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RAPAPORT NEWS SERVICE | April 20, 2017   www.rapaport.com | news@rapaport.com
 
 
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Rapaport Weekly Market Comment April 20, 2017

Dealers return from spring break in optimistic mood despite low trading volumes. Steady influx of new polished production entering the market. Large Indian manufacturers raising production, while small factories still acclimatizing to demonetization and low levels of demand. Dealers shifting focus to U.S. ahead of Las Vegas shows. Jewelers discounting to bring consumers back to stores this Mother’s Day. Luk Fook 4Q same-store sales +2%, gold -1%, gem-set jewelry +11%. Firm rough premiums on the dealer market. ALROSA 1Q production +9% to 8.9M cts., sales +17% to 14.1M cts. Rio Tinto 1Q production -8% to 4.2M cts. Dubai 2016 rough exports +29% to $9.8B, rough imports +16% to $6.3B.

RapNet Data: April 20
Diamonds 1,264,743
Value $7,607,099,685
Carats 1,355,074
Average Discount -30.12%

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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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  QUOTE OF THE WEEK
  Surat has made a mark in the diamond industry, but there is now a need to look at the entire gems and jewelry sector. Our aim should not only be ‘Make in India,’ but also ‘Design in India.’

Indian Prime Minister Narendra Modi at the inauguration of Hari Krishna Exports' cutting factory in Surat.

MARKETS  
 
United States: Polished market steady although many businesses closed last week for the Passover holiday. A lot of goods out on memo

Belgium: Dealers slowly returned from the long Easter weekend relatively positive about the market

Israel: Diamond trading quiet given it was a short week due to Passover. Dealers focused on US market with rising expectations for upcoming Las Vegas shows

India: Dealers relatively upbeat despite decline of foreign buyers during Passover and Easter

Hong Kong: Quiet week due to holidays, but polished trading generally slow compared to busy first-quarter period

Click here for deeper analysis


INDUSTRY  
 
Pink & Blue Diamonds Could Fetch $68M

Sotheby’s will offer a pair of pear-shaped diamonds at its May 16 Geneva auction, claiming they are the “most valuable” earrings ever to go under the hammer. The stones will be presented as separate lots, with the 14.54-carat “Apollo Blue” — the largest fancy vivid blue, IF diamond to go on auction — expected to sell for $38 million to $50 million. Its counterpart, the 16-carat, fancy intense pink, VVS2-clarity “Artemis Pink” diamond, is valued at $12.5 million to $18 million.


 
Dubai Sees Jump in 2016 Diamond Trade

The Dubai Diamond Exchange (DDE) gained 268 new members in 2016 for a total of 945 companies, according to the Dubai Multi Commodities Centre (DMCC), which hosts the bourse in its tax-free zone. Rough imports there rose 16% to $6.3 billion, with volume increasing 13% to 70.1 million carats for an average of $89.76 per carat — 2% higher than the previous year. Rough exports jumped 29% to $9.77 billion, and volume rose 26% to 79.9 million carats; the average export price grew 3% to $122 per carat.


 
US Polished Trade Slows in February

US polished diamond imports slid 15% to $1.49 billion in February, while polished exports dropped 11% to $1.75 billion, government data showed. Net polished imports stood at negative $257 million, compared with negative $214 million last year, meaning exports exceeded imports. Rough imports to the US rose 14% to $50 million, while rough exports leapt 37% to $31 million, leaving net rough imports 10% lower at $20 million.The US net diamond account for the month stood at negative $237 million compared with negative $192 million a year earlier.


RETAIL & WHOLESALE  
 
Luk Fook Gets Long-Awaited Jewelry Sales Growth

Luk Fook Holdings recorded its first quarterly growth for same-store sales in three years, reporting a 2% rise across its 199 self-operated stores during the fiscal fourth quarter. By location, same-store sales grew 11% in mainland China, and 1% in Hong Kong and Macau. The jeweler attributed the Hong Kong improvement to better market sentiment and an increase in high-value gem-set jewelry sales in March. Luk Fook opened four self-operated locations in China during the quarter for a total of 133 there, alongside 47 stores in Hong Kong, 10 in Macau and nine in other areas.


 
Judge to Review Signet Workplace Policies

Signet Jewelers has appointed former federal judge Barbara Jones to review its policies on equal opportunities and workplace expectations. Following last month’s Washington Post report about alleged claims of sexual harassment and discrimination at Signet’s Sterling Jewelers division, company shares fell 10%; at press time, they were down 30% since the beginning of the year. In the aftermath, Signet established a committee on respect in the workplace, which recruited Jones to conduct the review. A partner at Bracewell LLP, Jones has extensive experience dealing with workplace compliance issues, Signet said.


