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Rapaport Weekly Market Comment

Jul 18, 2019 10:58 AM   By Rapaport News
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Diamond market weak due to summer slowdown and sluggish dealer demand. Manufacturers frustrated by tight profit margins and hoping for rough price reduction at De Beers July sight. Cutters maintaining low polished production due to profit and liquidity squeeze. ABN Amro restricts rough-sector lending out of concern for lack of profitability. Chow Tai Fook FY1Q same-store sales +11% in China, -11% in Hong Kong as political protests and strong dollar impact tourist luxury spending. De Beers 1H production -11% to 15.6M cts., sales volume -12% to 16.5M cts., average price -7% to $151/ct. Belgium June polished exports -20% to $836M, rough imports -21% to $681M.

Fancies: Fancy shapes soft, reflecting slowdown in high-end demand. 3 to 8 ct., I-K, VS-SI1 moving better than rounds as dealers and consumers shift to lower price points. Well-known brands are paying best prices, as are buyers with specific requests. Ovals for fashion jewelry moving well, especially 1.50 and 2 ct., G-H, VS and H-K, SI2. Marquises and Princesses weak despite reduced manufacturing. US sustaining market for commercial-quality, medium-priced fancies under 1 ct. Chinese consumers seeking fancy shapes at better prices. Off-make, poorly cut fancies illiquid and hard to sell, even at very deep discounts.

United States: Polished trading slow, with manufacturers cutting out dealers by selling directly to retailers. Suppliers considering lower offers to maintain cash flow and inventory turnover. Steady demand for RapSpec A3+, 1 to 2 ct., G-H SIs. Overall retail positive in June, despite reported decline in consumer confidence. Jewelry store sales -3% to $2.74 billion for the month, according to government data.

Belgium: Focus on rough ahead of next week’s sight, as July is traditionally a strong month for De Beers and Alrosa sales. Low activity ahead of summer vacations, which are scheduled for the beginning of August. Weak sentiment stemming from declines in other centers. US orders supporting the market. 0.30 to 0.60 ct., G-M, SI2 goods selling well.

Israel: Quiet trading, with rising concerns about drop in sentiment. Manufacturers note tight profitability ahead of De Beers sight. Stable US demand, with steady orders for 1 ct., G-H, VS-SI, RapSpec A3+ diamonds. 0.30 to 0.50 ct. and large stones above 3 ct. soft.Bourse delegation in Shanghai targeting improved business with Chinese traders.

India: Fewer transactions than this time last year, despite strong foreign-dealer presence in Mumbai. Buyers looking for bargains amid rumors of tight liquidity and financial distress. 0.30 ct. diamonds selling in parcels since prices of certified goods have declined. GIA has reduced grading fees for 0.30 by 10%. Solid demand for SI1-I2 parcels. Manufacturers maintaining low polished production.

Hong Kong:
Wholesale and retail markets very slow due to ongoing political protests. Trade war making dealers cautious, even as jewelry retail sales in mainland China remain robust. Buyers moving away from 0.30 ct. Dealers reluctant to purchase in down-trending market. Some opting for 0.50 ct. instead. Soft trading expected at least until September show.
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