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Rapaport TradeWire April 27, 2016
Apr 27, 2016 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
April 27, 2016
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Diamond trading very
quiet during Passover holiday. Rising expectations for May Day retail holiday
as China’s gold imports increase.
U.S. demand steady but jewelers avoiding unnecessary inventory and taking goods
on memo. U.S. 2015 retail diamond jewelry
demand +5% to $39B, global consumption -2% to $79B, according to De Beers
insight report. Rough trading stabilizing as manufacturing profit margins
tighten. Petra Diamonds 3Q sales +25% to $121M, production +26%
to 995,905 cts. Christie’s NY sells $57M (80% by lot) with 15.99 ct. Burmese
ruby sold for $14.2M ($3.6M/ct.). Swiss watch March exports -16%
to $1.4B. AWDC highlights reduced Antwerp bank financing in 2015 annual report.
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| Diamonds |
1,155,870 |
| Value |
$7,891,332,625 |
| Carats |
1,258,643 |
| Average Discount |
-28.53% |
www.rapnet.com
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| The RapNet Diamond Index (RAPI™) is the average asking price in hundred $/ct. of the 10 percent best priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet - Rapaport Diamond Trading Network. |
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Get Current Price List | Subscribe to Rapaport | Join RapNet |
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QUOTE OF THE WEEK
The global diamond industry took a beating this year. Thanks to our strong foundations and ability to be agile and adopt innovative new technologies, Antwerp has succeeded in safeguarding its world-leading position with regard to rough as well as polished diamonds. Antwerp will consequently emerge from this downturn in better shape than our competitors.
Ari Epstein, chief executive officer of the Antwerp World Diamond Centre (AWDC) in the group's 2015 annual report.
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MARKETS
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United
States:
New York trading quiet with many dealers on vacation during Passover
holiday. Suppliers reducing prices on unwanted excess inventory but holding
firm on top-quality RapSpec A2 goods...
Belgium: Seasonally slow period with
dealers concerned about weak demand. Dealers focused on filling orders with very
little buying for inventory...
Israel: Most dealers away and
Israel Diamond Exchange (IDE) services closed during Passover holiday (April 24
to 28)...
India:
Trading slow as expected during April-May. Jewelry retailers
focused on gold sales ahead of Akshaya Tritiya festival on May 9...
Hong
Kong: Polished trading stable. Steady demand for 0.30 to 1 ct., D-J, VS-SI, 3X diamonds.
Big stone demand weak...
Click here for deeper analysis
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INSIGHTS
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Making Luxury More Affordable in China
Diamond
dealers still see China as the engine of industry growth but Premier Xi
Jinping’s government can do more to encourage its development. As the country
transitions to a consumer-driven economy, luxury products such as jewelry are
considered expensive in China, forcing shoppers to look abroad for their
purchases…
Click here to continue reading
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INDUSTRY
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U.S. Diamond Jewelry Sales Surges in Weak Global Market
U.S.
demand for diamond jewelry grew 5% to $39 billion in 2015 supported by a
sustained economic recovery and an improved labor market, according to a De
Beers report. Growth in the U.S., however, failed to lift the global industry
which contracted 2% because of sluggishness in emerging-market economies and
the strength of the U.S. dollar.
Global
diamond jewelry demand fell to $79 billion, off its record high of $81 billion
in 2014. At constant exchange rates, demand advanced 2%. Chinese diamond
jewelry demand, including from purchases abroad, rose 1%, or 3% when measured
in terms of yuan. Other major markets including India, Japan, and the Gulf,
registered declines in sales.
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Tight Margins, Financing Challenge Antwerp Trade
The
Antwerp World Diamond Centre (AWDC) said tighter profit margins and lower bank
credit squeezed Belgium’s diamond trade in 2015, a difficult year amid an
“unsettling global economy”. The average profit margin reported by wholesalers
in 2015 was in the 0.1% to 0.4% range, the same as previous year, according to
the AWDC’s annual report.
The report
also acknowledged funding pressure on diamantaires in relation to rough diamond
purchases, after the global banking and sovereign debt crisis dramatically
altered lending practices. Industry financing was also impacted by the banking
industry’s policy of “de-risking,” or removing access to funds for businesses
with a perceived risk of money laundering or terror financing.
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Harry Winston Diamonds Shine in $7M Auction
Bonhams
garnered $7.2 million (GBP 5 million) at its jewelry auction this month in
London, where it noted a strong interest in diamonds as well as pink and blue
sapphires.
