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RAPAPORT NEWS SERVICE | February 11, 2016   www.rapaport.com | news@rapaport.com
 
 
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Rapaport Weekly Market Comment February 11, 2016

Polished trading slows as Chinese buyers vacation over Lunar New Year. Consumer demand slow but steady with concerns that sluggish global economy and weak stock markets will lead to negative wealth effect. Shortages supporting prices for specific goods which are in demand. Large volume of new polished expected in 2Q after Jan. rough buying spree. Botswana’s 2015 rough exports -39% to $2.4B. Rio Tinto’s 2015 diamond sales -23% to $698M, earnings +32% to $104M. Asian Star 3Q revenue -3% to $102M, profit -25% to $2M. Blue Nile 4Q sales -5% to $150M, profit +4% to $5M. U.S. 2015 polished imports -4% to $23.1B, exports -12% to $18.3B. De Beers to launch grading at UK lab on March 1.

RapNet Data: February 11
Diamonds 1,085,796
Value $7,869,567,573
Carats 1,223,918
Average Discount -27.82%

www.rapnet.com

RAPI Chart
The RapNet Diamond Index (RAPI) is the average price for the top 25 diamond qualities (D-H, IF-VS2). It is based on the 10 best priced diamonds for each quality.

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RAPAPORT ANNOUNCEMENTS
February
10-22
Wed-Mon
Rapaport
Rapaport Single Stone Auction 

New York & Israel

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February
14-18
Sun-Thu
Rapaport
International Diamond Week

Ramat Gan, Israel

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Feb-Mar
22-4
Mon-Fri
Rapaport
Rapaport Melee Auction

New York & Hong Kong

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March
9-16
Wed-Wed
Rapaport
Rapaport Single Stone Auction

New York & Israel

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  QUOTE OF THE WEEK
  We sold a record number of engagement rings, expanded gross margin rate, and drove success in our new Webroom. As we look out on 2016, we will push harder on elements that are working: engagement ring units, wedding band attach rates, continued expansion of margin, and the Webroom concept.

Blue Nile chairman, CEO and president Harvey Kanter on fourth-quarter results

MARKETS  
 
United States: Polished trading is steady and dealers maintain a positive outlook. New York prices are firm with limited supply in select categories of RapSpec A2 (3X, none) that are in demand...

Belgium: Antwerp cautious as dealers are uncertain in which direction the market is heading. Demand is okay but market prices are relatively high due to shortages, particularly for smaller goods...

Hong Kong: Diamond markets closed for the Chinese New Year vacation. Hong Kong dealers expected to start returning next week, while Chinese market is shut down through most of February...

India: Polished trading slowed slightly as Hong Kong and China went on vacation. U.S. demand consistent and supporting the market. Domestic demand cautious with weak rupee (-2.6% to 67.9/$1 in 2016) affecting confidence and adding to local expenses...

Israel: Trading slowed slightly with Chinese buyers on vacation for the Lunar New Year. U.S. demand is steady. Some foreign buyers in Ramat Gan looking for goods in anticipation of next week’s International Diamond Week... 

Click here to continue reading


INSIGHTS  
 
Organized Synthetics

The natural diamond trade should welcome the establishment of the International Grown Diamond Association (IGDA) announced last week even though it may actually serve as a wake-up call for the industry…

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INDUSTRY  
 
U.S. Polished Imports -4% in 2015

Polished imports to the U.S fell 4% to $23.1 billion in 2015 after the trade registered a relatively slow end to the year. By volume, polished imports dropped 5% to 11.125 million carats, while the average price of the imports rose 1% to $2,076 per carat, according to provisional government data.

Polished exports by the U.S. dropped 12% to $18.32 billion, taking net polished imports – imports minus exports – to $4.78 billion, a jump of 53% from the previous year.


 
Botswana’s Export Slump Weighs on Economic Growth

A slump in global demand for diamonds hit Botswana’s economic growth as exports of rough diamonds fell 39% to $2.41 billion in 2015, according to provisional data published by the Bank of Botswana.

“The continued slowdown of growth in the global economy, particularly in the major markets for our diamonds, has had profound impact on the domestic economy,” Kenneth Matambo, Botswana’s minister of finance and development planning, said in his budget speech for 2016 on February 1.


 
De Beers to Launch Non-Forevermark Grading from U.K. Lab

De Beers will offer grading of non-Forevermark diamonds from its U.K. laboratory for the first time from March 1 as the company expands a service currently existing in Antwerp and Surat.

The miner’s research company, International Institute of Diamond Grading & Research (IIDGR), will open up the general grading service to the entire trade including retailers and those outside the U.K. It will include IIDGR’s Diamond Grading Reports and the more concise Diamond Identification Report. The service has been running in Belgium since 2012 and in India since mid-2015.


