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Rapaport TradeWire December 8, 2016
Dec 8, 2016 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
December 8, 2016
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Polished
market stable during peak jewelry selling season. Small melee significantly
weakened by India’s currency demonetization. Larger stones relatively
unaffected. Nov. RAPI 1 ct. +0.5%, 0.30 ct. +0.5%, 0.50 ct. -1%, 3 ct. +1.2%. Manufacturing
profitability better than last year with De Beers Jan. to Nov. rough price
index -5%. Lukoil to sell Grib mine to Russian Otkritie investment group for
$1.5B. Christie’s NY sells $51M with
rectangular, 51.35 ct., D, VVS1 diamond sold for $5.6M ($108,422/ct.). Belgium
Nov. polished exports -6% to $878M, rough imports +60% to $1.1B. GIA opens synthetic
melee testing service.
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| Diamonds |
1,279,046 |
| Value |
$7,900,529,253 |
| Carats |
1,355,391 |
| Average Discount |
-30.18% |
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
I would like to have more diamonds, to be very explicit. That’s a priority area.
Diamond mines are on Rio Tinto CEO Jean-Sébastien Jacques' wish list this holiday season.
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MARKETS
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United
States: Positive
sentiment due to improved trading during the holiday season. Many inquiries for
memo goods from independent jewelers…
Belgium: Steady
last-minute orders for specific goods from U.S. and European independent
jewelers. Dealers relatively satisfied with holiday trading but still cautious
about the market…
Israel:
Dealer
trading quiet with most orders complete for the U.S. holiday season. Steady demand
for under-the-carat GIA goods with some weakness and rising inventory for 0.50
to 0.89 ct., D-I, IF-VVS diamonds…
India: Dealers
trying to normalize operations after Nov. government demonetization liquidity
crisis. Larger exporters resuming regular activity with full manufacturing
capacity after Diwali break…
Hong
Kong: : Dealer sentiment slightly improved with steady
orders for the Chinese New Year season. Buyers shifting to lower price points
with good demand for 0.30 to 1 ct., G-J, VS-SI diamonds…
Click here for deeper analysis
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| RAPAPORT STATEMENT
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Diamond Prices Firm Slightly with U.S. Optimism
Diamond
trading slowed in November as Indian liquidity dried up and manufacturing shut
down for Diwali. U.S. jewelers completed their inventory purchases and focused
on selling during the holiday season rather than buying from overseas
suppliers. Sentiment improved as the season began and polished prices
firmed despite slow dealer trading. The RapNet Diamond Index (RAPI™) for
1-carat, RapSpec A3+ diamonds gained 0.5% in November.
Purchase the full Rapaport
Monthly Report – December 2016
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INSIGHTS
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Diamond Industry Now Banking on Legitimacy
The diamond industry has added several layers of legitimacy this year as more companies are complying with standards set out by banks, regulators and suppliers. Encouragingly, the trade ended 2016 in a far healthier place than a year ago with officials starting to view the industry as a more 'normal' market...
Click here to continue reading
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INDUSTRY
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De Beers Rough Prices Drop 5% in 2016
De
Beers rough diamond price index fell 5% in 2016 despite a vastly improved
diamond market. Diamond prices declined for the period January to
November, while prices rose among other commodities in parent Anglo American’s
portfolio. De Beers is still expected to drive growth at Anglo American this
year as diamond sales grew in the first half whereas revenue fell from each of
its other core businesses. Including this week’s final sight of the year, De
Beers sales are expected to exceed $5.6 billion for 2016, from $4.1 billion
last year.
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Bain Warns of Looming Rough Bubble
Strong
growth in rough sales this year may lead to a repeat of last year’s damaging
inventory pile-up if consumer demand does not improve, Bain & Company
warned. Rough sales grew 20% in the first half as the midstream restocked
following an inventory sell-off. However, jewelry retail might not be keeping
pace as sales were hit by weaker economic conditions in parts of the U.S. and a temporary drop in overall consumer expenditure, Bain explained.
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ABN AMRO Forecasts Polished Price Recovery
ABN
AMRO predicted polished diamond prices will increase next year as it expects
improved economic conditions will boost U.S. and Chinese demand. U.S. jewelry
consumption will benefit from a stronger labor market, rising housing prices
and the impact of President-Elect Donald Trump’s fiscal stimulus, the bank
argued. Polished prices have declined this year, with the RAPI for 1-carat
polished diamonds dropping 3.8% in the first 11 months.
