RAPAPORT... Business picked up a bit in August. Average wholesale prices remained almost unchanged although the price for rough has risen in the international market. The impact of the rough price hike on companies has been cushioned by the fact that comparatively slower sales activity in recent months has protected stockpiled inventory from any price pressure and by the appreciation of the Chinese yuan, which helped offset the price gap between the rough in the international market and the polished in the Chinese market.
Statistics from the Shanghai Diamond Exchange (SDE) show that imports of polished diamonds for the local market reached $235 million, with a 70.6 percent increase over the same period of 2006. The main category in the China market — 10-per-carat to 6-per-carat — is a little bit sluggish at present. As a trend in the retail sector, 10- to 15-point diamond solitaire rings are gradually being replaced by 20 points and larger in major cities. Dealers report a shortage of supplies in 40 points up to 1 carat, H color, VS to VVS clarity, resulting in a price increase of 1 to 2 percent in that range.
Online Competition“Market activity is still slow. But demand for certificated 40 to 70 points and carat goods from 1 to 3 carats is very good,” commented Sun Bin, sales manager of Shanghai Brilliant Diamond Co., Ltd. “There’s more and more demand from the internet diamond-selling companies. A considerable proportion of certificated goods sales to consumers have shifted from the traditional retail sector to online channels. Online sales will be a new and increasing area for certificated goods.”
Pan Bin, general manager of Shanghai Lao Feng Xiang International Trade Co. Ltd., believes that traditional retail still has its advantages over the online mode. He said his company’s outlets had good performance, even in the sluggish months.
Lao Feng Xiang’s chain stores sold $40 million in diamond jewelry in the first seven months of this year, a 30 percent increase over the same period in 2006. As one of the oldest local jewelry brands in China, Lao Feng Xiang, along with other famous branded jewelry enterprises, is benefiting greatly from the influence of brands in retail sector competition. But most nonfamous branded jewelers said they have encountered price pressure from the internet and a decline in diamond jewelry sales, especially for those pieces where the main diamond is larger than 30 points.
Shenzhen’s Strength
Suppliers of stars and melees did well in August, with good demand from jewelry manufacturers in Shenzhen in the south of China. It is reported that manufacturers are now extremely busy fulfilling orders before the biggest jewelry fair of the year— the Shenzhen International Jewellery Fair — to be held September 13 to 17.
In recent years, substantial improvements in technique and upgrading of machinery have moved Shenzhen’s jewelry manufacturing industry into a new development stage. It now boasts high standards of craftsmanship and enlarged manufacturing capacity supported by a work force of more than 110,000 employees.
As an important jewelry manufacturing center, Shenzhen accounts for more than 70 percent of local-market-oriented jewelry manufacturing in China, and it has begun to expand its export business, reporting annual export value of $1.2 billion in 2006.
“Business is quite good here if we can find the suitable goods for this market. Jewelry factories buy a large quantity of regular goods, but they are becoming very picky in order to survive in the competition,” a dealer from Shenzhen told RDR. “In the area of small SI and piqué goods, Indian suppliers find their niche with competitive prices and long credit terms.”
In the Shenzhen market, the quality of the small goods is also being upgraded to better cuts and better clarity. The majority of demand now is for SI1 to SI2 goods instead of piqué goods.
The Marketplace• Prices are up by 1 to 2 percent in the 40 points to 1 carat size range, H+, VS-VVS, very good or excellent make.
• Prices are generally stable in the majority of goods sold in China.
• 10-per-carat, good make, VS+/H-I, are selling at approximately $620 to $660.
• 6-per-carat, good make, VS+/H-I, are selling at approximately $830 to $870.
• 4-per-carat, good make, VS+/H-I, are selling at approximately $1,040 to $1,080.
• 3-per-carat, good make, VS+/H-I, are selling at approximately $1,400 to $1,500.
• 10-per-carat, good make, VS+/I-J, are selling at approximately $550 to $580.
• 6-per-carat, good make, VS+/I-J, are selling at approximately $780 to $830.
• 4-per-carat, good make, VS+/I-J, are selling at approximately $900 to $950.
• 3-per-carat, good make, VS+/I-J, are selling at approximately $1,250 to $1,350.
• -1 point, SI/G-I, are selling at approximately $160 to $230.
• -2 points, SI/G-I, are selling at approximately $230 to $290.
• 3 to 7 points, SI/G-I, are selling at approximately $300 to $380.
• 10 points, SI/G-I, are selling at approximately $360 to $450.
• 15 points, SI/G-I, are selling at
approximately $490 to $590.
Article from the Rapaport Magazine - September 2007. To subscribe click here.