 
Fancy Color Diamond Prices Rise

Fancy color diamond prices increased 0.3% on average during the fourth quarter of 2015 as better-than-expected holiday sales outweighed sluggish Asian demand, according to the Fancy Color Diamond Index. Lower supply from diamond producers have led to a shortage of fancy yellow gems.

Prices for the fancy yellow segment performed the strongest, increasing 1.1%, the Fancy Color Research Foundation said. Within the yellow category, 3-carat diamonds demonstrated a 2.7% price increase and 5-carat stones rose 4.4%, likely driven by low availability in rough tenders.


 
Asian Star’s 4Q Revenue -3%, Profit -25%

India-listed Asian Star reported quarterly revenue declined 2.6% year on year to $101.7 million (INR 6.9 billion) in the three months that ended December 31. Profit slumped 25% to $2.2 million.

Diamond sales slipped 0.5% to $889.9 million during the quarter. Jewelry sales totaled $17.8 million, representing a 12% decrease over a year before, the diamond manufacturer and De Beers sightholder said.


 
American Gem Society CEO to Retire

Ruth Batson, chief executive officer of the American Gem Society (AGS) and AGS Laboratories, will retire after 23 years, with her departure scheduled for the summer of 2017. The AGS board of directors will form a committee to hire a new CEO.

“Ruth will participate in the search and onboarding process of the new CEO,” said Louis Smith, AGS president. “We are confident that we will find a great successor to guide the organization forward. Ruth has generously provided us with ample time to make a seamless transition."


 
WJA Names 2016 Hall of Fame Honorees

The Women’s Jewelry Association has named its Hall of Fame honorees for the association’s annual Awards for Excellence gala scheduled for July 25 at the Hammerstein Ballroom in New York.

Sissy Jones, owner of Sissy's Log Cabin, will receive the Lifetime Achievement Award; Peter Engel, president of Fred Meyer Jewelers, will receive the Ben Kaiser Lifetime Achievement Award; and longstanding jewelry retailer Ben Bridge Jeweler will receive the Corporate Award.


 
Scio Diamond Gets 28th Patent for Lab-Grown Stones

Scio Diamond Technology Corporation, a producer of lab-grown diamonds, got its 28th patent for gemstone production from chemical vapor deposition (CVD) diamond plate.

The company creates high-quality, type-IIa, single-crystal diamonds in a controlled laboratory setting, it said. Its diamonds are used in jewelry and for industrial applications.


RETAIL & WHOLESALE  
 
Blue Nile’s 4Q Sales -5%

Blue Nile reported net sales fell 4.8% year on year to $150 million in the fourth quarter that ended January 3 because of continued weakness in high-ticket purchases and foreign currencies. Selling prices for core engagement products slipped.

U.S. engagement net sales declined 7.7% to $78.4 million, while U.S. non-engagement net sales retreated 0.3% to $48.7 million.

Profit rose 4.3% as the cost of sales was cut 6.2% to $120.9 million. The online jewelry seller announced a first-ever dividend of $0.70 per share.


 
Pandora Closes 1,422 Unbranded Stores in 2015

Pandora closed 1,422 unbranded stores in 2015 and increased its focus on branded and concept stores, as total revenue for the year grew 40%. The Denmark-based jeweler opened a net total of 392 concept stores during the year, including 136 in the fourth quarter that ended December 31.

Revenue from concept stores increased 54% to $1.57 billion (DKK 10.4 billion), while total branded stores – which include concept stores – advanced 45% to $2.24 billion.

Total company revenue for the year soared 40% to $2.52 billion on strong growth across the major regions and product groups. Net profit increased 19% to $554 million.


 
Kohl’s 4Q Sales Steady

Department-store chain Kohl’s Corporation reported comparable sales increased 0.4% in the fourth quarter to January as a stronger holiday season from Thanksgiving week to Christmas was offset by a slow start to the period and a weaker-than-expected January. Total sales increased 0.8%.

The company lowered its earnings guidance because of lower fourth-quarter sales and gross margin than planned.


MINING  
 
Rio Tinto’s 2015 Diamond Sales -23%

Rio Tinto reported diamond revenue slumped 23% to $698 million in 2015 as market conditions drove down rough prices. Lower demand from India and China, higher rough and polished inventory and lower trade manufacturing margins forced prices to dip.

Diamond production fell 25% to 17.4 million carats. Rio Tinto forecast output to increase 21% to 21 million carats in 2016.