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Belgium’s Polished Diamond Exports Decline
Belgium’s
polished exports fell 6% to $878 million in November, according to the
Antwerp World Diamond Centre. Polished imports dropped 10% to $695
million, while net polished exports rose 14% to $183 million. Rough
imports grew 60% to $1.14 billion, while rough exports increased 63% to $1.05
billion. Net rough imports rose 32% to $87 million. Belgium’s November net
diamond account, representing total polished and rough exports minus total
imports, edged up 1% to $96 million.
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RETAIL & WHOLESALE
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Christie's Sells 51 Carat Diamond for $5.6M
Christie’s
sold $51 million worth of jewelry at its New York auction with the top lot, a
rectangular, 51.35-carat, D-color, VVS1 diamond ring selling for $5.6 million,
or $108,423 per carat. A total 13 items fetched more than $1 million each, including
a cushion-cut, 75.41-carat sapphire ring that fetched $3.8 million. Christie’s earlier
reported a stronger than expected Paris auction, with total receipts of $4.1
million (EUR 4 million) as 45% of items sold above their estimates.
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Diamonds Shine in Bonhams London Auction
Bonhams
sold $8.6 million (GBP 6.8 million) worth of jewelry at its London auction. The
highlight of the diamonds on offer was a pear-shape, 12.08-carat, D-color,
VVS1-clarity diamond ring, which went to a telephone bidder for $975,797, or
$79,000 per carat. However, the selling price was surpassed by a 14.13-carat
Kashmir sapphire ring, which drew a winning bid of $1.7 million.
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Blue Nile Says Takeover Bid Unchallenged
Blue
Nile did not receive additional takeover bids during a 30-day period in which
it could consider proposals from third parties, according a company filing. The
online jewelry retailer agreed to a $500 million acquisition by Bain
Capital Private Equity and Bow Street last month. However, the terms permitted it
to solicit bids from other potential buyers during a ‘go-shop’
period. With the period now over, Blue Nile is subject to “customary
restrictions” when engaging with alternative proposals.
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MINING
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Grib Diamond Mine Sold for $1.5B
Lukoil
agreed to sell its Grib diamond project to Russian investment group Otkritie
Holding for $1.45 billion in cash. The deal is expected to close in the first
quarter of 2017 following government approval. Production at Grib
was launched in September 2014, with initial projections pointing to peak levels
of 4.5 million carats a year. The majority of the mine's production is sold by
tender via the Antwerp-based subsidiary Grib Diamonds, which won't be
affected by the acquisition, sources said.
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Rio Tinto U-Turns to Prioritize Diamonds Again
Rio
Tinto plans to expand its diamond mining operations, new CEO Jean-Sebastien
Jacques (pictured) told Bloomberg. The miner mulled
divesting from diamonds in 2013 but held on to the business unit because of
growing luxury demand in Asia and continued strength of the North American market.
Rio Tinto intends to increase diamond production to a range of 19 million to 24
million carats in 2017, from 18 million to 21 million carats planned
for this year.
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De Beers to Add 25 Years to Botswana Mine
Debswana,
De Beers mining joint venture in Botswana, is close to completing a tailings
project that will extend the Letlhakane mine’s lifespan by 25 years. The
Letlhakane Mine Tailings Resource Treatment Project will enable Debswana to
continue producing rough diamonds at the site even when mining at the main
deposit comes to an end next year. The project is 80% complete, and Debswana
expects it will be officially launched in the third quarter of 2017.
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ALROSA Sales Weather Indian Liquidity Storm
ALROSA
reported diamond sales jumped 63% year on year to $255.2 million in November
with rough sales of $245.6 million and revenue from polished coming in at $9.6
million. The figures represented continued strength in the rough market even as
India's liquidity crisis damaged demand for smaller and lower-quality diamonds,
ALROSA’s vice president Yury Okoemov said.
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India Cash Crunch Stalls Gemfields Auction
Gemfields
pushed back a sale of higher-quality emeralds by two months to enable Indian
buyers to adapt to the government’s decision to invalidate higher-value currency
notes. The auction of stones from the Kagem mine in Zambia will now take
place in February instead of this month. India abolished its INR 500 and
INR 1,000 rupee notes in November to curb black-market transactions, resulting
in lower liquidity which hit the cash-focused jewelry and gem trade.
