RAPAPORT... Israeli diamantaires appeared satisfied with current polished market conditions as prices firmed around the various trade shows that took place in March. However, their approach to the different events provided some insight into where their priorities lie as they attempt to capitalize on the strength of the Far East market.
“Southeast Asia and Mainland China are surging and there is no doubt that China is the second-biggest market for polished diamonds worldwide, even if the official numbers are debatable,” said Jeremy Medding, a partner at EMA Diamonds, which specializes in 0.10-carat to 3-carat stones in all colors and clarities. “We see it in our sales and at other companies. Other markets in the U.S. and Japan are still sluggish.”
Higher Prices
Positive reports from the Hong Kong International Jewellery Show bore testimony to Medding’s observations. Yossi Yogev, a partner at D.N.S. Diamonds, a specialist in lower-color and lower-clarity stones in all sizes, noted that both the Hong Kong show and the Bangkok Gems & Jewelry Fair, which took place the previous week, were strong events. In Hong Kong, he noted, demand was led by Indian buyers.
Yogev reported that there was good demand in Hong Kong for 1-carat to 2-carat, H-I and K-M, VVS goods. Medding qualified that the show was strong in the 0.30-carat to 1.99-carat sizes but weaker than hoped for in 2 carats to 3 carats. Daniel Yakubov, marketing manager at Yakubov Group, which has diamond manufacturing and retail jewelry operations, stressed that clean Triple EX goods were very hot there.
All Israeli manufacturers who spoke with RDR agreed that there was a clear firming of prices in Hong Kong, particularly in the 1-carat to 2-carat sizes. “Buyers bought at the new prices, and even if sellers didn’t get the prices they expected, they sold, and were busy,” Yogev said. Medding added that customers realized they needed to pay higher prices if they wanted to get the popular polished goods they were after.
Changing China
Both Medding and Yogev noted a shift in China over the past year toward lesser-quality goods, even if the better items still define the market there. Yogev said he has intentionally tried to push more SI, or “traditional U.S. goods” to Chinese customers. “They’re more accepting than before, but it’s still not easy,” he said.
Medding reported that China has been using more SI clarity stones in the past year, which is helping firm up prices for these items. He took this as a sign of a maturing market but added that the trend also indicates that the perception of diamonds in China is changing. More importantly, however, he explained, the trend signifies the inability of the market to source VS goods to sell there.
Having exerted a great deal of energy on Hong Kong, the Israeli market appeared less motivated by BaselWorld. The Israel pavilion at Hong Kong, hosted by the Israel Diamond Institute Group of Companies (IDI), featured 60 companies, including 20 first-time exhibitors — and there were an additional 20 Israeli companies exhibiting outside the IDI area. In comparison, fewer than 20 companies comprised the IDI pavilion at BaselWorld.
Medding, whose company attended BaselWorld, noted that the event caters to a niche market, which is not suitable to everyone. Yogev added that the expense involved in traveling to the trade shows means that one has to choose the best strategic opportunities.
Steady Growth
Yakubov, who did not exhibit at the Basel show but had representatives there, noted that Europe remains weaker than other markets, “although it is gradually showing improvement.” He added that since the show season in March 2009, all markets have gradually improved, which was evident in the contrast with this year’s event. “Since March 2009, we’ve seen a constant uptrend, which has resulted in a better mood both in Israel and abroad,” he said. “A better mood makes for better business.”
While stressing his concern for the “crazy” rough market, Yakubov said that polished was showing healthy trends at the moment, dismissing the possibility of another downturn. “I expect that polished will soften a bit in the near term, and then show some big increases,” Yakubov predicted.
Medding warned that the market needs to be cautious, given the macroeconomic environment and debt levels in the U.S. and the U.K., but agreed that the polished market had responded in a healthy manner in the past year. He added, however, that speculation on rough has caused prices to rise, which is having an effect on polished, and could soon impact sales.
Medding stressed that the current trading environment calls for stability. “We prefer to see a steady market rather than the roller-coaster ride that we’ve been on for the past two years,” he said. “It was out of character for the industry and to the industry’s detriment. People need to be more careful with their purchases.”
The Marketplace
• The mood in the Ramat Gan bourse was more optimistic after the Hong Kong show.
• Demand is good for 1-carat and 1.50-carat sizes.
• Demand is strong for collection 1-carat, D, IF-VS goods.
• J-M colors are also in demand.
• Cushions are growing in popularity.
• There is lingering concern about high rough prices.
Article from the Rapaport Magazine - April 2010. To subscribe click here.