RAPAPORT... Demand has been keen since the beginning of September in preparation for the October holidays in China. Overall prices of polished diamonds have increased 3 to 5 percent on average compared with the previous month; demand is hot for half pointers and stars, with an approximate 7 to 8 percent increase in price, and carat goods are repeatedly reported in short supply.
Shenzhen International Jewellery FairThe Shenzhen International Jewellery Fair, held from September 13 to 17, is the largest of its kind in Mainland China, with about 600 local jewelers as well as 300 representatives from approximately 25 foreign countries exhibiting. With a large exhibition area of almost 600,000 square feet, nicely designed and decorated, the fair sent optimistic signals for business in the rest of 2007, although there were fewer professional visitors and buyers than expected by some of the diamond exhibitors.
“There’s about a one-week time gap between the Shenzhen Fair and the Hong Kong show; some of our local Chinese clients will visit us in Hong Kong instead of at this one,” said one diamantaire.
Inflation in China
The consumer price index (CPI), as a gauge of inflation, rose 6.5 percent in August, hitting the highest level in nearly 11 years, after a 5.6 percent increase the previous month, the National Bureau of Statistics announced. The hike is well above the government’s target of 3 percent for the whole year.
As a consequence, sales of luxury products, like automobiles and real estate, surged with the inflation. Consumers are buying valuables ahead of their planned schedules because of inflation fears. According to the Union of National Passenger Car Market Information, passenger car sales across the country rose 30 percent in August compared to the previous year.
There are no comparable statistics for jewelry sales yet, according to the statistics bureau, but sales of all kinds of jewelry rose 37 percent in May on a year-to-year basis.
Observers pointed out that diamonds, especially the big certificated stones, are seen as a valuable investment against inflation. The continuous appreciation of the Chinese yuan also makes diamonds more affordable in China.
Indian Operations in China“Will China eventually be a threat for Indian diamond business?” is a question that has been raised in the Indian media.
The picture in the China market is that Indian diamantaires are the majority of suppliers in the market. The Indian merchants play an important role at the Shanghai Diamond Exchange (SDE) — the only official channel for importing diamonds — and account for 41 of its 206 corporate members. There are three Indian companies on the list of the SDE’s ten biggest importers for the first half of this year. The number of Indian merchants setting up offices in Shanghai has increased rapidly in the past two years, and several more are expected to enter the market in the near future.
No one is asking, “Will India be a threat for China’s diamond business?” As a matter of fact, China has become an open market for all diamond suppliers since the government exempted the import duty for both rough and polished diamonds and adopted a favorable 4 percent value-added tax (VAT) rate for diamonds, down from 17 percent.
In the diamond manufacturing sector, where India and China are often considered competitors, big operations have been set up in China by Indian investors, like Eurostar, Rosy Blue, KGK and others, combining the advantages of both countries.
When asked the advantage of shifting some manufacturing from India to China, Andy Abhishek, the general manager of KGK Shanghai Company, said that manufacturing of the better and bigger stones benefits from the more organized labor force and better infrastructure in China. KGK has set up diamond and jewelry processing operations as well as jewelry retailing outlets in China.
The Marketplace• 10-per-carat, good make, VS+/H-I, are selling at approximately $630 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 $1,250 to $1,350.
• 10-per-carat, good make, VS+/I-J, are selling at approximately $560 to $610.
• 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 $920 to $1,200.
• 3-per-carat, good make, VS+/I-J, are selling at approximately $1,150 to $1,250.
• -1 point, SI/G-I, are selling at approximately $190 to $230.
• -2 points, SI/G-I, are selling at approximately $270 to $310.
• 3 to 7 points, SI/G-I, are selling at approximately $320 to $380.
• 10 points, SI/G-I, are selling at approximately $400 to $480.
• 15 points, SI/G-I, are selling at approximately $530 to $590.
Article from the Rapaport Magazine - October 2007. To subscribe click here.