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Market Comments 7/31/2014

Jul 31, 2014 6:00 PM  
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TRADE NOTICE: The Rapaport Price List will be based on the new “Rapaport Specification A-” effective next week August 8, 2014. Full details of all new specifications are available at www.diamonds.net/rapspec. Comments from the trade should be emailed to rapspec@diamonds.net by Wednesday, August 6 for immediate consideration. The Rapaport Price List will exclude price information for Marange and green-tinted diamonds. RapNet members will now be required to remove all non-fancy color, green-tinted diamonds from RapNet regardless of origin. Members that list green-tinted or Marange diamonds on RapNet will be subject to suspension and publication.

Trading: NY jewelry shows slow. Market sentiment improves with rising U.S. consumer confidence as 2Q GDP +4%. Steady U.S. and Far East demand for commercial-quality below 1ct., SI-I2, G-M diamonds. Rough markets stable with seasonal Indian demand for pre-Diwali manufacturing. De Beers 1H rough sales +15% to $3.5B, earnings +59% to $469M, prices +7%. Petra FY revenue +17% to $473M, production +17% to 3.1M cts. Letšeng 1H sales +14% to $54M, average price +58% to $2,747/ct. Birks FY revenue -4% to $281M, loss of $5.8M vs. profit of $1.5M. Kering 1H jewelry group sales +5% to $4B.  Cash America 2Q revenue +11% to $455M, profit -17% to $21M.

Fancies: Fancy shape market steady with fair demand for excellent shaped and larger polished sizes. Cutters are moving to fancy shapes because of significantly high rough prices for identical quality round diamonds. Curves (Pears, Ovals) are doing better than Squares (Emerald, Princess) in larger sizes with squares doing better in under the carat sizes. Increasing demand for 30-point Princess cut. Far East markets becoming more aware of fancy shapes. Buyers very selective regarding shape- and cut-quality with extreme price differentials between excellent- and average-cut fancies. Off-make, poorly-cut fancies illiquid and hard to sell even at very deep discounts.


Global Comments:

United States: There has been an increase in activity in New York due to the various trade shows taking place in the city this week, including JA New York, the New York Antique Jewelry and Watch Show, and the International Watch and Jewelry Guild (IWJG) show. While diamond trading at the shows was soft, the market remains steady with many buyers in town to view goods. There is steady demand for G-J, SI and lower clarity round goods. In fancy shapes, there is stable demand for ovals, cushions and pears, 0.50-carat to 2-carat, F-I, VS2-SI goods, while demand for princess cuts has softened. Retail jewelry sales are seasonally slow but better than last year. There is rising consumer interest in estate diamond jewelry and alternative engagement gemstones. Bridal diamond jewelry sales remain strong.

Belgium: Trading in Antwerp is quiet with dealers away during the ongoing summer vacation period. The various Antwerp bourses closed from July 28 to August 18. There is good demand for 0.20-carat to 0.90-carat, D-M, VS-SI goods, while demand for large diamonds above 3 carats has slowed. Similarly, the rough market is quiet but stable with a lot of goods in the market following the relatively large De Beers July sight.

Hong Kong: Polished trading is relatively slow with deals typically based on filling existing orders rather than replenishing inventory. Anecdotal reports suggest that the large Hong Kong-based jewelry chains are active in the market buying in preparation for China’s National Day Golden Week holiday. However, the dealer market is seasonally quiet and only expected to improve closer to the September Hong Kong show.

India: Activity in the polished market has improved since the IIJS show earlier in July with many Antwerp-based traders in Mumbai during the ongoing vacation period in Belgium. Polished dealers are still cautious as buyers are very price sensitive and selective with demand primarily focused on filling existing orders. Liquidity among cutters remains tight although there has been a slight increase in manufacturing as polished suppliers start to prepare for the fourth quarter Diwali/Christmas holiday shopping season. Still, manufacturing is cautious as there is a steady inflow of 1-carat and larger goods from the Gemological Institute of America (GIA) and a continued backlog of dossiers being graded at the GIA. Rough trading is stable with demand expected to remain robust through the next De Beers sight in mid-August.

Israel: Activity in the Israel Diamond Exchange is steady with buyers from the U.S. and India in Ramat Gan looking for goods before Israeli dealers take vacation in mid-August. Suppliers are focused on the U.S. market with steady demand for SI and lower clarity goods, and select demand from I and lower color diamonds from the major Far East retailers. Rough trading is stable with continued deep concern about high prices prevalent in the market.  
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