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RAPAPORT NEWS SERVICE | August 28, 2015 |
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Rapaport Weekly Market Comment August 28, 2015

Polished trading cautious as financial markets tumble. De Beers restarts generic marketing spend to restore U.S., China holiday sales growth, drops prices 8-10% at $250M Aug. sight. Cutters hope cheaper rough will enable profitable 4Q season but trading is still restrained. Signet 2Q sales +15% to $1.4B, profit +7% to 62M. Tiffany 2Q sales flat at $991M, profit -16% to 105M. Chow Sang Sang 1H sales -1% to $1.2B, profit +39% to $94M. India’s July polished exports -18% to $1.5B, rough imports -43% to $1.1B. Global 2014 rough production +4% to $14.5B, volume -4% to 124.8M cts., average price +8% to $116/ct. Dominion 2Q sales -24% to $210M, Ekati production +15% to 924,000 cts.

RapNet Data: August 27
Diamonds   1,381,642
Value $8,820,898,969
Carats   1,428,033
Average Discount -26.00%

RAPI Chart
The RapNet Diamond Index (RAPI) has been revised to reflect the average price of the 10 best priced diamonds in each category.

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  One can’t ignore what’s happened on the financial markets in the past few days and weeks but we also see our product doing quite well in these times.

Paul Rowley | Head of Global Sightholder Sales, De Beers

United States: Polished trading is stable amid some concern that quality goods are becoming harder to replace as manufacturing slowed in the last few months.

Belgium: While dealers slowly return from the summer break, they’re in no rush to enter the market. There’s some anticipation activity will pick up from September 1 as in previous years.

Hong Kong: Polished trading is slow, dampening expectations for the upcoming show. The local stock market plunge and the yuan depreciation have cast a pall over the region.

India: Manufacturers remain cautious despite reports that De Beers reduced its rough prices by up to 10 percent at this week’s sight. Rough demand improved slightly on news of the cuts but polished dealers aren’t yet seeing an effect on polished prices.

Israel: The mood in the Israel Diamond Exchange was muted by news of two significant local bankruptcies. More businesses are insisting on cash payments for goods, particularly from Far East.

Click here to continue reading

Sightholders React to Price Cuts at $250M Sight

De Beers sightholders had mixed reactions to the price cuts at this week’s sight, which had an estimate value of $250 million before any additional supply was offered. The company dropped its rough diamond prices by an average of 8 percent to 10 percent, which spurred demand for additional goods during the week. Sightholders at press time were waiting to hear whether their requests would be granted. Click here to continue reading

New Gem-A Trustees Gain Seats in Hotly Contested Election

Elections results are in for trustees at Gem A, the Gemmological Association of Great Britain, according to the Friends of Gem A Facebook page and confirmed by an association spokesperson. Voting was delayed this week reportedly due to technical issues.

Some 16 people were seeking to fill as many as nine slots on the board. New members are: Kathryn Bonanno, Justine Carmody, Paul Greer, Kerry Gregory, Alan Hart, Alan Hodgkinson, Jack Ogden, Richard Slater, and Chris Smith. Continuing as trustees are: Mary Burland, Nigel Israel, Miranda Wells. Israel is expected to continue to serve as acting chief executive officer of the group until the new board meets on a replacement for departed CEO James Riley.

Blue Diamonds Drive Color Index Higher

The Fancy Color Diamond Index (FCDI™) rose in the second quarter, driven mainly by the blue diamond categories, according to the Fancy Color Research Foundation. Fancy-color diamonds continued to show price strength amidst declines in their white diamond counterparts.

Based on a survey of more than 20 wholesale traders, the index revealed that the prices of fancy-color diamonds across the pink, yellow and blue categories edged up 1% over the April to July period. The strongest performers included 1-carat fancy blue and 1-carat fancy vivid yellow stones, which were both up 4%.

Fancy vivid blue diamonds in the 3- to 10-carat range jumped 4 to 6% while 8- to 10-carat pinks, both intense and vivid, were up 5 to 6%. In most categories, the price increase was the result of lower supply.

Price weakness among white diamonds continued during the period, as polished inventories accumulated across the supply chain. According to the RapNet Diamond Index (RAPI™), 1-carat diamonds prices slid 1.6% over the same period.

Tzoffey's First Rough Diamond Tender

Tzoffey's 1818, the Israeli-French auction house, will hold its first exclusive African rough diamond tender from August 30 to September 4 at the Israel Diamond Exchange complex in Ramat Gan.

