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Rapaport TradeWire May 4, 2012

May 3, 2012 6:00 PM   By Rapaport
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Rapaport Weekly Market Comment May 4, 2012

May DTC sight estimated at $520M as prices firm slightly despite weak rough ‎trading on the secondary market. Polished prices stable in April with RAPI for 1 ct. down ‎‎0.2% amid low trading volume. Pressure for higher polished prices is coming from high ‎rough prices rather than improving consumer demand. Titan Industries 4Q sales +28% to ‎‎$433M, net profit +72% to $27M. Botswana’s March diamond exports -19% to $411M. ‎Japan’s March polished imports +21% to $74M. Qatar-Egyptian consortium buys Damas ‎International for $445M. Regulators approve Graff $1B IPO.

RapNet Data: May 3
Diamonds   851,286
Value $5,876,860,719
Carats   919,418
Average Discount -26.50%

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  We're thrilled to be a financing partner for Crossworks Manufacturing as it expands operations and contributes to the growth of the Canadian diamond industry. The diamond industry is very capital intensive. Understanding Crossworks' history, performance and people was critical, as a financing partnership is more than just a question of ratios and repayment terms. After learning more about the Crossworks management team, the diamond industry and Crossworks' existing partners, we were able to put together a financing package that allowed them to pursue this expansion opportunity.

Kristi Miller | First West Capital

The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants, and entry level positions for our offices in New York, Antwerp, Mumbai, Dubai, and Shanghai. To get on the fast track, email your resume to

Polished Prices Stable

Certified polished diamond prices were stable in April although trading remained weak. India is under pressure as the new protectionist 2% polished diamond import tax has drastically reduced polished imports and exports. Demand in the consumer markets was stable but wholesalers and retailers continue to maintain low inventory levels. Buyers are focused on commercial-quality diamonds. There is continued improvement in demand for fancy shape diamonds. Price conscious consumers are moving to fancies as their prices are much lower than rounds. Price differentials encouraged cutters to manufacture rounds instead of fancies in 2011, resulting in a current shortage of fancies.

In April, the RapNet Diamond Index (RAPI) for 1.00 ct. polished diamonds fell 0.2%. The 0.3 ct. category increased by 0.4% while 0.5 ct. rose 0.5%. RAPI for 3.00 ct. diamonds increased 1.2%. During the first four months of the year, RAPI for 1.00 ct. diamonds fell 2.9% and was at about the same level as it was one year ago.

DTC May Sight Estimate at $520M

The Diamond Trading Company's (DTC) May sight had an estimated value of $520 ‎million, roughly the same value as the previous sight in March, but a 25% drop from this sight period of one year ago. Rapaport estimates indicate that DTC sales fell 16% year on year during the first four months of this year. De Beers earlier reported ‎that production in the first quarter fell 16% to 6.2 million carats. ‎

DTC made slight adjustments on pricing by increasing some ‎boxes while decreasing others at this offering. Sight participants were less enthusiastic since there is no room for rough ‎price increases at the moment as so many firms are not really making money. Sightholders also noted that there is relatively little activity in the secondary markets and DTC boxes are ‎trading at low premiums of around 3% to 4%. There is some demand for ‎Indian goods but no category stands out as particularly strong.

April Retail Sales

U.S. chain-store sales were basically flat in April, up only 0.6% year on year, according to  the International Council of Shopping Centers (ICSC). Retail sales performance was stifled in part due to an earlier Easter holiday coupled with a warm spell in March, which sparked some earlier than usual shopping patterns, ICSC determined.

  Same-store *Chng. Total %Chng $Mil
BonTon -5% -5.3% $187
Costco 4% 7% $7,250
Kohl's -3.5% -1.9% $1,254
Macy's 1.2% 0.4% $1,928
Neiman Marcus 6.7% 7.5% $1,058
Nordstrom 7.3% 10.5% $802
Saks 2% 0.9% $260
Target 1.1% 2.1% $4,978

Titan's Profits Soar

Titan Industries reported that net sales grew 28% year on year to $433 million during the fourth-quarter that ended on March 31. The Mumbai-based ‎company noted that net profit rose 72% to $27.4 million after expenses increased by 25% to $396 million.  ‎The company reported that jewelry sales, including those from its flagship Tanishq brand, rose 30% year on year to $341.5 million, while watch sales rose 25% to $78.5 million.

Charles & Colvard Loss Widens

Charles & Colvard reported that its  revenue jumped 40% year on year to $4.18 million, while total costs surged 53% to $4.9 million for the first quarter that ended on March 31. Due to a $720,000 investment in the company's consumer-direct selling model as well as higher expenses, Charles & Colvard reported a loss of $375,846, which was up from a loss of $236,388 one year ago. Still, Charles & Colvard held no long-term debt as of March 31 and cash on hand amounted to $10.6 million.

