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RAPAPORT NEWS SERVICE | March 23, 2017 |
Industry Retail General Mining EconWatch India
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Rapaport Weekly Market Comment March 23, 2017

Polished market upbeat with steady orders from U.S. and Chinese jewelers. Improving demand for big stones as Basel show begins with fewer companies attending due to high exhibitor costs. Sotheby’s to offer Oval, 59.60 ct., Fancy Vivid Pink, IF Pink Star diamond at Apr. 4 Hong Kong auction with low estimate of $60M ($1M/ct.). Rapaport Auctions sells 83,000 cts. for $12.5M at Hong Kong show as melee prices rebound. 1Q Rapaport Melee Index +13%. Tiffany 2016 sales -3% to $4B, profit -4% to $446M. De Beers buys LVMH stake in De Beers Diamond Jewellers. Dominion rejects $1.1B takeover bid from Washington Companies. India Feb. polished exports +3% to $2.4B, rough imports -3% to $1.5B.

RapNet Data: March 23
Diamonds 1,244,958
Value $7,454,575,039
Carats 1,327,166
Average Discount -30.36%

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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  Millennials are going to be our number-one customer in the next five years. They don’t want to go to stores to buy things. I don’t say the shop model is not there, but you need to integrate stores and online sales.

Praveenshankar Pandya, chairman of the Gem & Jewellery Export Promotion Council (GJEPC).

United States: Sentiment improving with dealers filling orders. A lot of goods out on memo. Stable demand for commercial-quality 1 to 2 ct., G-I, VS2-SI2 diamonds

Belgium: Positive market momentum with good Far East demand for dossiers and steady U.S. demand for 1 ct., D-H, VS-SI, RapSpec A3+ diamonds

Israel: Polished trading relatively slow compared with other centers. Dossiers stable but 1 to 2.99 ct., D-J, VVS-VS sluggish with tight profit margins

India: Good mood in the market. Firm prices for smaller diamonds signal diminishing negative impact of demonetization on local trading

Hong Kong: Polished market slowed slightly after the peak selling period surrounding the March show. Steady demand for 0.50 to 0.70 ct., D-H, VVS-SI RapSpec A2+ (3X, none) diamonds

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Rapaport Garners $12.5M at Hong Kong Auctions

Rapaport Auctions, the world’s leading recycler of diamonds, closed its Hong Kong auctions this month at one of the largest jewelry shows of the year. The auctions sold over 83,000 carats of polished diamonds for $12.5M, achieving a sell-through rate of over 87%. The Rapaport Melee Index (RMI™) for small diamonds increased by 13.3% to 108.40 during the first quarter of 2017.

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Will Retail Help De Beers ‘Build Forever’?

De Beers acquisition of LVMH’s 50% stake in De Beers Diamond Jewellers was hardly surprising, as it means the company has taken full control of its branding. What it does next with the network of stores will be more telling for the company and its Forevermark program...

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Rapaport to India: Scrap Diamond Import Tax

Martin Rapaport, chairman of the Rapaport Group, called on India to show reciprocity in its trade relationship with the U.S. by lowering or removing its import tax on diamonds, gems and jewelry. Speaking at the “Mines to Market” conference in Mumbai to mark 50 years of India's Gem & Jewellery Export Promotion Council, Rapaport noted that India’s import tax on loose polished diamonds and gems was 2.575%, whereas the U.S. charged nothing. Further, he said, India’s levy on diamond-jewelry imports is 31.56%, compared with America’s 5.5%.

Modi Notes Custom Jewelry Potential

Indian Prime Minister Narendra Modi urged his country’s gem and jewelry industry to forge stronger connections with consumers in order to shape their buying habits and grow the sector. In particular, it should tap into demand for custom jewelry by utilizing the “golden opportunity” of ecommerce technology, he told the “Mines to Market” conference in Mumbai. The trade should support young entrepreneurs in order to cultivate such a market, he added.

India’s Polished Exports Improve in Feb.

India’s polished exports rose 3% to $2.41 billion in February, according to data from the Gem & Jewellery Export Promotion Council (GJEPC). Polished imports dropped 20% to $178 million, and net polished exports – the excess of exports over imports – increased 6% to $2.24 billion. Meanwhile, rough imports declined 3% to $1.51 billion, and rough exports grew 11% to $145 million. The country's net diamond account grew 25% to $875 million.

China’s Polished Imports Rise in 2016

China’s polished diamond imports increased 4.9% to $7.02 billion last year, according to data from the China Customs Information Center. By weight, polished imports increased 1.2% to 7.7 million carats, while the average price rose 3.7% to $916 per carat. Polished exports fell 11% to $1.91 billion, meaning net polished imports jumped 12% to $5.12 billion. Rough imports slid 13% to $666 million, while rough exports increased 11% to $30 million.

De Beers Buys Out LVMH Retail Partner

De Beers has taken full ownership of the De Beers Diamond Jewellers (DBDJ) retail operation. The group bought the 50% stake owned by LVMH, which previously operated the stores, for an undisclosed sum, thereby ending its partnership with the luxury house. DBDJ comprises 32 stores in 17 consumer markets around the world, including China, London, Paris and New York.

Pink Star Diamond Back on the Auction Block

Sotheby’s will auction the Pink Star diamond in Hong Kong next month, more than three years after its previous sale fell through. The oval, 59.60-carat, internally flawless, fancy vivid pink diamond is expected to exceed $60 million, which would rank it among the most valuable diamonds ever sold, according to Sotheby’s. It will be on display at the Hong Kong Convention and Exhibition Centre from March 29 to April 3 before going under the hammer on April 4.