The rough to be sold at the upcoming tender is from Africa and includes a run-of-mine production, a wide variety of 5 to 10.8 caraters and rough stones larger than 10.8 carats.

Viewing of the goods will take place between August 30 and September 3.

Portugal Joins Kimberley Process Certification Scheme

Portugal has joined the Kimberley Process Certification Scheme (KPCS), according to the Official Journal of the European Union. Other participating EU countries include Belgium, Bulgaria, Czech Republic, Germany, Romania and the United Kingdom.

Countries that participate must pass legislation to enforce the Kimberley Process. They must also set up control systems for the import and export of rough diamonds.

India Polished Diamond Imports Plummet

India’s polished diamond imports were nearly halved in July, falling 42.9% year on year, according to The Gem & Jewellery Export Promotion Council (GJEPC).

The impact of an industry slowdown was evident in the country’s import figures. Overall gross imports of gems and jewelry were down 29.8% to $2.27 billion compared to $3.24 billion in July of last year.

Gross exports totaled $2.898 billion during the month, a decline of just 0.94% from the $2.926 billion posted for the same period of 2014. Exports of cut and polished diamonds, however, dropped 18.3% to $1.51 billion in July 2015. In volume terms, the drop totaled 14.4%, with the country exporting 2.80 million carats versus 3.26 million carats a year earlier.

Surat Diamond Workers Attend Rally

Surat diamond industry workers will not report to work and diamantaires will voluntarily refrain from buying and purchasing diamonds on August 25, according to the Times of India.

Instead, workers will head to Ahmedabad to attend a rally advocating education improvements and jobs for members of the community. The diamond industry in the city employs over 450,000 diamond workers, per the newspaper.

Surat Diamond Association President Dinesh Navadia was quoted as saying, “It is a voluntary decision of the people in the diamond industry to keep their units and offices closed on August 25. They are going to Ahmedabad to attend the rally.”

IDI Enables Chinese Diamond Search for September Show

The Israel Diamond Institute has introduced a Chinese-language version of its “Find Your Diamond” search platform for the Hong Kong Jewellery & Gem Fair beginning September 10, according to an IDI announcement.

The application shows all goods offered by Israeli exhibitors at the show. There is a mobile version to complement dedicated terminals at the show. The Israel Diamond Pavilion in Hong Kong will feature 98 companies, with another 20 businesses exhibiting at other locations throughout the show. The pavilion will be located in Hall 7, 9 and 11 of the Asia World Expo.

De Beers to Launch Holiday Campaign

De Beers will make what it described as “a major investment” in marketing to boost consumer demand in the U.S. and China during the year-end holiday season.

The company didn’t specify the amount it would spend on the campaign, which will run in addition to Forevermark’s “A Diamond is Forever” brand promotion. The new campaign will target men purchasing diamond jewelry as gifts for partners during the holiday season.

Tiffany's to Open Store in Auckland

Tiffany & Co. says it will bring a new level of luxury jewelry to Auckland when it opens a store there in late 2016, according to New Zealand’s Herald newspaper.

The 430-square-meter store will occupy the entire ground floor of the historic Australis House building, located at 36-38 Customs Street East.

Luxury Consigner RealReal Opens NY Valuation Office

RealReal, which provides authenticated luxury consignment sales, has opened a valuation office in New York City to provide sellers with free valuations of their fine jewelry and watches, according to a company announcement.

The midtown Manhattan office is staffed by RealReal's graduate gemologists and watch experts who assess and provide a valuation document on the spot. The company said the new concept aligns with its mission to address the gap in the market for a reliable place to get accurate fine jewelry and watch valuations.

Chow Sang Sang’s Sales Drop

Chinese jewelry retailer Chow Sang Sang’s sales fell in the first half, dragged down by a 12% decline in same-store sales in Hong Kong and Macau, according to its filing with the Hong Kong Stock Exchange.

Overall company sales slipped 1% to $1.2 billion (HK$9.3 billion). Operating profit from the company’s retail jewelry group fell 12% to $72.3 million (HK$561 million).

The company said that while there may have been as much as a 5.9% year-on-year increase in Mainland Chinese tourists’ visits to Hong Kong, “actual spending by these visitors did not bring much cheer to the luxury retail sector.”

Ahead of the filing, Bloomberg Intelligence analyst Catherine Lim wrote that a sales decline could lead Chow Sang Sang to seek retail rent cuts and store closures. The company closed its store in Metroplaza, Kwai Chung during the first half of the year.

