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By Avi Krawitz
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Posted: 09/24/09 10:20
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RAPAPORT... Exhibitors at the Hong Kong Jewellery & Gem reported a narrowing gap between buyers and sellers in regard to the prices set for polished diamonds, but added that they still saw resistance in the market to accept significant increases. There were a lot of serious buyers at the show, but even though they brought demand, they resisted higher price levels, said Rony Golan, owner of M.G. Diamonds. “Prices today don’t match, neither between buyers and sellers nor between the rough and polished markets.”
Ygal Hausman, chief executive officer (CEO) of Hausman Diamond Manufacturers, agreed, adding that customers are paying a bit more than a few months ago, but are not willing to pay what dealers anticipated. Expectations of an increase in polished prices have emerged in response to the recent rise in rough prices. Rough prices, which fell sharply in the final quarter of 2008, have consistently risen since February until and including the August Diamond Trading Company (DTC) sight. However, polished prices have not followed and have remained relatively stable since the steep fall that began in the fourth quarter of 2008 and ended in March.
Hausman expressed concern that the rough market rose by too much in the past few months and that this may have been driven by speculation in the market. “If dealers trade according to the market and not according to speculation, it will bring rough to a better level,” he said. Hausman added, however, that he felt the current level of trade in the polished market was sustainable over the next few months.
One diamond manufacturer, who requested anonymity, noted that prices at the show were, in fact, softer than expected due to strong competition between sellers. Show organizers reported a record number of exhibitors at this year’s event, with more than 3,000 participants from 44 countries and regions taking part. He added that some people even sold for cheaper than what they could get in the city.
This trend surprised many, given reports that there were shortages at the show on certain items, even as manufacturers came with high inventories. Demand was for 0.50-3.00 carat, H-J color, VVS clarity goods and collection D-J color, VVS-SI clarity stones. There was good demand for round, 2.00 carat, D-E color, VVS clarity diamonds, and round, 3.00 carat, G+ color, SI+ clarity stones. Participants noted stronger activity in SI clarities, shifting the trend in Asia to focus on VVS-VS categories.
Show organizers reported that 30,785 registered visitors attended the show in the first three days of the event, as traffic spiked on the third day (Wednesday) with the opening of the second venue dedicated to finished jewelry at AsiaWorld-Expo. The first venue at the Hong Kong Convention & Exhibition Centre, showcasing raw materials, including diamonds, colored gemstones and pearls, launched on Monday. It was the first time the show was split into two venues. Total show attendance in 2008 amounted to 37,276 visitors, largely impacted by the slowdown in the global economy, which had intensified shortly before last year’s event.
As Reported on Day Two:
The first two days of the September Hong Kong Jewellery & Gem Fair met exhibitor’s expectations as participants reported that a steady stream of serious buyers have passed through the event.
“There are a lot of people and it seems that interest is back in the diamond market,” said Hanan Rapaport, the Far East sales manager for Avlas Diamonds. “There are serious buyers at the show who want to see goods and make an offer.”
The show that features raw materials, such as diamonds, colored gemstones, pearls, as well as equipmentm began Monday at the Hong Kong Convention & Exhibition Centre, whereas a separate venue for finished jewelry will open Wednesday at the Asia-World Expo. Organizers have already reported a record number of exhibitors for the event this year.
In contrast with the September 2008 event, which coincided with the start of the economic collapse, participants reported that there has been a positive mood at this year’s show, reflecting the general optimism in the market.
Demand, Prices Holding Firm
Reports from the show indicate strong demand for 1.00 carat, G-I, VVS-VS goods. There is also good demand for 0.30 to 0.90 carats, J+, SI1 stones and significant demand for diamonds above 3 carats in J+, SI+. H-I colors and lower are selling well in general.
Hanan Rapaport (who is not associated with the Rapaport Group) noted that the price gap between buyers and sellers had narrowed, with sellers experiencing greater success by holding firm on price levels. Alon Garty, general manager of Windiam Hong Kong, added that buyers were still seeking deep discounts, but sellers were able to strategize on whether to hold out or close the deal. Others indicated that prices have been strong for sellers at the show and are trending upward on 1.00 to 2.00 carat, G-I, VVS-VS stones.
