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RAPAPORT NEWS SERVICE | April 27, 2016 |
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Rapaport Weekly Market Comment April 27, 2016

Diamond trading very quiet during Passover holiday. Rising expectations for May Day retail holiday as China’s gold imports increase. U.S. demand steady but jewelers avoiding unnecessary inventory and taking goods on memo. U.S. 2015 retail diamond jewelry demand +5% to $39B, global consumption -2% to $79B, according to De Beers insight report. Rough trading stabilizing as manufacturing profit margins tighten. Petra Diamonds 3Q sales +25% to $121M, production +26% to 995,905 cts. Christie’s NY sells $57M (80% by lot) with 15.99 ct. Burmese ruby sold for $14.2M ($3.6M/ct.). Swiss watch March exports -16% to $1.4B. AWDC highlights reduced Antwerp bank financing in 2015 annual report.

RapNet Data: April 27
Diamonds 1,155,870
Value $7,891,332,625
Carats 1,258,643
Average Discount -28.53%

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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  The global diamond industry took a beating this year. Thanks to our strong foundations and ability to be agile and adopt innovative new technologies, Antwerp has succeeded in safeguarding its world-leading position with regard to rough as well as polished diamonds. Antwerp will consequently emerge from this downturn in better shape than our competitors.

Ari Epstein, chief executive officer of the Antwerp World Diamond Centre (AWDC) in the group's 2015 annual report.

United States: New York trading quiet with many dealers on vacation during Passover holiday. Suppliers reducing prices on unwanted excess inventory but holding firm on top-quality RapSpec A2 goods...

Belgium: Seasonally slow period with dealers concerned about weak demand. Dealers focused on filling orders with very little buying for inventory... 

Israel: Most dealers away and Israel Diamond Exchange (IDE) services closed during Passover holiday (April 24 to 28)... 

India: Trading slow as expected during April-May. Jewelry retailers focused on gold sales ahead of Akshaya Tritiya festival on May 9... 

Hong Kong: Polished trading stable. Steady demand for 0.30 to 1 ct., D-J, VS-SI, 3X diamonds. Big stone demand weak...

Click here for deeper analysis

Making Luxury More Affordable in China

Diamond dealers still see China as the engine of industry growth but Premier Xi Jinping’s government can do more to encourage its development. As the country transitions to a consumer-driven economy, luxury products such as jewelry are considered expensive in China, forcing shoppers to look abroad for their purchases…

Click here to continue reading

U.S. Diamond Jewelry Sales Surges in Weak Global Market

U.S. demand for diamond jewelry grew 5% to $39 billion in 2015 supported by a sustained economic recovery and an improved labor market, according to a De Beers report. Growth in the U.S., however, failed to lift the global industry which contracted 2% because of sluggishness in emerging-market economies and the strength of the U.S. dollar.

Global diamond jewelry demand fell to $79 billion, off its record high of $81 billion in 2014. At constant exchange rates, demand advanced 2%. Chinese diamond jewelry demand, including from purchases abroad, rose 1%, or 3% when measured in terms of yuan. Other major markets including India, Japan, and the Gulf, registered declines in sales.

Tight Margins, Financing Challenge Antwerp Trade

The Antwerp World Diamond Centre (AWDC) said tighter profit margins and lower bank credit squeezed Belgium’s diamond trade in 2015, a difficult year amid an “unsettling global economy”. The average profit margin reported by wholesalers in 2015 was in the 0.1% to 0.4% range, the same as previous year, according to the AWDC’s annual report.

The report also acknowledged funding pressure on diamantaires in relation to rough diamond purchases, after the global banking and sovereign debt crisis dramatically altered lending practices. Industry financing was also impacted by the banking industry’s policy of “de-risking,” or removing access to funds for businesses with a perceived risk of money laundering or terror financing.

Harry Winston Diamonds Shine in $7M Auction

Bonhams garnered $7.2 million (GBP 5 million) at its jewelry auction this month in London, where it noted a strong interest in diamonds as well as pink and blue sapphires.

