at Gem Diamonds’ Letšeng mine in Lesotho. The diamond has been named the ‘Graff Vendôme’ to commemorate the opening.

Luk Fook’s Profit Plunges 41%

Hong Kong-based Luk Fook’s sales slumped 12% to $1.81 billion (HKD 14.03 billion) and profit plummeted 41% to $123.9 million in the past fiscal year. The company joined a string of jewelers in the region to be hit by a Chinese economic downturn and fewer tourist arrivals in Hong Kong. Sales were impacted by the strong U.S. and Hong Kong dollars relative to the Renminbi, while favorable exchange rates made locations such as Japan and Korea more attractive shopping destinations for Chinese tourists.

U.S. Jewelry Prices Rise in May

The U.S. consumer price index (CPI) for jewelry grew 3.3% in May from a month ago, according to the U.S. Bureau of Labor Statistics. The index jumped 9.9% from a year earlier. The May CPI for watches also climbed 3.3% over the previous month and spiked 7.2% from a year ago.

Swiss Watch Exports Miss a Beat

Swiss watch exports extended their decline in May because of a slump in shipments of higher-value and precious-metal timepieces. Exports dropped 9.7% to $1.62 billion (CHF 1.55 billion) as shipments of watches made from precious metals dived 24% to $512.14 million. Exports to Hong Kong plunged 17%, continuing the downtrend witnessed in recent months.

Michael Hill to Restructure for Australia Listing

Michael Hill will move its primary stock-exchange listing to Sydney next month and set up a new parent company that will be incorporated in Australia. The jeweler, which traces its roots back to New Zealand, has shifted most of its key functions to Australia. The listing on the Australian Securities Exchange will be effective July 7.

Rio Tinto Merges Diamonds and Copper

Rio Tinto will combine its diamond and copper divisions to form one product unit within a new group structure. The move comes under Rio Tinto’s new chief executive officer Jean-Sébastien Jacques (pictured), who will succeed Sam Walsh on July 2. Arnaud Soirat, currently head of the company’s aluminum primary metal division, will be the London-based CEO of the merged copper and diamonds division and join Rio Tinto’s executive committee.

Cullinan Yields 121-Carat Whopper

Petra Diamonds discovered a 121.26-carat rough diamond at its Cullinan mine in South Africa. The white, type-II diamond of “exceptional” color and clarity was put up for sale at a tender in Johannesburg this week. It is the last tender for Petra in fiscal 2016, which will end June 30.

Huge Diamond Made Sorter Want to Scream

The 1,109-carat Lesedi La Rona diamond was discovered by a 27-year-old trainee who had worked at Lucara Diamond Corp. for fewer than five months. Tiroyaone Mathaba found the gem while working as a sorter, examining rock and sand produced by large diamond recovery machines, The Daily Telegraph reported. “At first I wanted to scream,” Mathaba was cited as saying. The diamond is expected to sell for more than $70 million at Sotheby’s in London next week.

Gemfields Ruby Sale Fetches $44M

Gemfields is launching a campaign to market rubies from Mozambique after the company reported its largest sale to date for stones from the country’s Montepuez mine. The miner sold $44.3 million of rough rubies and corundum from Montepuez at a June auction in Singapore. The gems fetched an average price of $29.21 per carat from 1.5 million carats.

KP Chair Visits CAR

Ahmed Bin Sulayem became the first sitting Kimberley Process chairman to visit the Central African Republic (CAR). The tour comes after the country resumed diamond exports following a three-year moratorium. Bin Sulayem (pictured, left) met with Faustin-Archange Touadera, President of the CAR (right), and Leopold Mboli Fratran, the newly appointed minister of mines.

Antwerp Trade Selects AWDC Board

The Antwerp World Diamond Centre (AWDC) last week elected its new board, which will appoint the industry body's president and vice-presidents next week. Vimal Lakhani of Kiran Exports and Nishit Parikh of Diarough were elected unopposed in category 1, representing firms in the highest revenue band. In the two contested categories, Amratlal Chatankumar Shah of Simplex and Rajiv Kothari of Diamstones were selected from the category 2 vote, while Samir Mehta of Snehdiam and Jacques Weisz of Weisz Diamonds Belgium were re-elected for category 3.

Knightley Named Face of Chanel Jewelry

Keira Knightley will front Chanel’s fine jewelry line “Coco Crush,” a role previously filled by models such as Sigrid Agren and Jac Jagaciak. The star, who acted in Bend It Like Beckham and Pirates of the Caribbean previously fronted Chanel’s Coco Mademoiselle perfume and Rouge Coco lipstick. The advertisements were photographed by Mario Testino, a favorite of Chanel. They are scheduled to debut in fall 2016.

Diamond Industry Stock Report

Mining stocks were mixed this past week, led by Anglo American (+13.5%), with Rio Tinto (+8.1%) gaining on news of a corporate restructuring. Goldiam International (+28%) stood out in India where stocks were otherwise mostly stable. In the U.S., Signet (+3%) showed signs of a recovery after bad publicity prompted a slide in its share price in previous weeks.

View the detailed industry stock report.

  Jun 23 (12:06 GMT) Jun 16 (09:52 GMT) Chng.  
$1 = Euro 0.88 0.89 -0.01  
$1 = Rupee 67.29 67.23 0.07  
$1 = Israel Shekel 3.82 3.87 -0.04  
$1 = Rand 14.46 15.34 -0.87  
$1 = Canadian Dollar 1.28 1.30 -0.02  
Precious Metals       Chng.
Gold $1,263.95 $1,304.85 -$40.90 -3.1%
Platinum $974.75 $984.62 -$9.87 -1.0%
Silver $17.32 $17.72 -$0.40 -2.3%
Stock Indexes       Chng.
BSE 27,002.22 26,511.51 490.71 1.9%
Dow Jones 17,780.83 17,640.17 140.66 0.8%
FTSE 6,338.64 5,929.23 409.41 6.9%
Hang Seng 20,868.34 20,038.42 829.92 4.1%
S&P 500 2,085.45 2,071.50 13.95 0.7%
Yahoo! Jewelry 956.95 1,057.70 -100.75 -9.5%

Polished Trading Activity

Polished trading slow with very few foreign buyers in the market and sluggish local Indian demand. Suppliers and buyers traveling to Hong Kong show uncertain about Chinese demand. Steady demand for dossiers, particularly 0.50 to 0.80 ct., G-J, SI-I2 and for 1 ct., G-J, SI-I2 diamonds. Manufacturing remains steady at estimated 70 percent of full capacity. Rough trading stable during sight week.

Read the Polished Diamond Trading Report


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