RAPAPORT... Business was showing signs of improved strength and stability in March, though diamond wholesalers were quick to point out that sales continue to be well below levels seen in 2007 and 2008. Tanya Nisguretsky, president of Illuminex Diamonds in New York City, explained, “Sales have definitely increased since the beginning of the month. But the price increases aren’t helping. Sales are nowhere near where they are supposed to be.”
Sales Up
Moises Mareyna Rosenberg, president of M&M Diamond Imports in Houston, Texas, commented, “The market is getting stronger. Business is better overall. The clients are adjusting to the market price. The range of asking and selling prices has reduced.”
Sam Frank, president of Leo Frank & Sons in Troy, Michigan, observed, “Things are starting to move. We’ve got a full memo book. We can feel it and we are getting results. Big stones, larger than 4 carats, are starting to move as well. We are getting more calls for those stones and some sales.” He added, “It’s busy enough that I’m going to add more salespeople this year. Unfortunately, these jobs are not going to be in the Midwest. I’m looking into other regions.”
Speculation
Many warned about a speculative pricing environment. Nisguretsky stated, “Honestly, I feel the price increases are due to buying and selling from dealer to dealer. We’re embarking on the mistakes of a few years ago. That concerns me. I have companies from Israel coming to me and asking me if I have goods to sell.”
Ran Amiel, president of Globe Diamonds in New York City, described business as “Good, but not because business is booming. There is more demand between dealers than from retailers. It’s not the mom-and-pop and regional stores.”
Frank recognized, “I am being careful about prices, but if you want the sellable goods, you are going to have to pay a little more.”
Asia’s Impact
Another issue is the matter of prices being influenced by foreign markets, a scenario to which U.S. diamantaires are unaccustomed. Avi Simkhai, director of Kanton Diamonds in New York City, conceded, “Overseas people are coming here to buy for their companies. The U.S. market is not doing well at all. People are still cautious. Prices have nothing to do with us. They have to do with other markets. Some people don’t understand the things that are happening globally. India has a developing middle class and so does China.”
Simkhai called locating supplies “definitely a big issue for us,” noting that in the past, business slowdowns were a buying opportunity because prices were lower. “But not this time,” he continued. “Business is soft, but we cannot even buy cheap because in other markets, people are buying more. So U.S. traders are faced with a new situation. As Americans, we lost our luster in determining prices. I feel a little irrelevant as other markets have more of a say.”
Amiel said that the rough market is being driven by similar factors. “It is impossible to touch it. We cannot compete with the Indians. They pay anywhere from 5 percent to 15 percent more than we want to pay. I hear the government is giving them money. It’s a very strange market.”
Rosenberg remarked, “What’s going to happen is pretty much out of my hands. Today it is more about Asia and the amount of wealth that is in China.” However, Amiel cautioned that overseas buyers should be equally wary of speculation. “I think that if the economy does not change, demand will not change. The Indians can buy as much as they want, but they can’t eat the stones. They can buy and hold, but we saw what happened with that before. Maybe they have some demand from their local market, but I doubt it.”
Amiel summarized the impact of higher prices: “Last year, it was tough to sell. This year, it will be tough to buy.” Nisguretsky seemed to concur, saying, “I’m a buyer and I’m so reluctant to buy right now. I find the prices to be unrealistic. I don’t think our customers are ready and willing to pay them.”
Rosenberg saw the upside, reasoning, “Now, prices are stable enough to allow people to sell without losses. That makes it easier.” Amiel is utilizing the same strategy. “I’m trying to take advantage and sell the old stuff that has been hard to get rid of.”
The Marketplace
• ¾-carat diamonds in bread-and-butter qualities are meeting moderate demand.
• 1¼-carat G-H, SI diamonds are in demand, but can sometimes be hard to find.
• Most sales are for diamonds with colors in the range of F-H and clarities from SI1-SI2.
• Retailers seem increasingly willing to pay for VS goods.
• Good-quality radiants, Asschers and emerald cuts are becoming scarce due to a lack of manufacturing.
Article from the Rapaport Magazine - April 2010. To subscribe click here.