 
‘Lesedi La Rona’ Chosen as Name for World's Second-Largest Diamond

The 1,111-carat diamond recovered by Lucara Diamond Corp. in Botswana in November has been named ‘Lesedi La Rona’ following a competition among locals to label the gem.

The name, which means ‘Our Light,’ was given by Thembani Moitlhobogi, the winner of a $2,196 (BWP 25,000) prize, according to a Lucara statement February 9. The contest was only open to Botswanan citizens, including the miner’s employees.

The type-IIa gem was the largest diamond ever recovered in Botswana and the second largest ever found in the world.


 
Lucara Schedules First 2016 Exceptional Stone Tender

Lucara Diamond Corp. will hold its first exceptional stone tender of 2016 from April 4 to 13 in Gaborone, Botswana. The tender will feature ten diamonds with a combined weight of 1,525 carats, including a 296-carat, type-IIa gem.

The event will not feature any of the three exceptional diamonds recovered in November that included a 1,111-carat, type-IIa stone from the Karowe mine in Botswana, the second largest diamond in history.


GENERAL  
 
Italy’s Fiera di Vicenza Mulls Listing

The Italian company behind the annual VicenzaOro jewelry show is considering listing its shares on the Milan Stock Exchange.

Fiera di Vicenza’s board of directors told shareholders it was considering the move at a meeting of investors February 3, according to a statement. A stock-market flotation is “supported by strategic and economic objectives.”


 
Madoff Jewelry Up for Auction Online

Jewelry and watches formerly owned by convicted fraudster Bernie Madoff and his wife Ruth are being auctioned online by Texas-based company Gaston & Sheehan Auctioneers.

Items on offer include two Patek Philippe timepieces, with latest bids of $30,200 and $24,544 as of February 8, according to listings on the auctioneer’s website. An 18-karat white-gold bracelet by Sabbadini in Milan set with 654 round diamonds, with an approximate total weight of 48.11 carats, had a bid of $26,205. Bidding ends February 16.


 
JAPAC Raises Over $25K in 2015

Jewelers of America Political Action Committee (JAPAC) raised $26,680 in 2015 to support its advocacy efforts in Washington DC, according to Jewelers of America (JA).

“JAPAC gives the jewelry industry a platform to have a collective voice on issues,” said Jenny Caro, JAPAC chair and co-owner of Jewelry By Designs in Woodbridge, Virginia. “These funds are an important tool in preparing JAPAC for the essential 2016 election year.”


ECONWATCH  
 
Diamond Industry Stock Report

U.S. and European retail stocks had a tough week, with drops led by Birks Group (-21%), Kohl's (-22%), Damiani (-15.5%) and Charles & Colvard (-14%) as major stock indexes around the world declined. Mining stocks generally dipped, led by Rockwell Diamonds (-14%), but there were improvements for Stornoway Diamond (+5.5%), Mountain Province (+3.1%) and Anglo American (+3%).

View the detailed industry stock report.

  Feb. 11 (11:41 GMT) Feb. 4 (10:40 GMT) Chng.  
$1 = Euro 0.88 0.89 -0.012  
$1 = Rupee 68.42 67.69 0.7  
$1 = Israel Shekel 3.89 3.91 -0.02  
$1 = Rand 15.91 15.86 0.05  
$1 = Canadian Dollar 1.40 1.37 0.03  
         
Precious Metals       Chng.
Gold $1,218.40 $1,146.21 $72.19 6.3%
Platinum $939.33 $888.99 $50.34 5.7%
Silver $15.45 $14.77 $0.68 4.6%
         
Stock Indexes       Chng.
BSE 22,951.83 24,338.43 -1,387 -5.7%
Dow Jones 15,914.74 16,336.66 -421.92 -2.6%
FTSE 5,553.04 5,923.65 -370.61 -6.3%
Hang Seng 18,545.80 19,183.09 -637.29 -3.3%
S&P 500 1,851.86 1,912.53 -60.67 -3.2%
Yahoo! Jewelry 966.43 993.20 -26.77 -2.7%


INDIA MARKET REPORT  
 
Polished Trading Activity

Polished trading slowed slightly as Hong Kong and China went on vacation. U.S. demand consistent and supporting the market. Domestic demand cautious with weak rupee (-2.6% to 67.9/$1 in 2016) affecting confidence and adding to local expenses. IIJS Signature show quiet. Steady demand and shortages of better-quality RapSpec A2 (3X, none) diamonds. Shortages supporting prices as new polished production coming to market at a slow pace. Manufacturers increasing production after large volume of rough purchased in January. Significant increase in polished availability expected in about three months. Rough trading slowed compared to last week and premiums have come down a bit.

Read the Polished Diamond Trading Report




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