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Rapaport Weekly Market Comment Apr. 11, 2014

Polished markets stable but buyers are increasingly price sensitive as cutters try to raise prices due to expensive rough. Cutting center liquidity tightening due to high rough prices and GIA backlogs. Rough trading slows with premiums reduced on the secondary market. Zimbabwe plans UAE diamond embassy as Dubai sells $29M ($76/ct.) at inaugural Marange rough tender. Sotheby’s HK sells $107M (82% by lot) with brilliant-cut, 30.57ct., D, FL diamond selling for $6.5M ($214K/ct.). Hong Kong’s 2013 polished imports +9% to $18B, polished exports +6% to $12.2B. THE RAPAPORT PRICE LIST WILL NOT BE PUBLISHED ON APRIL 18 DUE TO THE JEWISH HOLIDAY OF PASSOVER.

RapNet Data: Apr. 10
Diamonds   1,059,263
Value $7,062,048,002
Carats   1,168,183
Average Discount -26.42%

RAPI Chart

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Rapaport Melee Auction

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Rapaport  Single Stone Auction

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  It is encouraging to see how Dubai has developed tailor-made strategies to an industry which was new to them only 12 ago. We have been overwhelmed by the enthusiasm and conviction in which policies have been pursued and businesses successfully attracted. We are happy to be part of this success story and look forward to continue a mutual beneficial relationship with Dubai in the future exploration and exploitation of our diamond business.

President Robert Mugabe | Zimbabwe

The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants and entry-level positions for our offices in New York, Antwerp, Mumbai, Dubai and Shanghai. View jobs now.

Polished Prices +1%

Diamond markets were positive in March after the Hong Kong show demonstrated steady Chinese demand for commercial-quality diamonds. The recent Basel shows signaled robust demand for top-quality large diamonds, fancy colored diamonds and fine-cut fancy shape diamonds.

The RapNet Diamond Index (RAPI™) for 1-carat diamonds increased 0.8% during the month, while RAPI for 0.30-carat diamonds grew 3.8% and RAPI for 0.50-carat diamonds rose 2%. RAPI for 3-carat diamonds increased 1.4%. Prices firmed in all categories during the first three months of 2014 and the trade enjoyed its strongest quarter since early 2011.

The market is expected to slow in the second quarter as wholesale and retail jewelers have replenished their inventories and may restrain their buying at current higher polished price points. Liquidity has tightened as rough prices rose toward the end of March and banks are increasingly conservative in lending to the industry. While sentiment remains positive, diamond market growth is projected to stabilize in the coming months.

De Beers Sight Value at $700M

De Beers April sight closed with an estimated value of $700 million after the mining company raised its rough diamond prices by 3% to 4%. Box assortments were relatively unchanged and some ex-plan was offered. Trading on the secondary market subsequently slowed and premiums declined.

One sight participant claimed that the market for second-hand boxes is dead as the price increase made boxes very expensive. Rapaport estimates that rough prices have increased by approximately 7% to 10% since the beginning of 2014. Guy Harari, the CEO of Bluedax, observed that the market has slowed for better-quality, clean diamonds, while high-premiums remain only on low-end goods.

Other observations from the trade indicated that there are a lot of goods in the pipeline, liquidity is tight and turnaround times from the GIA are slow. Sightholders said they weren’t surprised by price increases since De Beers maintained prices at its previous February sight and premiums on boxes steady on the secondary market during March. They also noted continued strong demand for dossiers but argued that trends in other goods didn’t warrant a rough price increase that affected most boxes and categories.

LVMH Jewelry Division Sales Flat

LVMH's jewelry and watch division reported revenue of $841 million (EUR 607 million) for the first quarter that ended on March 31, basically the same as one year ago. However, comparable-store sales for the division rose 5%.

Overall LVMH group revenue rose 4% year on year to $9.9 billion in the first quarter. At constant-exchange-rates, comparable-stores sales rose 6%. The group noted continued growth in the U.S. and Asia, with strong growth specifically in Japan during the quarter. LVMH stated that the market in Europe demonstrated resilience despite a still challenging economic environment.