Loose moissanite sales decreased 4% year on year to approximately $2.5 million in the first quarter, but finished jewelry sales, an important part of the company's growth strategy, increased 319% to approximately $1.7 million.

New Diamond Jewelry Designs for Spring

WATCH NOW: Platinum Guild International held its annual spring jewelry preview in Manhattan this week. Style expert Michael O'Connor shares designer insights, consumer and celebrity trends and specifics on pricing for  a few of this season's hot new platinum diamond jewelry collections. Featured designs come from Erik Stewart, Phyllis Bergman (Mercury Ring), Michael M., Erica Courtney and others. The price of platinum is about 16% lower today from one year ago, making it more affordable than gold for jewelry designers this season.

Hong Kong Okays Graff IPO

Graff Diamonds, which seeks listing approval from Hong Kong regulators, was given the green light for an approximately $1 billion initial public offering (IPO), according to Dow Jones Newswires. Graff submitted paperwork for an IPO in February and unnamed insiders have suggested the jeweler could go public before June.

TBZ's IPO Subscribed to 1.15 Times

Tribhovandas Bhimji Zaveri's (TBZ)  IPO was subscribed to 1.15 times, excluding the anchor investors portion.  The retailer aimed to raise around $39 million through its IPO of 16.7 million equity shares to finance the establishment of new stores and for incremental working capital requirements.  TBZ allocated about 2.5 million equity shares to three anchor investors namely, HSBC Global Investment Funds, HSBC India Alpha (Mauritius) Ltd. and Credit Suisse (Singapore) Ltd.

CARE Reaffirms Rating on Rajesh Exports

CARE Ratings reaffirmed the CARE A3+ rating assigned to jewelry manufacturer Rajesh Exports Ltd.'s short-term bank facilities worth $122 million. CARE affirmed the company's strength for having a long-standing presence in the market, cost advantages from operating both manufacturing and retail,  an in-house design team and efficient working-capital. Rajesh Exports, however, is constrained by low profit margins on the wholesale business, geographical concentration risk, the capital-intensive nature of its operations and intense competition from various organized players.

Luk Fook to Open New Jewelry Stores

Luk Fook Holdings opened five new shops in Hong Kong and Macau this month and will open approximately 30 new shops in Mainland China this month.  The new stores bring  the number of Lukfook Jewelry retail outlets to 870 worldwide.  New stores are slated for Beijing, Guangdong, Jiangsu, Shandong, Henan and Shanxi just to name some major cities. The group aims to further increase its market penetration and brand stronghold across the country this year.

IWC Opens Flagship Store in Manhattan

Swiss luxury watch manufacturer IWC Schaffhausen celebrated the opening of its U.S. flagship boutique at 535 Madison Avenue in Manhattan with the launch of the ''Big Pilot's Watch Edition Muhammad Ali'' limited edition. The opening featured an exhibition of the work of photographer Howard Bingham, a lifetime friend of Ali, who recorded the sportsman's career on camera.  The IWC boutique spans two floors across 3,000-square-feet, with a unique interior design that sets off the company's family of watches.

Helzberg Sponsors Castellano

Helzberg Diamonds partnered with jockey Javier Castellano, rider of the horse Gemologist, for the 2012 Kentucky Derby on May 5, to drive awareness for Helzberg's featured products. The jeweler is also encouraging its social media followers to share Helzberg's iconic "I Am Loved®" button with an exclusive Kentucky Derby design on Facebook and Twitter along with their favorite Kentucky Derby memory or story. In addition, Helzberg posted exclusive interview footage of Castellano on its Facebook and Twitter pages.

Shane Launches Wedding Club

Shane Co., in partnership with, launched the Shane Co. Wedding Club, a co-branded online resource that was built to connect bridal couples with exclusive services, tools, and discounts. The Colorado-based jewelry retailer developed the partnership as a way to provide additional value to its local bridal customers. powers The Shane Co. Wedding Club, handles  special promotions and offers comprehensive platform support. The Shane Co. Wedding Club also allows small wedding-oriented businesses to align themselves with members, gaining exposure to a targeted, locally-relevant bridal pool.

Crossworks Secures Expansion Funds

First West Capital will fund a multi-million dollar expansion deal for Canada-based diamond manufacturer Crossworks Manufacturing.  The funding will be used to expand Crossworks' cutting, polishing and manufacturing operations in order to accommodate growth from the company's renewed Diamond Trading Company (DTC) sight contract with De Beers' Victor mine in northeastern Ontario. The mine is slated to produce $35 million worth of rough diamonds annually through 2015.

Consortium Buys Damas

Golden Investments Ltd. (BidCo), a company controlled by Qatar's Mannai Corporation and Egypt's EFG Capital Partners Management, gained control of Damas International Ltd. after 78.37% of Damas shareholders agreed to sell the company. The bid, which was prepared in January, offered 45 cents per Damas share, or a total of approximately $445 million.  Damas' board of directors recommended the buyout. The board resigned following the deal and new board members were named.