Fletcher’s Parent Files for Bankruptcy Protection

USA Discounters Ltd., the parent company of Fletcher’s Jewelers, filed for bankruptcy protection and plans to wind down its business, according to TheWall Street Journal.

The company closed its 24 USA Living stores before filing and is still considering options for its seven Fletcher’s locations, according to the report.

In court papers, the company stated that it had discontinued credit sales as of Monday, the date of its bankruptcy filing, and is selling jewelry for cash only.

WJA Plans 19-City Night Out

The Women's Jewelry Association (WJA) will host its third annual Jewelry Night Out in 19 U.S. cities on September 10.

Activities will be held in Atlanta; Bethesda, Maryland; Birmingham, Alabama; Boston; Chicago; Dallas; Denver; Ft. Lauderdale, Florida; Cincinnati; Las Vegas; Los Angeles; Madison, Wisconsin; Minneapolis; Nashville; New York City; Providence, Rhode Island; San Diego; San Francisco and Seattle.

Jewelry Night Out's lead sponsors are Signet Group’s Kay Jewelers and Jared The Galleria of Jewelry. Details on location, start times and registration are available at

Russia Ranks as World’s Top Diamond Producer

Global diamond output grew 4% by value last year to $14.5 billion as the average price per carat jumped 8% to $116.17 and Russia displaced Botswana as the world’s largest producer, based on annual data published by the Kimberley Process Certification Scheme (KPCS). In volume terms, global production fell by 4% to 124.778 million carats.

Russia, which has traditionally placed second to Botswana, was the largest producer in terms of both value and volume last year. The average price of the nation’s total diamond crop, derived largely from ALROSA’s mining activity, surged 19% to $97.47 per carat as its value catapulted 20% to $3.73 billion and volume edged up 1% to 38.303 million carats.

The average price in Botswana, where De Beers mines are the predominant producers, slid 5% to $147.84 per carat as growth by value flat-lined at $3.65 billion.

Lesotho produced the world’s highest-priced diamonds, with their average price skyrocketing 69% to $990.18 per carat. In contrast, the mean price in second-place Namibia fell 25% to $602.57 per carat.

India, the world’s largest diamond manufacturing center, ranked as the largest importer of rough in 2014.

Dominion Diamond’s Sales Drop

Dominion Diamond Corp. reported that its fiscal-2016, second-quarter diamond sales totaled $209.7 million, versus $277.3 million in the comparable quarter of fiscal 2015. The results reflect the level of production achieved at the Diavik and Ekati diamond mines, according to the company.

During the quarter, Ekati recovered 900,000 carats from one million tons of the ore processed there.

Stellar Project to Produce 1M Carats

Stellar Diamonds announced that a preliminary economic assessment performed by Paradigm Project Management shows its Tongo kimberlite project in Sierra Leone can produce almost 1 million carats over the next 18 years.

The Tongo project has been assessed as having an 18-year mine life, based on both surface and underground mining, for a total yield of 955,930 carats. In the first four years, Stellar plans to produce 117,806 carats to generate early cash flow.

The company will utilize around $24.2 million to establish the project’s initial surface and underground mining operation.

De Beers Maintains Outlook

De Beers maintained its flat forecast for diamond jewelry sales in 2015, despite this week’s slump in financial markets, Paul Rowley, head of global sightholder sales, told Rapaport News.

“One can’t ignore what’s happened on the financial markets in the past few days and weeks, but we also see our product doing quite well in these times,” Rowley said. “We see diamonds in general bucking the trend a little. As much as consumer demand won’t meet our expectations from the beginning of the year, we still feel that it will be around flat on last year – which wasn’t a bad year.”

Rowley also pointed out that Chinese retailers aggressively purchased polished in response to the rapid store expansion that occurred in the first half of 2014.

“We saw a lot of those goods going to the Gemological Institute of America (GIA) for grading, but we subsequently didn’t see them fully turn into consumer demand,” he explained. “The opposite has happened in 2015, as there has been a contraction at a store level and flat growth in consumer sales. So, we have this overhang of polished.”

U.S. Sanctions Belgian Diamond Trading Office

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Belgium and Central African Republic (CAR)-based diamond companies Badica and Kardiam on August 21 for providing support to militia leaders responsible for violence threatening the peace, security and stability of the CAR through illicit trade.