Sotheby's Jewels Sale at $107M

Sotheby's Hong Kong sale of magnificent jewels and jadeite achieved $106,615,865 and was 82.2% sold by lot. The top lot was the Hutton-Mdivani necklace, a highly important jadeite bead, ruby and diamond necklace singed Cartier, circa 1933, which sold for $27,441,026 to The Cartier Collection. Sotheby's confirmed the sales price was a world record for any Cartier jewel.

The Red Emperor, a Burmese ruby and diamond necklace that was set with 60 pigeon's blood rubies totaling 104.51 carats sold for $9,923,077, setting a record for any ruby and diamond necklace, according to Sotheby's. The sale also set a world record price for a 29.62-carat, oval Burmese ruby and diamond ring, mounted by Cartier, which sold for $7,338,462. The sale also featured a 30.57-carat, D, flawless unmounted brilliant-cut stone that sold for $6,548,718 and a 102.61-carat, cushion-shaped royal blue sapphire and diamond necklace that sold for $4,179,487.

Next month, three exceptional diamonds will highlight Sotheby's Geneva sale of magnificent jewels and noble jewels on May 13. Sotheby's will auction the historic Victory Diamond, which was named in honor of the allied victory in World War II. The original rough diamond weighed 770 carats and it was discovered in 1945 in the African Woyie River. Thirty diamonds were cut from that stone, the largest of which was the 31.34-carat, D, potentially flawless, type IIa step-cut Victory Diamond. Sotheby's priced this lot to sell for between $5 million and $8 million.

The Graff Vivid Yellow diamond also highlights the Geneva sale. This 100.09-carat diamond ring is described as "daffodil yellow" in color with exceptional beauty and extraordinary fire and brilliance, and it has a presale estimate of $15 million to $25 million. A third diamond, also by Graff, is a 103.46-carat, brilliant-cut diamond ring with a presale estimate of $3.5 million to $5 million.

Chow Tai Fook's Sales +22%

Chow Tai Fook reported unaudited group revenue grew 22% year on year, without citing hard totals, for the fourth fiscal quarter that ended on March 31. The retailer cited strong retail sales of mass luxury jewelry products especially gem-set jewels and steady recovery in wholesale revenue in Mainland China. The company noted that sales at new stores in Mainland China and Hong Kong and Macau made a meaningful contribution to group revenue. Group sales in Mainland China jumped 44%, while sales in Hong Kong and Macau fell by 3%. Group same-store sales during the quarter increased 4% year on year.

Independents: Who needs them?

Watch Now:  Martin Rapaport, the chairman of the Rapaport Group, shares key measurements of success for the independent jeweler during a special presentation at the Centurion Show. Topics touch upon prices and trends, relationships with customers, merchandising and branding, and the way forward in a changing consumer environment.

Xcel Acquires Judith Ripka

Xcel Brands Inc. acquired the Judith Ripka brand and its intellectual property for approximately $22.5 million of which $14 million was paid in cash along with $6 million in interest-free promissory notes and 571,500 shares of common stock. In addition, Xcel will provide for up to an additional $5 million in contingent future payments, payable in cash or stock, based upon the achieving certain net royalties generated by the Judith Ripka brand during annual periods from October 2015 through September 2018.

The acquisition is expected to be accretive to Xcel's 2014 earnings. The Judith Ripka brand embodies Xcel's core mission of delivering products of uncompromising quality, according to the firm. Ripka will serve as chief designer under the new ownership.

Pandora Opens New Concept Stores

Pandora Jewelry opened two concept stores, one in the Baltimore and another in Washington, D.C., to serve visitors and communities at the Baltimore Washington International Airport (BWI) and the Georgetown shopping areas. The new store locations in Concourse B at BWI and Georgetown join the company's three existing owned and operated outlet stores in Hilton Head Island, South Carolina; Potomac in Woodbridge, Virginia and Rehoboth Beach, Delaware.

Jostens Unveils Red Sox Rings

During opening day festivities at Fenway Park, the Boston Red Sox presented players and uniformed personnel and staff with their 2013 World Series Championship Rings that were created by Jostens. The rings were crafted in 14-karat white gold, featured 126 diamonds, 16 custom-cut sapphires and nine custom-cut rubies. The left side of the ring pays homage to Boston, while the right side of the ring features the individual person's name and number. It is also customized to highlight the number of World Series titles the individual has won with the Red Sox by portraying either multiple trophy images or the Fenway Park façade. The inside further memorializes the season with a Bearded Brothers image and 10-30-13, the date that the Red Sox brought the World Championship back to Fenway Park.