The top lot was a step-cut, 15.52-carat, D, VVS2 diamond ring by Harry Winston. It sold for $1.6 million (GBP 1.1 million), or $101,500 per carat, exceeding the upper pre-sale estimate of $1.3 million (GBP 900,000).A pair of marquise and pear-shaped diamond earrings, also by Harry Winston, weighing 25.37 carats, fetched $384,000 (GBP 266,500).

De Beers IIDGR Diamond Grading Reports on RapNet

Grading reports from De Beers International Institute of Diamond Grading and Research (IIDGR) laboratories can now be uploaded to RapNet – Rapaport’s Diamond Trading Network.

De Beers noted IIDGR becomes one of only a handful of grading laboratories to have its reports listed on RapNet. IIDGR launched its generic diamond grading program earlier this year, extending its grading activity with the De Beers Forevermark brand.

U.S. Jewelry Prices Drop for First Time in Five Months

The U.S. consumer price index (CPI) for jewelry fell 3% in March, halting an uptrend in the four months to February, according to the U.S. Bureau of Labor Statistics.

However, even though the CPI for jewelry rose 9% between November and February, it was in a steady downtrend for most of 2015. Compared to last year, the figure for March was 3% higher than 12 months ago. The March CPI for watches also declined 4% but remained up 5% from a year earlier.

U.S. Consumers Less Optimistic in April

U.S. consumer confidence declined slightly in April as the outlook for the labor market was less favorable, according to The Conference Board’s monthly report. The Conference Board Consumer Confidence Index stood at 94.2 in April, down 2 percent from its March reading of 96.1.

Consumer assessment about current conditions improved but expectations regarding the short-term have moderated, said Lynn Franco, director of economic indicators at The Conference Board. The report suggested fewer consumers anticipate improvement in the job market in the coming months. Consumers were also more pessimistic about business conditions.

Indian Government Forms Panel for Controversial Tax

India’s Ministry of Finance has formed a sub-committee to oversee implementation of the 1% excise duty recently imposed on the jewelry industry. The ministry also deferred the deadline for jewelers to register with the central excise department to July 1, 2016, according to the Gem and Jewellery Export Promotion Council (GJEPC).

Ashok Lahiri, a former chief economic advisor to the government, will chair the five-person panel. Representatives from the trade will be coopted onto the committee in consultation with Lahiri.

Swiss Watch Exports Slump in March

Swiss watch exports fell 16% in March as orders from Hong Kong and the U.S. slumped. The value of wristwatch shipments stood at $1.4 billion (CHF 1.37 billion), the lowest for March since 2011. Volume dived 20%. 

The retreat reflects continued pessimism in the Swiss industry, with a 2015 Deloitte report stressing increasing concern of the threat of smartwatches. The impact of a stronger Swiss franc and weaker demand from countries such as China is also problematic, according to Deloitte.

Petra Diamonds 3Q Sales Rise in Buoyant Rough Market

Petra Diamonds raised its production target for fiscal 2016 as third-quarter sales jumped amid improving conditions in the rough market. Steps taken by major producers to reduce supply, lower prices of rough, and increase marketing and promotions helped lift trading, the diamond miner said.

Petra’s revenue surged 25% to $120.5 million in the three months to March 31 as the volume of sales rose 13% and rough prices climbed 3.5%. Output across its five mines soared 26% to 995,905 carats in the period, prompting Petra to raise its target to 3.6 to 3.65 million carats for the current fiscal year. Its previous guidance was for 3.3 to 3.4 million carats this year.

Rockwell Diamonds Sales Plunge in 4Q

Rockwell Diamonds reported sales slumped 45% to $7.1 million in its fiscal fourth quarter as the company has changed strategy at its South Africa-based operations. Production fell 33% to 4,714 carats.

A strategic review will see the company close its Saxendrift operation in May and recommission its Wouterspan project in the same month. A large proportion of the Saxendrift staff and equipment will be deployed at Wouterspan, the junior diamond miner said. Both projects are located at South Africa’s Middle Orange River.

