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Market Comments 5/23/2013

May 23, 2013 6:00 PM  
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Diamond markets stable ahead of Las Vegas shows. Manufacturers pressured by high rough prices and low volume trading. Cutting center liquidity tight as Indian factories close for summer vacation. Sentiment improves as U.S. retailers experience steady 1Q: Signet Jewelers sales +10% to $994M, profit +11% to $92M; Zale Corp. shares rally as revenue -1% to $443M but profit of $5M vs. loss of $4.5M a year earlier and Terry Burman appointed chairman. Richemont FY sales +9% to $13B, jewelry sales +13% to $6.7B. Winsome Diamonds and Jewellery 4Q revenue +9% to $350M, loss of $15M vs. profit of $2M.  Antwerp Diamond Bank 2012 profit +152% to $11M by adopting conservative, selective credit policy.

Fancies: Fancy markets OK but not enjoying significant Far East demand as rounds. ‎Lower fancy shape price points attracting price sensitive buyers. Strong demand for under the carat Princess cuts with Pears and Ovals catching up. Cushions relatively weak but doing better as ‎oversupply ‎eases. Marquise weak. ‎Improving demand for fancies at attractive price points encouraging ‎U.S. buyers. Extreme price differentials between ‎excellent/fine and ‎average cut fancy shapes.



Global Markets


United States: Wholesale trading is relatively steady although many buyers are waiting for next week’s Las Vegas shows to place orders. Many in the trade expect the shows will provide a better signal regarding how the market will trend in the second half of the year. While wholesale inventories remain relatively low, there is some expectation that trading will be satisfactory in Vegas. There is growing confidence in the trade helped by improved economic conditions and bullish stock markets. Retail jewelry sales continue to post modest gains over last year.

Belgium:
Trading is okay although many trading partners in India are currently away during the summer vacation period there. While demand is not especially strong, suppliers which have the right goods are selling at firm prices. In addition, it is difficult to find well-made goods which are in steady demand. Rough trading is slow as dealers struggle to profit on De Beers and ALROSA goods on the secondary market, while liquidity among manufacturers is tight.

Israel:
The market is waiting out the current lull in trading by preparing for the Las Vegas shows. Polished demand is selective with 0.30 ct., G-H, VS-SI goods in steady demand and some reported improvement in demand for 0.30 ct., VVS stones. There is also good demand for 1 ct., VS-SI diamonds. Dealers are focused on very targeted and select polished buying as they strive to make their inventories more efficient. Manufacturers are frustrated at rising rough prices during a relatively quiet period for the polished market.

India:
Both rough and polished trading is slow due to the ongoing summer vacation period and manufacturing levels are relatively low for the same reason. Liquidity is tight. Polished suppliers are preparing for the Vegas shows hoping the U.S. market will compensate for reduced local demand in the current period. Polished demand is focused on VS2 and lower clarity goods. Apart from the summer holidays, rough trading has slowed due to tough market conditions in the past two weeks. De Beers boxes are trading at list prices on the secondary market and sightholders are losing on these goods.

China:
Wholesale and retail diamond markets have slowed since the May Day holiday and trading is expected to remain subdued for the rest of the quarter. Retailers are satisfied to manage low inventory levels during the current quiet period and are therefore not expected to significantly increase their diamond buying in the short term. There is good demand for 0.30 ct., D-H, SI goods and 0.50-0.70 ct., D-H, VS2-SI2 are also selling well. 

Hong Kong:
The diamond market is quiet but stable. Buyers are very price sensitive and are prepared to compromise on quality to meet their price points. Buying is selective and concentrated on filling existing orders rather than building inventory. Round, SI clarity goods are selling well while there is steady demand for commercial-quality fancy shapes. 




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