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Market Comments 3/15/2012
Mar 15, 2012 6:00 PM
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Fairly good activity at Basel show with demand for large fancy color and fancy shapes. Indian jewelers expected to limit diamond buying ahead of March 31 financial year-end. Diamdel sells 93% by lot at Feb. rough auction with good demand despite high prices and tight cutter profit margins. Tiffany & Co. countersues Swatch Group for $590M damages in failed marketing partnership. U.S. Jan. polished imports -5% to $1.5B, polished exports -7% to $1.2B. Israel Feb. polished exports -81% to $138M. Botswana creates Okavango Diamond Trading Company to conduct government rough sales. The Rapaport Group extends sincere condolences to our colleagues in Belgium following tragic bus crash.
Global Markets
United States: Polished trading is relatively quiet with prices stable. There is steady demand for dossiers and certified goods up to 1.50-carat, G-H, VS-SI and improving demand for fancy shapes. Profit margins remain tight. Retailers continue to assess their inventories and are cautious not to over-stock their stores. They are focused on the engagement ring and bridal market, which continues to drive the bulk of consumer activity.
Belgium: Trading is stable but cautious due to prevailing European economic uncertainties. Buyers are still not looking to make large inventory purchases. They are buying to fill specific orders with steady demand for SI clarity stones. There is sufficient supply of polished to fulfill overall buying requirements. Rough demand is steady despite high prices and tight trading and manufacturing margins, with improving demand for Indian-type goods.
Israel: Polished trading has improved since the tax investigations in the bourse were recently suspended for one month. There is steady demand for medium-range goods of 0.50-carat to 1.50-carat, G-, VS-SI stones and good demand for fancy shape diamonds. Demand for fancy color stones has improved since the Basel show. Demand for stones above 3 carats remains weak but demand for 7.00-carat and larger goods is starting to improve. Polished dealers are traveling to find goods, particularly to India. Rough demand is stable.
India: Polished trading remains steady driven by international demand, particularly from buyers from the Far East, U.S. and Israel. Local buyers are purchasing to fulfill confirmed orders but overall trading is restrained due to rupee-dollar exchange rate fluctuations. Polished supply is steady but there are some shortages of SI and piqué goods. There is steady demand for G-H color, and star goods. Rough trading has weakened slightly as buyers consider prevailing prices high. However, some activity is observed in rough yielding polished of -11 sieve size and goods priced at below $150 per carat. There is ample supply of rough on the market but domestic buyers are treading cautiously.
China: Both retail and wholesale demand is stable but neither market is booming, which is in line with expectations for this time of the year. Wet weather has also curtailed retail activity. Polished diamond buyers continue to avoid large inventory purchases and there remains some uncertainty about prices. Dealers remain cautious and have limited their speculative buying. There continues to be a shift towards smaller and lower quality stones as more first-time buyers enter the market. Demand for fancy shapes, in particular princess cut stones, has improved.
Hong Kong: Trading has slowed this week with many goods that would normally be in Hong Kong sent to Switzerland for the Basel show. In addition, many large jewelers have wound down their buying as they close their books for the fiscal year-end on March 31. Smaller retailers continue to look for goods but significant price differences exist between buyers and suppliers. There is strong demand for SI clarity stones, but overall, caution continues to define the market.
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