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GENERAL
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GIA Rolls Out Synthetic Melee Testing Service
The
Gemological Institute of America (GIA) has started accepting stones for its
automated melee testing service, which identifies potential synthetics in
batches of small melee diamonds. Following a five-month pilot, the service
is now open at most GIA laboratories for customers to submit round, 0.005 to
0.25-carat, D-Z color diamonds. GIA will charge $0.08 per stone for
smaller diamonds, starting at the 0.90-1.49 millimeter range, and increase its
prices gradually up to $0.40 per stone for the 3.50-4.00 millimeter highest
tier.
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De Beers Expands Surat Grading Center
De
Beers plans to expand its diamond grading facility in Surat, India, increasing
the services it offers there. The International Institute of
Diamond Grading & Research (IIDGR), a subsidiary of De Beers, will invest
$5 million to enhance the center, adding 10,000 square feet to its existing
15,000 square feet of floor space. The expansion includes enlarging its
melee testing service, launching a new melee grading service next year, and a
new educational service.
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Cameroon Enabling CAR Conflict Diamonds: NGO
Conflict
diamonds from the Central African Republic (CAR) are entering the supply chain
because of poor prevention controls, non-governmental group Partnership Africa
Canada (PAC) alleged. Rough stones are being smuggled across the border into
Cameroon and adjudged conflict-free after they receive Kimberley Process
certificates, PAC claimed. Ahmed Bin Sulayem, the United Arab Emirates-based
chair of the KP for 2016, said its monitoring team has been probing the issue
for several months.
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GIA, MJSA Unveil New Board Chiefs
The
Gemological Institute of America (GIA) elected industry veteran Dione Kenyon as
chair of its board of governors. Kenyon (pictured), who
recently retired as president and chief executive officer of the Jewelers Board
of Trade, will take over the role from John Green, president and CEO of jewelry
chain Lux Bond & Green, who remains on the board. Separately, Manufacturing
Jewelers & Suppliers of America (MJSA) elected Steven Cipolla as chair,
succeeding Ann Arnold, who has been appointed chair of the MJSA Education
Foundation.
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ECONWATCH
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Diamond Industry Stock Report
Global markets continued to strengthen this week, with the Dow Jones Industrial Average up 2.2% and the FTSE gaining 3 percent. Rio Tinto (+11%) led mining stocks, with Anglo American (+7.2%) and Firestone Diamonds (+6.7%) also performing well. U.S. retail was headed by JCPenney (+10%), while resurgent European stocks were led by Swatch Group (+8.1%). Indian jewelry companies appear to be have recovered from the effects of the government's new cash policy for the time being, with Goenka Diamond (+6.5) growing in value the fastest.
View the detailed industry stock report
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Dec 8 (13:10 GMT) |
Dec 1 (13:54 GMT) |
Chng. |
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| $1 = Euro |
0.93 |
0.94 |
-0.01 |
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| $1 = Rupee |
67.37 |
68.37 |
-1.00 |
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| $1 = Israel Shekel |
3.79 |
3.83 |
-0.04 |
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| $1 = Rand |
13.67 |
14.10 |
-0.43 |
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| $1 = Canadian Dollar |
1.32 |
1.34 |
-0.02 |
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| Precious Metals |
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Chng. |
| Gold |
$1,174.97 |
$1,168.52 |
$6.45 |
0.6% |
| Platinum |
$947.75 |
$904.75 |
$43.00 |
4.8% |
| Silver |
$17.12 |
$16.38 |
$0.74 |
4.5% |
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| Stock Indexes |
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Chng. |
| BSE |
26,694.28 |
26,559.92 |
134.36 |
0.5% |
| Dow Jones |
19,549.62 |
19,123.58 |
426.04 |
2.2% |
| FTSE |
6,911.92 |
6,708.46 |
203.46 |
3.0% |
| Hang Seng |
22,861.84 |
22,878.23 |
-16.39 |
-0.1% |
| S&P 500 |
2,241.35 |
2,198.81 |
42.54 |
1.9% |
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INDIA MARKET REPORT
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Polished Trading Activity
Dealers
trying to normalize operations after Nov. government demonetization liquidity
crisis. Larger exporters resuming regular activity with full manufacturing
capacity after Diwali break. Smaller dealers and manufacturers adjusting to new
currency laws and lower demand from local jewelers. Steady foreign demand with
U.S. and Israeli dealers looking to fill U.S. orders. Rough trading stable during
De Beers and ALROSA Dec. sales.
Read the Polished Diamond Trading Report |
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Tags:
Rapaport
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