The top
lot was a step-cut, 15.52-carat, D, VVS2 diamond ring by Harry Winston. It sold
for $1.6 million (GBP 1.1 million), or $101,500 per carat, exceeding the upper
pre-sale estimate of $1.3 million (GBP 900,000).A pair of marquise and pear-shaped diamond
earrings, also by Harry Winston, weighing 25.37 carats, fetched $384,000 (GBP
266,500).
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De Beers IIDGR Diamond Grading Reports on RapNet
Grading
reports from De Beers International Institute of Diamond Grading and Research
(IIDGR) laboratories can now be uploaded to RapNet – Rapaport’s Diamond Trading
Network.
De Beers
noted IIDGR becomes one of only a handful of grading laboratories to have its
reports listed on RapNet. IIDGR launched its generic diamond grading program
earlier this year, extending its grading activity with the De Beers Forevermark
brand.
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RETAIL & WHOLESALE
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U.S. Jewelry Prices Drop for First Time in Five Months
The U.S.
consumer price index (CPI) for jewelry fell 3% in March, halting an uptrend in
the four months to February, according to the U.S. Bureau of Labor Statistics.
However,
even though the CPI for jewelry rose 9% between November and February, it was
in a steady downtrend for most of 2015. Compared to last year, the figure for
March was 3% higher than 12 months ago. The March CPI for watches also declined
4% but remained up 5% from a year earlier.
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U.S. Consumers Less Optimistic in April
U.S.
consumer confidence declined slightly in April as the outlook for the labor
market was less favorable, according to The Conference Board’s monthly report.
The Conference Board Consumer Confidence Index stood at 94.2 in April, down 2
percent from its March reading of 96.1.
Consumer
assessment about current conditions improved but expectations regarding the
short-term have moderated, said Lynn Franco, director of economic indicators at The Conference Board. The report suggested fewer consumers anticipate
improvement in the job market in the coming months. Consumers were also more
pessimistic about business conditions.
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Indian Government Forms Panel for Controversial Tax
India’s
Ministry of Finance has formed a sub-committee to oversee implementation of the
1% excise duty recently imposed on the jewelry industry. The ministry also
deferred the deadline for jewelers to register with the central excise
department to July 1, 2016, according to the Gem and Jewellery Export Promotion
Council (GJEPC).
Ashok
Lahiri, a former chief economic advisor to the government, will chair the
five-person panel. Representatives from the trade will be coopted onto the
committee in consultation with Lahiri.
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Swiss Watch Exports Slump in March
Swiss
watch exports fell 16% in March as orders from Hong Kong and the U.S.
slumped. The value of wristwatch shipments stood at $1.4 billion (CHF
1.37 billion), the lowest for March since 2011. Volume dived 20%.
The
retreat reflects continued pessimism in the Swiss industry, with a 2015
Deloitte report stressing increasing concern of the threat of smartwatches. The
impact of a stronger Swiss franc and weaker demand from countries such as China
is also problematic, according to Deloitte.
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MINING
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Petra Diamonds 3Q Sales Rise in Buoyant Rough Market
Petra
Diamonds raised its production target for fiscal 2016 as third-quarter sales
jumped amid improving conditions in the rough market. Steps taken by major
producers to reduce supply, lower prices of rough, and increase marketing and
promotions helped lift trading, the diamond miner said.
Petra’s
revenue surged 25% to $120.5 million in the three months to March 31 as the
volume of sales rose 13% and rough prices climbed 3.5%. Output across its five
mines soared 26% to 995,905 carats in the period, prompting Petra to raise its
target to 3.6 to 3.65 million carats for the current fiscal year. Its previous
guidance was for 3.3 to 3.4 million carats this year.
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Rockwell Diamonds Sales Plunge in 4Q
Rockwell
Diamonds reported sales slumped 45% to $7.1 million in its fiscal fourth
quarter as the company has changed strategy at its South Africa-based
operations. Production fell 33% to 4,714 carats.
A
strategic review will see the company close its Saxendrift operation in May and
recommission its Wouterspan project in the same month. A large proportion of
the Saxendrift staff and equipment will be deployed at Wouterspan, the junior diamond
miner said. Both projects are located at South Africa’s Middle Orange River.