Many Chinese, Indian Buyers
Traders noted the strong presence of buyers from India and China at the show, with others coming from southeastern Asia, such as Malaysia, Singapore and Indonesia and some from Australia. Traffic is expected to increase on Wednesday with the start of the Asia-World Expo for finished jewelry, as exhibitors expect that more buyers would rather combine the two events. Exhibitors have reported very little interdealer trading at the show so far.
Arnav Mehta, a director at Blue Star Diamonds, said he was expecting a good show because the Far East market has been less affected by the recession than other markets, while those in the U.S. and Europe are lagging behind.
“We’ll have to see how Christmas turns out to evaluate if there are any signs of recovery [in the U.S. and Europe],” he said. Mehta added that he felt the market had placed too much emphasis and hope on the Hong Kong show since business there has carried on as normal in the weeks leading up to this show. “What the show has given us is an opportunity to pick up some new clients,” he stressed.
Some Caution & Optimism
Mehta reported that demand from the Far East has even held up very well during the past three to four months. Garty agreed, but cautioned that the market may have risen too quickly. “The demand is not entirely there and the increases are based on speculation, as it was before [the collapse],” Garty said. “It seems that the industry has a short memory.”
Mehta noted that inventory levels appeared to be high at the show, while at the same time, there were shortages in certain goods. He reasoned that dealers have been exclusively buying rough in the past few months and only manufacturing certain goods, which has led to shortages of other makes.
Still, reports from the opening days proved positive overall, as exhibitors appear happy just to be conducting business again, compared with the very quiet first half of 2009.
“There’s clearly a market,” Hanan Rapaport said. “It’s much more optimistic and people are doing business.”
As Reported on Opening Day:
The September Hong Kong Jewellery & Gem Fair opened on Monday with more exhibitors covering a larger space than ever in the 27-year history of the event. Show organizers UBM Asia reported that over 3,000 exhibitors from 44 countries and regions are participating in the show, making it “the largest jewelry event in the world and the largest fair in any industry ever organized in Hong Kong.” The total exhibition space covers 120,000 square meters, representing a 25 percent increase over last year’s show.
UBM Asia acknowledged that the economic downturn affected jewelry fairs across the globe in the first half of 2009, but noted that there has been some increase in activity within the jewelry trade as economies have shown signs of recovery.
“The September fair is expected to benefit from this rebound; buyers are expected to start replenishing inventory in preparation for the holiday shopping season,” UBM Asia spokespersons noted in a statement about the show. “Hong Kong’s proximity to two of the world’s biggest markets, China and India, also bodes well for the September fair.”
Initial reports from observers on the first day of the show indicated that visitor traffic was on par with that of previous years and that exhibitors were optimistic that traffic would strengthen as the week progresses.
The show has been split into two venues: the AsiaWorld-Expo (AWE), showcasing raw materials, including diamonds, pearls, colored gemstones, equipment and packaging; and the Hong Kong Convention & Exhibition Center (HKCEC), which is scheduled to start on Wednesday, offering finished jewelry displays. Visitor traffic is expected to jump Wednesday when buyers are able to combine the two venues.
This year’s show features three new pavilions, including the Hong Kong Premier Pavilion and the International Premier Pavilion at HKCEC, comprised of approximately 40 Hong Kong jewelry companies and 40 international jewelry companies, respectively. The Fine Gem Pavilion at AWE consists of about 50 exhibitors from 13 countries showcasing loose diamonds, pearls and gemstones.
In addition, there are 21 group pavilions covering both venues, with the Hong Kong pavilion being the largest, accounting for approximately 40 percent of the total exhibitors. The Thailand pavilion is the second-largest with 301 companies, while the Italian and U.S. pavilions are the next-largest, with 170 and 150 companies, respectively. The number of Indian companies exhibiting at the show doubled from September 2008 to 129 companies this year.
Jime Essink, president and chief executive officer (CEO) of UBM Asia, noted the challenge to attract large crowds during the current economic climate as members of the trade seek to cut costs and choose to attend events that give the “best return for their money.” He reported that UBM Asia had doubled its marketing budget to advertise the event both locally and internationally. It also invited buyer delegations from China, Finland, India, Iran, Israel and Russia, amongst others, to attend, Essink said.
The Hong Kong show runs through Friday, September 25.
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