Israel Adopts 'Natural Is Real'

Israel's diamond industry is branding itself as the world's prime center for trading natural diamonds, according to Shmuel Schnitzer, the president of Israel Diamond Exchange (IDE). "By adopting the slogan 'Natural Is Real,' we are sending a clear message to the market that Israel's diamond trade is all about natural diamonds," he said during the U.S. & International Diamond Week in Ramat Gan. IDE's board banned trading of synthetic diamonds from the house floor.

Foreign Traffic Light at Diamond Week

The U.S. & International Diamond Week in Israel ended with "good" diamond trading opportunity, but nothing stellar with only a limited number of foreign buyers. Two reasons for light foreign traffic were heard on the trading floor: trade show fatigue and visitor visa issues. The industry just came off three tradeshows in Basel, and the Israel Foreign Ministry strike prevented many foreign buyers from receiving visas in time to attend diamond week. Nonetheless, attendees emphasized that goods were moving, especially for specialty diamond firms.

CIBJO, CIFA Sign Agreement

CIBJO and the Council of Independent Financial Advisors (CIFA) signed a cooperation agreement, the "Global Partnership for Development," which calls for the creation of a joint program to educate their respective members about the UN's post-2015 development agenda. The signing ceremony took place at UN headquarters. The partnership will focus on society, where the groups aim not only to eliminate negative elements from their industries, but ensure that the jewelry and gemstone industry delivers a peace dividend, according to Gaetano Cavalieri, CIBJO's president. "We are committed to the well-being of all our stakeholders. Nobody should be left behind," Cavalieri said.

In addition, CIBJO published a new report this week, prepared by the CIBJO Diamond Commission, which addresses the challenge posed by the influx of synthetic diamonds into the pipeline. There will be a special conference on this topic on the first afternoon of CIBJO's Moscow Congress, on May 19.

Roberto Coin Obtains New Trademark

The U.S. Patent & Trademark Office (USPTO) issued the trademark "The Perfect Diamond Hoop" to Roberto Coin Inc. of New York on April 1 with the registration number 4508353. The trademark refers to earrings and it was originally filed on April 16, 2013 at which time it was also first used in commerce.

The USPTO also assigned the trademark "TCC" on April 8 to Hong Kong Galaxy Jewelry Limited for goods and services including boxes of precious metals, bracelets, charms, diamond jewelry, gemstones, gold thread and precious metals.

ALROSA, DDE, GJEPC Sign Agreements

ALROSA signed cooperative agreements with both the Dubai Diamond Exchange (DDE) and India's Gem & Jewellery Export Promotion Council. ALROSA and DDE will further strengthen their relationship by jointly contributing to the development of a competitive rough and polished diamond market in Russia. ALROSA and the DDE will also frequently exchange expertise and information regarding the implementation of the Kimberley Process Certification Scheme and responsible sourcing of diamonds. Furthermore, both parties will participate at global industry events and seminars, to share market intelligence and identify new trends and technologies.

ALROSA and GJEPC agreed to exchange information on how to engage their sectors, share diamond trade statistics and market research, address Kimberley Process issues and jointly work to ensure separate sales of natural diamonds, diamond jewelry and synthetics.

Lucara Tender Achieves $50M

Lucara Diamond Corp. sold 1,191 carats of rough diamonds from its Karowe mine during an exceptional stone tender on April 10 and generated $50.47 million or $42,347 per carat. The company offered 20 single stone lots and all were sold. The highest value stones sold were a 167.10-carat and an 86.80-carat diamond that achieved $75,821 per carat and $58,627 per carat, respectively. Lucara held two regular diamond tenders during the first quarter of 2014 and the year to date total from the three sales was $84.06 million.

Marange Diamond Tender Totals $29M

The Dubai Diamond Exchange (DDE) reported that its inaugural Zimbabwe diamond tender, which was held from March 23 to 30, achieved a sales total of $29.2 million at an average price of $76 per carat. The highest price per carat reached $5,000, according to the DDE. The rough diamond tender was facilitated by Global Diamond Tenders in cooperation with the Dubai Multi-Commodities Centre (DMCC) and included diamonds from Anjin, Jinan, DTZ-Ozgeo, Diamond Mining Company (DMC), Marange Resources, Mbada Diamonds and Kusena.