Badica is one of the largest diamond companies in the CAR and Kardiam is Badica’s branch in Antwerp.

In May 2013, the Kimberley Process prohibited diamond exports from the CAR due to insurgents’ control over its diamond-mining areas. Badica buys rough diamonds from mines that are under insurgent control and smuggles them out of the country for exportation to Kardiam, OFAC stated.

IDE Mulls Creating Large Diamond Factory

The Israel Diamond Exchange (IDE) is considering opening a manufacturing plant for the polishing of large diamonds, according to information posted on its website. The IDE's Industry Committee has invited members of the bourse to a discussion of the facility on September 7.

Plans calls for converting 400 square meters of currently unused space into a factory. The operation will also offer 15 workrooms for rent. The factory is in the planning stages and will connected to the bourse’s Maccabi building by an internal passageway.

Birmingham Assay, London Diamond Bourse Partner

AnchorCert Gem Lab, part of the Assay Office Birmingham (AOB), and the London Diamond Bourse (LDB) are joining forces to provide bourse members with diamond and gemstone testing and reports, AOB announced.

The joint venture will offer LDB members trading from the Bourse floor in Hatton Garden dedicated, secure delivery of diamonds and gemstones for grading to the lab, based at AOB’s new Birmingham facility.

London Diamond Bourse COO Victoria McKay said the added value for bourse members is the lab’s U.K. location, which will reduce the lead times required for gemstone analysis and grading.

Doha Bank Imports Record Volume of Gold

Falling gold prices continue to fuel strong buying interest in gold and Doha Bank is building up its gold supply to satisfy this increased consumer appetite, CPI Financial reported.

The bank imported 23,818 ounces of gold in the first seven months of 2015 to keep up with sustained demand from jewelry manufacturers, jewelers, retailers and high-net-worth investors. Doha Bank is one of the few banks authorized to import gold in Qatar and offers gold bars and mint coins to its customers.

The bank has also signed a memorandum of understanding with a Swiss gold supplier and established agreements with several major global suppliers in the physical gold market, according to CPI Financial.

Gold prices fell below $1,100 in July, a five-year low, and continue to hover around that mark.

Colombia to Host International Emerald Symposium

Colombia will host its first International Emerald Symposium in Bogotá from October 13 to 15.

Fedesmeraldas, the Colombian Emerald Federation, will organize the conference, which will seek to address a number of issues and opportunities in resource management, manufacturing, certification, nomenclature, technology, consumer education and branding.

Delegations from the governments and private sectors of Zambia, Afghanistan and Brazil, as well as major international trade organizations, such as the International Colored Gemstone Association (ICA), American Gem Trade Association (AGTA) and CIBJO, the World Jewelry Confederation, will be participating in and supporting the event.

Diamond Industry Stock Report

Industry stocks followed their broader indexes down around the world this week. The biggest declines in the U.S. were Birks Group (-10%) and Sotheby's (-11%). Indian shares tracked a 5% drop in the Sensex index, led by Goenka Diamonds (-16%) and Rajesh Exports (-14%).  Mining stocks losses were headed by Petra Diamonds (18%) and Shore Gold (19%).  View the detailed industry stock report.

  Aug. 27 Aug. 20 Chng.  
$1 = Euro 0.8851 0.8942 -0.009  
$1 = Rupee 65.875 65.5904 0.3  
$1 = Israel Shekel 3.9382 3.883 0.06  
$1 = Rand 13.0566 12.9394 0.12  
$1 = Canadian Dollar 1.3217 1.3132 0.01  
Precious Metals        
Gold $1,128.63 $1,141.01 -$12.38  
Platinum $996.20 $1,018.00 -$21.80  
Silver $14.30 $15.47 -$1.17  
Stock Indexes       Chng.
BSE 26,251.40 27,607.82 -1,356.42 -4.9%
Dow Jones 16,285.51 17,348.73 -1,063.22 -6.1%
FTSE 6,119.36 6,373.06 -253.70 -4.0%
Hang Seng 21,838.54 22,757.47 -918.93 -4.0%
S&P 500 1,940.51 2,079.61 -139.10 -6.7%
Yahoo! Jewelry 978.15 1,005.35 -27.20 -2.7%

Polished Trading Activity

The local polished market continues to feel the slowing in both demand and manufacturing activity. Liquidity remains tight. Domestic buying has weakened as the INR has lost more than 3 percent against the USD since the beginning of the month.  Read the polished diamond trading report.


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