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Three Big Diamonds Found at Angola Lulo Project
Lucapa
Diamond Company recovered three more large diamonds during trial mining at
its Lulo alluvial project in Angola. Two of the gems are high-color white type
IIa diamonds, one weighing 88 carats and the other 30 carats.
They join
the ranks of 10 “special” stones weighing more than 10.8 carats and found in
the E46 area at Lulo since trial mining began in March. Lucapa reported more
than 30% of the diamonds above 1-carat recovered in the E46 project are type
IIa, the highest level of purity in a rough diamond.
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GENERAL
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De Beers to Move From Prestigious Premises in 2017
De Beers is
moving from its iconic premises at 17 Charterhouse Street as part of an ongoing
consolidation at its parent Anglo American, the company’s spokesperson
confirmed to Rapaport News.
Staff will
relocate to Anglo American’s Carlton House Terrace office within the next year.
Anglo American announced in December it plans to co-locate with De Beers in
2017 and was considering Charterhouse as its new headquarters. Instead it has
now been decided De Beers will move to Anglo American’s premises.
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Lab-Grown Diamond Association Adds Members
The
International Grown Diamond Association (IGDA) has almost doubled its
membership base since launching in February after reporting the addition of
eight new companies to its ranks.
The new
IGDA members include Numined Diamonds, Fair Trade Jewellery Co., The Gold
Concept Jewelry and Design, Caraxy, M. Geller, Schubach Enterprises, D.NEA and
DM Gems India. They join the IGDA to promote the so-called synthetic diamonds
as a “new choice” to consumers.
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Diamond Tracker Offers Sales, Inventory Insight
NPD Group,
a market-data analysis company, introduced a service providing visibility into
sales and inventory data across the global diamond industry. Diamond Tracker is
the “first service” to offer insight into detailed point-of-sale information,
monthly sales and inventory trends, NPD claimed.
Users are
able to drill down into performance trends by specific diamond characteristics
for both natural and lab-grown gems. It also tracks factors such as gemological
labs, wholesale sources and different forms of purchase such as outright
purchase, memo or recycled.
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ECONWATCH
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Diamond Industry Stock Report
The major mining companies lost ground with Anglo American
(-11.9%) leading the slump. Rio Tinto posted a double-digit decline, while
Petra Diamonds fell despite its positive trading report. Far East retail
was mixed with Chow Sang Sang posting the strongest gains (+3.3%). Among the
Indian retailers, Gitanjali continued its volatility with declines (-5.5%) wiping
out some of last week’s gains.
View the detailed industry stock report.
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Apr. 27 (09:15 GMT) |
Apr. 21 (12:24 GMT) |
Chng. |
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| $1 = Euro |
0.88 |
0.88 |
0.00 |
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| $1 = Rupee |
66.42 |
66.28 |
0.14 |
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| $1 = Israel Shekel |
3.77 |
3.76 |
0.01 |
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| $1 = Rand |
14.41 |
14.21 |
0.20 |
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| $1 = Canadian Dollar |
1.26 |
1.26 |
0.00 |
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| Precious Metals |
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Chng. |
| Gold |
$1,246.15 |
$1,265.75 |
-$19.60 |
-1.5% |
| Platinum |
$1,018.00 |
$1,036.95 |
-$18.95 |
-1.8% |
| Silver |
$17.34 |
$17.63 |
-$0.29 |
-1.6% |
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| Stock Indexes |
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Chng. |
| BSE |
26,055.58 |
25,880.38 |
175.20 |
0.7% |
| Dow Jones |
17,990.32 |
18,096.27 |
-105.95 |
-0.6% |
| FTSE |
6,274.94 |
6,370.76 |
-95.82 |
-1.5% |
| Hang Seng |
21,361.60 |
21,622.25 |
-260.65 |
-1.2% |
| S&P 500 |
2,091.70 |
2,102.40 |
-10.70 |
-0.5% |
| Yahoo! Jewelry |
1,109.20 |
1,128.90 |
-19.70 |
-1.7% |
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INDIA MARKET REPORT
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Polished Trading Activity
Trading slow as expected during April-May. Jewelry retailers
focused on gold sales ahead of Akshaya Tritiya festival on May 9. Government
sets up panel to implement 1% excise tax on jewelry industry. Steady demand for
GIA-dossiers and 1 ct., G-J, VS-SI diamonds. Manufacturing levels stabilizing.
Read the Polished Diamond Trading Report
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