Ahmed Seddiqi Buys Al Manara Jewellery

Ahmed Seddiqi & Sons of Dubai teamed up with investment firm HAMG to acquire Abu Dhabi-based Al Manara Jewellery. Ahmed Seddiqi & Sons is the largest retailer of Swiss Brand watches in the Middle East with 52 locations in the UAE.

Shreve, Crump & Low Prepares New Store

Boston-based Shreve, Crump & Low will open its new flagship jewelry store this month, following a multi-million dollar renovation of its three-story historic brownstone at 39 Newbury Street. The retailer's larger digs will also enable it to increase inventory by $10 million.

Rockwell 4Q Production Drops

Rockwell Diamonds updated a preview of fourth-quarter rough sales for fiscal-year 2012, in which proceeds reached $6 million for 5,795 carats. During the company's fourth-quarter of fiscal-year 2011, revenue exceeded $9.2 million. During this recent quarter, production rose 26% at Klipdam and 32% at Saxendrift, however, those increases were not enough to offset lost production out of the Holpan mine, which is on care and maintenance.

Namakwa Diamonds Revenues Plummet

Namakwa Diamonds reported that revenues fell 60% year on year to $17 million during ‎the six months that ended on February 29, after shifting its focus to mining development.‎ The company posted a net loss of $15 million, compared with a net loss of $10.9 million one year ago. During the past year, Namakwa focused its finances on ‎developing the Kao mine in Lesotho, while reducing the scale of its operations in South Africa’s ‎North West province to provide a cash generative platform. Namakwa also significantly ‎reduced its trading and beneficiation unit, closing its operations in Kinshasa, Tel Aviv and ‎Gaborone and selling its cutting and polishing business in Johannesburg. ‎

Shear Recovers 3,500cts.

Shear Diamonds Ltd., owner of the Jericho diamond mine in Nunavut, Canada,  began processing its high-grade concentrate stockpiles. A total of approximately 3,500 carats have been recovered from 358 tonnes after the first 10 days of processing. Shear Diamonds will now continue to focus on processing  these stockpiles this year. Following the valuation of these stones in late May, the  diamonds and all future recovery from Jericho, other than diamonds subject to a first option by the holder, will be delivered to Tache Company for market sale.

Namibia Approves Diamond Fields' ML32

Diamond Fields International Ltd. confirmed that Namibia renewed its mining license for the ML32 concession, which is situated north of Luderitz, for 10 years with respect to diamonds and precious minerals. The license has been reissued to a 70% owned subsidiary of Diamond Fields International, the Namibian Diamond Company. The license covers an area of more than 17,600 hectares and extends from Luderitz to the Galdovia Reef along the Namibian coast from the low water mark to approximately the 45 meter bathymetric contour.

Chamber of Mines Urges Lower Fees

Zimbabwe's Chamber of Mines recommended the government lower mining fees from the proposed 5,000% increase, on average, of $3 million. According to Statutory Instrument 11 of 2012, registration just for diamond claims was quadrupled to $5 million with a new ground rental fee of $3,000 per hectare per year. Coal mining fees jumped 19,000%. The government is also facing pressure from small-scale miners who claim the new fees will force them out of business. The government contends the higher fees will end speculative investments in the nation's natural resources.

Diamond Industry Stock Report

Retail stocks turned south this week in the U.S. with the biggest drops from Birks & Mayors (-10%), Blue Nile (-8%), Charles & Colvard (-8%), LJ Intl. (-8%) and Zale (-7%). Read the extended industry stock report for this past week
  May 3 Apr. 27 Chng.  
$1 = Euro 0.760 0.750 0.010  
$1 = Rupee 53.33 52.48 0.9  
$1 = Israel Shekel 3.78 3.75 0.03  
$1 = Rand 7.73 7.76 -0.03  
$1 = Canadian Dollar 0.99 0.98 0.01  
Precious Metals        
Gold $1,636.00 $1,656.90 -$20.90  
Platinum $1,531.00 $1,566.00 -$35.00  
Stock Indexes       Chng.
BSE 17,151.19 17,130.67 20.52 0.1%
Dow Jones 13,206.51 13,204.62 1.89 0.0%
FTSE 5,766.55 5,748.72 17.83 0.3%
Hang Seng 21,249.53 20,809.71 439.82 2.1%
S&P 500 1,391.57 1,399.98 -8.41 -0.6%
Yahoo! Jewelry 983.95 952.99 30.96 3.2%

Polished and rough trading activity

Polished trading is slow and liquidity remains very tight. Rough trading is weaker as summer vacation begins and the dollar strengthens. Read the full report.


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