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Market Comments 10/23/2014
Oct 23, 2014 6:00 PM
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Rough prices discounted on secondary market as sightholders pay for the privilege of steady supply. Polished markets under pressure with liquidity concerns as Antwerp Diamond Bank begins shut down process and other banks tighten credit. Global diamond demand weak. Hong Kong trading declines as Chinese government restricts currency transfers and cracks down on corruption. Indian market closes for Diwali with soft holiday sales. U.S. market steady with good expectations for holiday season. Christies NY sells $34M (75% by lot). Chow Tai Fook 2Q retail sales -10%. ALROSA 3Q production -2% to 9.7M cts., De Beers +6% to 8.2M cts. We wish all our friends a happy, enlightening Diwali.
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. Demand for Princess cut is weak. 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: Polished trading in New York is slow with many Jewish dealers returning from their Succot vacations. Dealers continue to prepare for the holiday shopping season with positive forecasts for jewelry demand. Retail buyers are focused on commercial-quality, SI and lower clarity goods and there is good demand for rounds, cushions and ovals, 0.50-carat to 0.99-carat, J-M, VS-SI diamonds. Buyers are looking to take advantage of the prevailing softness in the polished market and are traveling to look for goods. Engagement ring sales are steady as the fourth quarter is regarded as a popular period for proposals.
Belgium: The market is quiet due to the recent Jewish High Holidays and India’s Diwali holiday, which started this week. There is good demand for 0.30-carat to 0.50-carat, F-I, VS-SI diamonds, while demand for large stones above 3-carat, D-F colors are weak. Overall, buying is erratic and sentiment has softened, particularly following the decision to close Antwerp Diamond Bank. Liquidity is tight among polished suppliers. They are hesitant to sell on terms and are limiting the credit they give to 60 days. Rough trading is slow and premiums have eroded on the secondary market as manufacturers have the goods they need to ramp up their production before Diwali.
Hong Kong: Polished trading is quiet due to weak demand from Chinese buyers who appear to have high inventory levels following strong buying in the third quarter. Trading in October has been below that of previous years when retail buyers are traditionally buying for the holiday season. However, local dealers are coming under increased pressure as more Chinese buyers are cutting out the middleman by going directly to Mumbai to buy, or buying goods directly from the Hong Kong offices of Surat-based manufacturers. There is good demand for Gemological Institute of America (GIA) dossiers. Retail sales have improved as the pro-democracy protests that hurt Golden Week sales have quieted and are now limited to an area less disruptive to business.
India: The market has basically shut down for the Diwali holiday with most businesses already closed as of October 20 for two weeks. Surat manufacturers are expected to remain closed until mid-November. Local jewelry demand has improved slightly but expectations for jewelry sales during Diwali and the subsequent wedding season is cautious. Polished exports remain steady to supply the U.S. and Far East markets in time for their respective holiday seasons. Liquidity remains a primary concern for local manufacturers, particularly as banks have tightened their lending to the industry and as rough prices remain high. Rough demand has slowed with some major manufacturers reportedly deferring their box purchases at the De Beers October sight.
Israel: Trading is slowly picking up as dealers have returned from the week-long vacation during the Succot Jewish holiday. Polished dealers are focused on the U.S., which is Israel’s biggest market, ahead of the Christmas shopping season. There are mixed expectations for the Israel Diamond Week in New York taking place on November 10 to 13. There is good demand for SI-clarity diamonds in all sizes, while better-quality IF-VVS goods remain weak.
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