RAPAPORT... In recent years, the natural fancy color diamond market has experienced an upsurge in popularity among consumers yearning for rare and one-of-a-kind diamond purchases. Steady growth in demand, diminished supply and increased prices have all contributed to transforming the fancy color market from a speculative and risky business to a lucrative and attractive niche.
Tough HuntingWithout a central supplier, sourcing rough is “extremely tough,” said I.Z. Eliezri, president of Coldiam Ltd, specializing in natural fancy color goods. Diamantaires must hunt for rough and are often forced to go downstream to purchase goods, especially for the scarcer pinks, blues, reds and greens. Rough supply is inconsistent and most purchasing is done on a single-stone basis. Describing the hunt for rough, Eliezri noted, “It is impossible to plan because you never know what can be sourced. It is simply a matter of opportunity and luck.” Meir Dahan Shay, president of Pekard Diamonds Ltd, manufacturer of fancy colors, searches the world over for fancy rough, from the remote jungles of Brazil, to Africa, Venezuela and Belgium. “Even in the jungles of Brazil, I can ‘hunt’ for two years before finding a good-quality red stone and even then, after polishing, often the shade changes,” he said. Brown diamonds are easier to find and considerably cheaper than rarer counterparts. According to Dahan Shay, Australian mines have produced an abundance of browns and “champagnes,” which were subsequently bought mostly by Indian manufacturers, who polished the goods and put them on the market at a less expensive price of $500 to $1,500 per carat — compared with yellows at approximately $6,000 per carat.
Market by ColorThe core buyers in the natural fancy color market are investors, collectors and multiple diamond owners in the United States, Asia and Europe. Pinks, blues, greens and reds are generally affordable only by the highest-end buyers who are less affected by economic downturns, said Shaul Cohen of Novel Collection, manufacturer of natural fancy colors in all sizes, shapes and colors. Yellows, which are less scarce, are generally purchased by middle- to upper-range customers, depending on the intensity of the color.
“Light yellows are most frequently purchased by affluent, yet price-sensitive consumers, while fancy yellows and fancy intense yellows are purchased by elite consumers who are fashionable, but will not compromise on quality,” explained Eden Rachminov, president of Rachminov Diamond, a manufacturer specializing in natural fancy color diamonds. Rachminov noted that vivid yellows are often bought as a second fancy color diamond and usually by a “husband with a collector’s tendency.” Fancy and fancy intense are strongest in demand, while fancy light and vivid are slightly less in demand. According to Yossi Polnauer, ecommerce manager at Fancy Diamonds Leibish Polnauer & Co., vivid yellows are comparatively slow-moving, due to their higher price, as compared with intense yellows. In pinks, the vivid colors in smaller sizes are very firm, but the stones are extremely difficult to find, Polnauer maintained.
Trends in shapes and sizes are less prevalent in the fancy color market as color and beauty are the most critical elements for selecting a fancy color, said Cohen. “Demand is according to budget and, given the economic opportunity, consumers would choose to purchase the rarest and most expensive color,” he added.
By Market
Demand in Asia is strongest for exotic colors — greens, pinks, blues and browns — in better makes and qualities, according to Oren Seren, an owner of Seren Diamond Ltd., a manufacturer and dealer of natural fancy colors specializing in 5 carats plus, in business for more than 14 years. “The market in the Far East is very selective for the more expensive items and we, as manufacturers, must be sensitive to market vibrations and adjust our production accordingly,” he said. The U.S. market will accept the entire range, from the lower-grade makes and clarities of SI and I1 to VS, VVS. Seren attributed the growing demand in the U.S. market for all colors to the rising awareness of the fancy color market. Currently, demand in the U.S. is especially strong for yellows and pinks. According to Seren, fancy yellows are extremely high in demand, particularly from 2 to 10 carats in SI1+.
A supplying company’s professional conduct and expertise is of utmost importance in the fancy color market, particularly because there is neither a price list nor grading certificates to effectively determine the quality of the color. “The certificate provides direction but does not fully represent how the diamond looks,” said Cohen. In order to determine the value of the colored diamond, the buyer must, in person, examine the luster and color of the diamond, especially for the more expensive pieces.
The ultimate price of a fancy color diamond is determined by supply, cost of rough, demand and intensity of color and clarity. Fancy color prices have steadily risen in recent years, along with a marked decline in the supply of natural fancy colors. In Israel, there are only a handful of companies dedicated to fancy colors, as it is highly specialized and requires players with higher capital capacities for sourcing, in addition to expertise in cutting and marketing.
Looking to the future, fancy color dealers anticipate increased demand and higher prices for fancy colors as natural resources are depleted and consumers become more aware of the unique beauty and value of the fancy color diamond.
The Marketplace• Market activity is slow.
• Demand is steady for fancy colors
2 to 10 carats, VS.
• Demand is strong for deep pink, blue and red.
• Prices are strong for rough and polished fancy colors, excluding browns.
• Demand is strong for fancy yellows, pinks and blues in 40 points+ and there are shortages.
• Greens and reds are extremely hard to source.
• Demand is solid for radiants, pears, rounds, cushions and emeralds in all sizes.
• Demand is weak for hearts and marquises in fancy colors.
• Demand is steady for Asschers and ovals in fancy colors.• There is steady demand for heart shapes, pear shapes, marquise, oval and emerald cuts, especially in 2.5 carats+.• There are heavy shortages in 10 carats+ rough, accompanied by high prices.
Article from the Rapaport Magazine - October 2006. To subscribe click here.