Three Big Diamonds Found at Angola Lulo Project

Lucapa Diamond Company recovered three more large diamonds during trial mining at its Lulo alluvial project in Angola. Two of the gems are high-color white type IIa diamonds, one weighing 88 carats and the other 30 carats.

They join the ranks of 10 “special” stones weighing more than 10.8 carats and found in the E46 area at Lulo since trial mining began in March. Lucapa reported more than 30% of the diamonds above 1-carat recovered in the E46 project are type IIa, the highest level of purity in a rough diamond.

De Beers to Move From Prestigious Premises in 2017

De Beers is moving from its iconic premises at 17 Charterhouse Street as part of an ongoing consolidation at its parent Anglo American, the company’s spokesperson confirmed to Rapaport News.

Staff will relocate to Anglo American’s Carlton House Terrace office within the next year. Anglo American announced in December it plans to co-locate with De Beers in 2017 and was considering Charterhouse as its new headquarters. Instead it has now been decided De Beers will move to Anglo American’s premises.

Lab-Grown Diamond Association Adds Members

The International Grown Diamond Association (IGDA) has almost doubled its membership base since launching in February after reporting the addition of eight new companies to its ranks.

The new IGDA members include Numined Diamonds, Fair Trade Jewellery Co., The Gold Concept Jewelry and Design, Caraxy, M. Geller, Schubach Enterprises, D.NEA and DM Gems India. They join the IGDA to promote the so-called synthetic diamonds as a “new choice” to consumers.

Diamond Tracker Offers Sales, Inventory Insight

NPD Group, a market-data analysis company, introduced a service providing visibility into sales and inventory data across the global diamond industry. Diamond Tracker is the “first service” to offer insight into detailed point-of-sale information, monthly sales and inventory trends, NPD claimed.

Users are able to drill down into performance trends by specific diamond characteristics for both natural and lab-grown gems. It also tracks factors such as gemological labs, wholesale sources and different forms of purchase such as outright purchase, memo or recycled.

Diamond Industry Stock Report

The major mining companies lost ground with Anglo American (-11.9%) leading the slump. Rio Tinto posted a double-digit decline, while Petra Diamonds fell despite its positive trading report. Far East retail was mixed with Chow Sang Sang posting the strongest gains (+3.3%). Among the Indian retailers, Gitanjali continued its volatility with declines (-5.5%) wiping out some of last week’s gains.

View the detailed industry stock report.

  Apr. 27 (09:15 GMT) Apr. 21 (12:24 GMT) Chng.  
$1 = Euro 0.88 0.88 0.00  
$1 = Rupee 66.42 66.28 0.14  
$1 = Israel Shekel 3.77 3.76 0.01  
$1 = Rand 14.41 14.21 0.20  
$1 = Canadian Dollar 1.26 1.26 0.00  
Precious Metals       Chng.
Gold $1,246.15 $1,265.75 -$19.60 -1.5%
Platinum $1,018.00 $1,036.95 -$18.95 -1.8%
Silver $17.34 $17.63 -$0.29 -1.6%
Stock Indexes       Chng.
BSE 26,055.58 25,880.38 175.20 0.7%
Dow Jones 17,990.32 18,096.27 -105.95 -0.6%
FTSE 6,274.94 6,370.76 -95.82 -1.5%
Hang Seng 21,361.60 21,622.25 -260.65 -1.2%
S&P 500 2,091.70 2,102.40 -10.70 -0.5%
Yahoo! Jewelry 1,109.20 1,128.90 -19.70 -1.7%

Polished Trading Activity

Trading slow as expected during April-May. Jewelry retailers focused on gold sales ahead of Akshaya Tritiya festival on May 9. Government sets up panel to implement 1% excise tax on jewelry industry. Steady demand for GIA-dossiers and 1 ct., G-J, VS-SI diamonds. Manufacturing levels stabilizing.

Read the Polished Diamond Trading Report


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