Rapaport Weekly Market Comment

Positive sentiment despite sluggish Hong Kong show. Stable US and Chinese
demand supporting the market. Suppliers holding polished prices firm as high
rough prices squeeze manufacturers’ profit margins. Larger-than-expected $575M
June De Beers sight signals robust rough market, with boxes selling at
estimated average 3% to 6% premiums. Good polished demand for 1 ct., G-J,
VS-SI, RapSpec A2+ diamonds. Buyers shifting to VG as 3X premiums increase. Luk
Fook FY revenue +14% to $1.9B, profit +33% to $175M. Israel and Shanghai bourses
sign MoU to manufacture large stones in new Ramat Gan factory.

Fancies: Fancy shapes mixed, with curves better than squares. Ovals hot,
followed by Emeralds, Pears and Cushions. Marquises and Princesses weak.
Oversizes selling well. Steady demand for fine-quality 6 to 10 ct. Ovals, Pears
and Emeralds, with prices firming for 3 to 5 ct. due to shortages. US
supporting market for commercial-quality, medium-priced fancies under 1 ct. Far
East demand improving as consumers seek fancy shapes at better prices.
Off-make, poorly cut fancies illiquid and hard to sell, even at very deep
discounts.

United States: Dealer trading slower since Las
Vegas shows. Wholesalers shifting to summer vacation mode, with many taking a
break in July. Seasonal decline in retail. Steady demand and firm prices for 2
to 4 ct., I-J SIs.Shift in consumer interest
from bridal to fashion collections.

Belgium: Stable market with some active buyers, but suppliers holding
polished prices firm. Good orders for non-certified, 0.01 to 0.05 ct., D-F,
VVS-SI1 diamonds. Asian market shifting to VGs. Fancy colors relatively weak,
particularly commercial-quality yellows. Rough trading robust following last
week’s De Beers sight.

Israel: Slower trading, with dealers returning from the Hong Kong show.
Fewer goods available due to inventory being sent to the fair. Strong buying
opportunities for select categories in Hong Kong and India. Firm polished prices
supported by high cost of rough. Rise in availability of 1 ct., I-M, IF-VS
diamonds. Imperfect stones selling
at deeper discounts.

India: Polished market stable, backed by US and Far East demand after Hong
Kong show. Low availability of 3 ct. and larger diamonds. Steady orders for 1
ct., J-L SIs. Dossiers in H-L, VS-SI moving well. Good rough activity, with
focus on boxes that yield 0.30 to 1 ct. polished. Consistent manufacturing to
fill shortages and satisfy anticipated third-quarter demand.

Hong Kong: Market sentiment positive, even
though last week’s show failed to boost trading. Dealers more interested in
larger September fair. Solid demand for 0.30 to 1 ct., H-K, VS-SI diamonds. Buyers
shifting to lower qualities, as 3X, no-fluorescence selling at strong premiums.
Jewelry retail continues to improve, spurring better inventory orders.