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Market Comments 7/2/2015
Jul 2, 2015 6:00 PM
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Polished prices continue to decline with June RAPI 0.30ct. -2.6%, 0.50ct. -2.4%, 1ct. -0.8% and 3ct. -1.9%. Diamond markets weak as U.S. goes on vacation. Hong Kong show very slow reflecting poor Far East luxury demand. Chinese buyers are delaying payments to polished suppliers. Liquidity is tight and manufacturers continue to lose money and reduce activity. More Indian companies file for bankruptcy with estimated $200M outstanding debt. Birks FY sales +7% to $302M, loss of $8.6M vs. loss of $5.8M. RJC appoints Andrew Bone as executive director. Notable diamantaires Jacob Zupnick and Shlomo Moussaieff passed away this week.
Fancies: Ovals and Cushions steady, Pears and Princess improving, Hearts slow. Prices for curves improving slightly. U.S. demand supporting market for commercial-quality fancies, especially for sizes under the carat. Larger sizes softening. Far East fancy demand weak. Buyers are very selective and insisting on excellent-shape proportions. Significant price differentials between excellent- and average-cut fancies. Off-make, poorly-cut fancies illiquid and very hard to sell, even at very deep discounts.
Global Comments
United States: New York trading is quiet as dealers are going on their summer vacations, and most offices are closed on Friday ahead of the Fourth of July holiday. Demand for 0.50-carat diamonds is relatively weak, while there is steady demand for 1-carat to 2-carat goods. There is stable demand for fancy shape diamonds above 6 carats, G-K, VS-SI. There are shortages of fine-quality diamonds in specific categories due to reduced supply from manufacturers. Preliminary figures show that jewelry and watch retail sales were flat in May, although consumer confidence appears to be improving.
Belgium: Trading is slow and market sentiment is weak. Diamantaires are worried about recent bankruptcies among local companies. Dealers note trading was weak at last week’s Hong Kong Jewelry and Gem Fair as buyers aggressively sought higher discounts. Concerns remain regarding late payments from China and India and the undisclosed mixing of synthetics. Demand is weak for GIA dossiers up to 0.70 carats, while there is stable demand for 1-carat, F-H, VS-SI diamonds. There is steady demand for 5-carat and larger, SI-clarity diamonds. Manufacturers continue to complain that rough is too expensive to polish at a profit.
Hong Kong: Diamond trading was slow at last week’s Hong Kong show, reflecting the state of the overall market. Many important Far East buyers were reportedly absent from the show, but are planning to attend the September show. Retailers are avoiding adding to inventory during the slower summer months. Buyers were looking for bargains with no categories clearly in demand. There is weak demand for diamonds below 0.50 carats and stable demand for 1-carat to 3-carat diamonds. Recent financial reports suggest large Hong Kong jewelers have built up sizable diamond inventories over the past year.
India: Trading is slow as confidence has weakened among Indian diamantaires. The Hong Kong show met low expectations but did not generate a sizable volume of sales. Far East demand is weak and diamantaires are complaining about delayed payments from Chinese buyers. There is stable demand from the U.S. that is providing support to the market. Godhani Gems is negotiating with India-based creditors after declaring bankruptcy, while other bankruptcies have been reported as companies fall behind on payments. There is weak demand for 0.30-carat to 0.40-carat diamonds and stable demand for 1-carat, D-H, VS-SI, triple EX diamonds. Demand has softened for diamonds larger than 3 carats. There is steady demand for ovals, pears and cushion cuts up to 3 carats. Demand is improving for emerald and princess cuts below 3 carats. Manufacturing is still operating at reduced capacity with some rumors of factory closures in Surat.
Israel: The market is moving slowly in Ramat Gan. Israeli diamantaires reported that trading was slow at the Hong Kong show. Dealers are buying more goods locally than before as local suppliers are more accommodating to price-sensitive demand than their Indian counterparts. Stable U.S. demand is supporting the market. There is stable demand for 1-carat, D-G, VS-SI diamonds, as well as for 3-carat and larger, D-H, IF-VS2 diamonds. In fancy shapes, there is steady demand for pears and ovals, and improving demand for cushion and emerald cuts. Manufacturers report that prices are stable in the rough market despite a lack of profitability in polished goods.
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