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Market Comments 7/12/2012

Jul 12, 2012 6:00 PM  
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Diamond markets quiet with U.S. on vacation and polished inventories ‎sufficient to see through the third quarter. Rapaport Melee Diamond Index -13% to ‎‎122.48 in 2Q. Weak rough trading ahead of next week’s DTC sight with expectations for ‎another small sight below $500M as sightholders plan to reject goods. ALROSA June ‎large stone 10ct.+ rough auction sells $40M (89% by lot). Belgium’s June polished ‎exports -13% to $1.3B, rough imports -35% to $925M. U.S. May polished imports +3% to ‎‎$2.6B, polished exports -3% to $1.3B. Botswana’s May diamond exports -36% to $324M. ‎Anglo American gains final approval for De Beers buyout. Rio Tinto names Alan Davies ‎as diamond unit CEO.‎

Fancies: Extensive complaints about reductions of last week’s Pear Shape Price List. ‎Dealers feel fancy shape market is strong with shortages of desirable goods and that ‎prices should not have been lowered. Buyers please note significant price differentials ‎between fine and average-cut fancy shapes. Fine cut stones may not be available as ‎suppliers tighten discounts and resist lower prices. We are reviewing all specific ‎complaints and analyzing discount levels, availability and cut specifications. Trade ‎comments are invited to ‎

Global Markets

United States: Trading is quiet as many wholesalers are on vacation and as buyers are ‎prepared to wait through the summer months before making larger purchases. Overall ‎sentiment is weak but dealers are not panicking as they did in previous downturns. There ‎is steady demand for commercial quality SI goods. Retail sales are relatively stable, but ‎are still below 2011 levels in most regions. Bridal jewelry continues to be the strongest ‎category. Consumers are spending less and are prepared to compromise on size and ‎quality to meet their tighter budgets.‎

Polished trading is subdued. There is specific demand to fill orders but buyers ‎are holding back from making larger purchases due to the weak market outlook. ‎Confidence is low due to economic uncertainty, with more companies in the industry ‎facing financial difficulties. Similarly, rough trading on the secondary market is quiet and ‎sightholders are expected to reject goods at next week’s Diamond Trading Company ‎‎(DTC) sight. Manufacturers continue to see little profitability in the rough that is on offer.‎

Israel: The polished market is restrained as recent price declines have impacted trading. ‎Most dealers are holding onto their goods with the hope that U.S. and Far East demand ‎will revive in August and September after the summer vacation period. There are some ‎cash-strapped suppliers who are prepared to sell cheap as they need to generate sales. ‎There is steady demand for commercial VS-SI goods while demand for better-quality IF-‎VVS stones remains weak. Similarly, rough trading is low as prices on the secondary ‎market have softened and buyers fear further declines. Dealers have held back from ‎trading before next week’s DTC sight.  ‎

India: Polished trading improved marginally from last week with a relative increase in ‎demand for SI and I1 clarity goods. However, overall sentiment remains weak with very ‎few foreign buyers in the market and domestic buyers uncertain about prices. The ‎volatile exchange rate and tight liquidity continue to impact both rough and polished ‎trading. There is sufficient rough in the market and rough inventories are rising as ‎manufacturing levels remain well below capacity. Several small manufactures have ‎closed their units and many have reduced their working hours to retain their skilled ‎workers.‎

Weak economic sentiment has impacted diamond trading as buyers maintain a ‎cautious outlook for the rest of the year. Polished wholesale demand is not as strong as it ‎was last year as retail sales have slowed. Buyers are waiting to see if prices will decline ‎further while others are prepared to work with their existing inventories until the ‎uncertainty fades. There is steady demand for 0.30-carat to 0.50-carat, G-H, VS-SI ‎diamonds. ‎

Hong Kong:
Wholesale diamond trading is quiet as dealers are uncertain about prices. ‎There is sporadic demand for goods but buyers are avoiding building their polished ‎inventories. Buyers are prepared to wait before committing to larger transactions as they ‎expect further price reductions in the coming months.  ‎

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