Tiffany Targets New Products as Sales Fall

Tiffany & Co. expects to turn a corner in 2017 by raising the number of new product launches following last year’s poor performance. Sales fell 3% to $4 billion in the fiscal year that ended January 31, with net earnings declining 4% to $446.1 million. Tiffany continues to emphasize its fashion product segment and is also seeing increased success with sales under $500, said Michael Kowalski, Tiffany’s chairman and interim CEO.

Swiss Watch Dip Expected to Solidify Market

The Swiss watch industry remained cautious at the start of the Baselworld show as data indicated a continued slowdown in the timepiece trade. The nation’s watch exports declined 10% to $1.5 billion (CHF 1.49 billion) in February, the Federation of the Swiss Watch Industry reported. However, the downturn will lead to a consolidation period that will benefit the entire sector, said Eric Bertrand, president of the Baselworld Exhibitors’ Committee. Baselworld runs from March 23 to 30.

Image: Newscast

Dominion Under Merger Spotlight

Dominion Diamond Corporation received a $1.1 billion takeover approach from the Washington Companies. The miner said it was prepared to enter discussions with the group, but claimed the informal proposal was “opportunistic” and undervalued the business. Dominion has also been in merger talks with Stornoway Diamond Corporation, with discussions covering the possibility of Stornoway CEO Matt Manson filling the soon-to-be vacant CEO role at Dominion, Reuters reported.

ALROSA Upbeat Despite Sales Decline

ALROSA sales fell 6% to an estimated $1.25 billion during the first quarter even as its rough diamond prices firmed, the company reported. The miner’s rough diamond price index rose 2%, with reports of strong demand at the beginning of the year. Although sales slowed during the quarter, the company maintained a positive outlook for the rest of 2017, with full-year production projected to rise 5% to 39.2 million carats.

Pastor Finds 706ct. Diamond in Sierra Leone

An alluvial miner discovered a 706-carat rough diamond at the Koyadu village in Sierra Leone, the government confirmed. The stone was presented to the country’s President Ernest Bai Koroma by Paramount Chief Paul Saquee of the Tankoro chiefdom in the Kono district, where artisanal miner Pastor Emmanuel A. Momoh unearthed it. Koroma thanked the chief and his people for not smuggling the diamond out of the country and stressed the importance of selling it in Sierra Leone.

DPA Taps Bartle Bogle Hegarty for India Ads

The Diamond Producers Association (DPA) has appointed Bartle Bogle Hegarty as its creative agency in India. The organization plans to roll out the “Real Is Rare” campaign in the sub-continent in September, reported DPA chief executive officer Jean-Marc Lieberherr (pictured). The launch will be the DPA’s first venture outside the U.S. The association is also seeking to raise its budget for 2017, which will be funded by its seven member mining companies, predominantly De Beers and ALROSA.

Shenzhen Bourse to Embrace Polished Diamonds

The Shenzhen Rough Diamond Exchange (SRDE) plans to expand into polished trading and is preparing to rebrand as the Shenzhen Diamond Exchange to reflect the upgrade. The SRDE opened a bonded warehouse in 2015, where rough diamonds and colored gemstones that have been shipped into the Chinese city can be held tax-free for traders to view. The exchange now plans to receive polished diamonds, which will then be sent to the Shanghai Diamond Exchange as per import procedures.

TAGS to Hold Six Dubai Rough Tenders

Trans Atlantic Gem Sales (TAGS) will host six rough diamond tenders at the Dubai Diamond Exchange this year. The collaboration aims to enable suppliers with smaller production to present their goods alongside larger offerings and gain greater exposure. Buyers, meanwhile, will be able to maximize the value of their viewing time, since they’ll have access to a wider range of goods, explained Mike Aggett, general manager of TAGS (pictured).

Diamond Industry Stock Report

Dominion Diamond (+44%) and Stornoway Diamond (+12%) both gained significant value following reports the pair were in merger talks, with Dominion also boosted by a separate $1.1 billion takeover bid from Washington Companies. In the U.S., J.C.Penney (-7.8%) and Macy's (-6.4%) led the declines amid continued concerns over the future of brick-and-mortar retail. Tiffany & Co. (+5.7%) rose on better-than-expected results.

View the detailed industry stock report

  Mar 23, 2017 (11:58 GMT) Mar 16, 2017 (12:45 GMT) Chng.  
$1 = Euro 0.93 0.93 0.00  
$1 = Rupee 65.47 65.39 0.08  
$1 = Israel Shekel 3.64 3.63 0.01  
$1 = Rand 12.51 12.73 -0.22  
$1 = Canadian Dollar 1.33 1.33 0.00  
Precious Metals       Chng.
Gold $1,248.10 $1,231.59 $16.51 1.3%
Platinum $964.00 $965.40 -$1.40 -0.1%
Silver $17.60 $17.45 $0.15 0.9%
Stock Indexes       Chng.
BSE 29,332.16 29,585.85 -253.69 -0.9%
Dow Jones 20,661.30 20,950.10 -288.80 -1.4%
FTSE 7,325.46 7,405.93 -80.47 -1.1%
Hang Seng 24,327.70 24,288.28 39.42 0.2%
S&P 500 2,348.45 2,385.26 -36.81 -1.5%

Polished Trading Activity

Good mood in the market. Firm prices for smaller diamonds signal diminishing negative impact of demonetization on local trading. Steady demand for E-I, VS-SI dossiers, especially in 0.40 cts. Large manufacturers near full production and able to turn over new inventory. Rough trading stable with smaller De Beers sight expected next week.

Read the Polished Diamond Trading Report

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