Zimbabwe's Mine's Minister, Walter Chidhakwa said the tender earned $4.3 million for the government through royalties. The Minerals Marketing Corporation of Zimbabwe (MMCZ), Zimbabwe Mining Development Corporation (ZMDC), Marange Resources and Mbada Diamonds are listed on the U.S. Office of Foreign Assets Control (OFAC), which means that U.S. residents and businesses may not trade or purchase diamonds in any form from these firms.

Lucapa Raises $6M

Lucapa Diamond Company raised $5.5 million, less costs, through a share placement to advance its Lulo diamond concession in Angola. The placement is subject to the clearance of funds and involved issuing approximately 917 million new ordinary shares, together with approximately 458 million listed options at no further consideration on the basis of one option for every two placement shares. The options, which are to be listed and exercisable at 1 cent each on or before August 29, 2015, remains subject to shareholder approval.

Debmarine's Production +5%

Debmarine Namibia, a seabed diamond miner, reported diamond production rose by 5% year on year to 1.16 million carats in 2013. The company anticipates a similar volume this year. Debmarine generated revenue of $479 million from rough diamond sales. Debmarine plans to purchase a second seabed crawler for one of its five mining vessels at a cost of $9.6 million.

Stornoway Secures Funding Agreement

Stornoway Diamond Corporation entered into a financing agreement to raise $866.9 million (CAD 944 million) for construction at its Renard diamond project in Quebec. The agreement includes $360 million from private equity group Orion Finance, $202 million from Ressources Québec, a wholly-owned subsidiary of Investissement Québec and $96.4 million from Caisse de depot et placement du Quebec, a large institutional fund manager in the province.

The agreement also includes a public share offering and an equipment financing facility with Caterpillar Financial. Each element of the financing transaction is conditional on the completion of the others and the successful completion of the marketed subscription receipt offering. Construction at Renard is slated to begin in June this year with commercial production expected to commence in the third quarter of 2016.

North Arrow Begin Survey Program

North Arrow Minerals Inc. began its program of ground geophysical surveys for the Redemption diamond project in the Northwest Territories of Canada. The property is located 32 kilometers southwest of, and 47 kilometers west of the Ekati and Diavik diamond mines. Twenty-one grids are planned for the program, covering approximately 40 individual targets and North Arrow expects to complete the program in approximately 28 days. Survey results will be used to select targets for follow up exploration, including drilling.

Hong Kong

  2013 $Mil. YOY %Chng.
Polished imports $18,015 9%
Polished exports $12,154 6%
Net imports $5,861 16%
Rough imports $1,932 14%
Rough exports $2,546 35%
Net imports ($614)  
Net diamond account $5,247 8%

Diamond Industry Stock Report

Weak consumer spending sent U.S. retail shares lower, except for Zale, which was unchanged. European shares were mixed with LVMH (+6%) and Swatch (-2%) defining the spread. Indian shares higher except for Goldiam (-1%) and Titan (-2%). Mining stocks were largely unchanged except for Gemfields (+12%). View the extended stock report.

  Apr. 10 Apr. 4 Chng.  
$1 = Euro 0.720 0.729 -0.009  
$1 = Rupee 60.09 60.19 -0.1  
$1 = Israel Shekel 3.46 3.47 -0.01  
$1 = Rand 10.47 10.64 -0.17  
$1 = Canadian Dollar 1.09 1.10 -0.01  
Precious Metals        
Gold $1,318.10 $1,286.70 $31.40  
Platinum $1,449.00 $1,438.00 $11.00  
Stock Indexes       Chng.
BSE 22,715.33 22,509.07 206.26 0.9%
Dow Jones 16,170.22 16,572.42 -402.20 -2.4%
FTSE 6,641.97 6,649.14 -7.17 -0.1%
Hang Seng 23,186.96 22,565.08 621.88 2.8%
S&P 500 1,833.08 1,888.76 -55.68 -2.9%
Yahoo! Jewelry 1,034.56 1,046.76 -12.20 -1.2%

Polished and Rough Trading Activity

Some softness in demand observed and sellers are ready to negotiate, but only to some extent. Stable demand in 0.18ct. to 0.50cts. Read the full report.  


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