MINING  
 
Alrosa Sales Volume Spikes

Alrosa’s sales far exceeded production in the first quarter, helping the miner reduce excess inventory from 2015. Production rose 9% year on year to 8.9 million carats, and the company cited sales of 14.1 million carats — a 17% jump from last year, according to Rapaport records. Alrosa — which is on track to meet its 39.2 million-carat 2017 production target — benefited from abnormally strong Indian demand in the first quarter as midstream players recovered from demonetization faster than expected, according to VTB Capital analysts.


 
Argyle Decline Weighs on Rio Tinto Output

Rio Tinto’s diamond production fell 8% year on year in the first quarter, as its Argyle mine in Australia yielded a reduced volume and lower grade of ore. Group output dropped to 4.152 million carats, with Argyle’s production down 11% to 3.016 million carats. At Canada’s Diavik mine, which the company owns jointly with Dominion Diamond Corporation, first-quarter production was flat, with Rio Tinto’s 60% share at 1.136 million carats. Rio Tinto maintained its forecast to recover 19 million to 24 million carats this year.


GENERAL  
 
Israel Bourse Issues Ethics Code

The Israel Diamond Exchange (IDE) has introduced an ethical code of conduct to improve transparency and business practices. The code — which was initiated during the term of previous bourse president Shmuel Schnitzer and took more than two years to complete — requires members to show respect for clients, colleagues, employees and suppliers; comply with all legal regulations; show responsibility toward other members; train and mentor new industry members; compete fairly; and strive for excellence and professionalism, among other things.


 
GIA Launches Synthetics Detector for Jewelry

The Gemological Institute of America (GIA) has unveiled a new machine for identifying synthetic diamonds, including stones mounted in jewelry. Using advanced spectroscopic technology, the machine can pinpoint natural, untreated diamonds above approximately 0.005 carats with D to Z color. The GIA will start selling the device later this year at a price that is “accessible to the trade,” it said. The institute is also researching how to extend the instrument’s capabilities so it can screen pink diamonds and other materials.


 
Ex-Rio Tinto Exec to Chair Gem Diamonds

Gem Diamonds has appointed Rio Tinto and McKinsey & Co veteran Harry Kenyon-Slaney to succeed Roger Davis as chairman, effective June 6. Kenyon-Slaney, a senior adviser to McKinsey, has more than 33 years’ experience in the mining industry, Gem Diamonds said. A geologist by training, he is also a partner at Audley Capital Advisors and a member of Bridon Bekaert Ropes Group’s board of directors. He filled several roles at Rio Tinto, including CEO of energy and CEO of diamonds and minerals.


ECONWATCH  
 
Diamond Industry Stock Report

Financial markets fell this week, dragging diamond and jewelry stocks down. JC Penney (-7.5%) led the US retail decline despite reports it would delay some planned store closures due to better-than-expected sales. Chow Tai Fook shares (+4.3%) were the sole gainer among Far East jewelry retailers, with further reports of a turnaround in jewelry sales in Hong Kong and China. Among the mining companies, Gem Diamonds (-9.8%) fell, even as this week’s appointment of a new chairman brought hope the company would restore growth.

View the detailed industry stock report

  Apr 20, 2017 (12:30 GMT) Apr 13, 2017 (11:45 GMT) Chng.  
$1 = Euro 0.93 0.94 -0.01  
$1 = Rupee 64.63 64.44 0.19  
$1 = Israel Shekel 3.66 3.65 0.01  
$1 = Rand 13.17 13.58 -0.41  
$1 = Canadian Dollar 1.35 1.32 0.03  
         
Precious Metals       Chng.
Gold $1,280.05 $1,286.60 -$6.55 -0.5%
Platinum $971.50 $971.00 $0.50 0.1%
Silver $18.20 $18.46 -$0.26 -1.4%
         
Stock Indexes       Chng.
BSE 29,422.39 29,461.45 -39.06 -0.1%
Dow Jones 20,404.49 20,591.86 -187.37 -0.9%
FTSE 7,113.56 7,311.43 -197.87 -2.7%
Hang Seng 24,056.98 24,261.66 -204.68 -0.8%
S&P 500 2,338.17 2,344.93 -6.76 -0.3%


INDIA MARKET REPORT  
 
Polished Trading Activity

Dealers relatively upbeat despite decline of foreign buyers during Passover and Easter. Local trading steady with good demand for dossiers, particularly for 1 ct., J-L, VS-SI diamonds. Some concern about slower-than-usual US demand ahead of Las Vegas shows. Manufacturers maintaining steady production, with large factories operating at full capacity. Demonetization still affecting smaller units, but dealers report improved liquidity in the market. Rough demand firm.

Read the Polished Diamond Trading Report






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