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Market Comments 11/27/2013
Nov 27, 2013 6:00 PM
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U.S. market mixed as Black Friday approaches. Big stones cooling off in China as Chairman Xi Jinping implements anti-corruption campaign. Indian market improving. Cert shortages, due to GIA delays, supporting prices. De Beers Nov. sight sells out at $480M, large Dec. sight expected. Christie’s HK sells $111M (86% by lot). Chow Tai Fook 1H revenue +49% to $4.8B, profit +90% to $464M. Tiffany & Co. 3Q revenue +7% to $912M, profit +8% to $95M. Signet Jewelers 3Q sales +8% to $771M, profit -4% to $34M. Zale Corp. 1Q revenue +1% to $363M, net loss narrowed 3% to $27M. Belgium’s Oct. polished exports +26% to $1.3B, rough imports -3% to $1.2B. India’s Oct. polished exports +56% to $2.2B, rough imports -18% to $1.2B. Happy Thanksgiving and Hanukkah.
Fancies: Ovals improving, pears shaping up, but squares slow. Availability tightening with shortages of select items that meet specific demand. Cutters have reduced production due to overpriced, unsustainable rough prices, and sellers holding back popular goods. U.S. demand for commercial-qualities good with some improvement in Chinese demand. Big expensive stones making news at auctions as global economic uncertainty drives investment demand. Off-make, poorly-cut fancies hard to sell even at very deep discounts. Buyers very selective regarding shape- and cut-quality with extreme price differentials between excellent- and average-cut fancy.
Global Comments:
United States: Wholesale trading continues to improve as dealers fill orders for the Christmas shopping season. While jewelry retailers are making slightly larger orders for stock inventory, demand remains selective and the market is focused on SI goods. Overall, there is strong demand for commercial diamonds F-H, SI-I2 and there are some shortages of these goods in the market. There has been an increase in consignment buying ahead of the holiday season, and there is concern that a large volume of goods will be returned unsold in January. Retailers are focused on gold jewelry, while bridal remains the strongest category among diamond jewelry lines.
Belgium: The market in Antwerp is quiet with many still cautious about prices and concerned about liquidity in the manufacturing sector. Dealers are disappointed that overall demand was below previous years in November. There is good demand for dossiers between 0.30-carat to 0.90-carat, F-H, VS-SI, with a strong emphasis on Triple EX and VG goods. Demand for fancy shapes has been steady. Rough trading is stable with some premiums in De Beers boxes on the secondary market since the November sight.
China: Wholesale trading is stable but relatively slow as the busy selling season is expected to emerge after Christmas ahead of the Chinese New Year on January 31. There is good demand for 0.30-carat to 0.50-carat, G-I, VS-SI goods. Demand has slowed for large, better quality diamonds. Retailers continue to focus on gold jewelry products which spurred growth in recent months. Some are experimenting with different diamond designs using more colored diamonds in their jewelry.
Hong Kong: The market is slower than expected as dealers are waiting to see how the U.S. Christmas season evolves. There is good demand for certified 0.30-carat to 0.40-carat, VS2-SI1 diamonds. Demand for melee has slowed as many are concerned about undisclosed synthetic goods being mixed in melee parcels. Jewelry retailers note steady demand from Asian and western tourists while Chinese consumers remain focused on gold jewelry in their purchases.
India: Polished trading has improved with both domestic and foreign buyer activity back to regular levels after the Diwali break. Dealers note an increase in demand from Chinese buyers. There is good demand for -2 sieve, 0.08-carat to 0.18-0carat and for dossiers in VS and lower clarities in the local market. There are reported shortages in the market as many smaller manufacturing units are still not operational and there have been delays in bringing new polished goods to market. Rough trading is relatively slow and selective with decent demand for rough goods that yield very small polished and SI goods. Domestic jewelry demand has also improved slightly during the ongoing wedding season.
Israel: Trading is stable with dealers focused on filling U.S. demand for the Christmas season. While demand has not been as busy as previous years, dealers are hoping Black Friday will spur strong, last-minute orders in December. There is steady demand for 0.30-carat to 0.50-carat, H-, VS- diamonds and for goods above 1-carat, D-K, SI1-SI2. Demand for fancy shapes is stable, while demand for fancy color diamonds remains strong. Rough dealers note good demand for large diamonds at rough tenders.
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