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Israel
By Avi Krawitz
One might have thought the recent polished price stability would raise confidence in the trade, but there was an edgy mood in Ramat Gan in February. Diamantaires, uncertain about where the market was heading, expressed concern about rising rough prices. At the same time, there is something of a dichotomy between the shortage of polished goods on the market and the cautious demand for those same goods. “There is a shortage of polished, rough is expensive and you can’t get your price on the polished,” said Avi Mandler, a partner at Beta Diamonds, which specializes in rounds and fancies of .50 carats to 5 carats. “So you expect that polished prices should be going up but that’s not what’s happening in the field.” Jeremy Graus, owner of Spectra Gems, which specializes in antique pieces and special stones, recently returned from the Miami Beach antique show. He reported that there was a lot of interest to buy goods among Israeli and U.S. diamond dealers at the show but they left disappointed. “It’s an illusion that the goods are there for the taking,” he said. Many dealers and manufacturers who spoke with Rapaport Magazine agreed with that assessment, laying the blame for the shortages on a slowdown in manufacturing in India as well as in Israel. Mandler noted that high rough diamond prices, tight bank credit and the long turnaround time in the polishing process are making manufacturing a difficult, and often unprofitable, business.
Mandler indicated that current rough prices do not correlate with the polished, especially after premiums on De Beers and ALROSA rough increased in February in advance of both companies’ sights at the end of the month. While the two major mining companies were limiting their supply, there has been a shortage of rough coming to the market and that shortage is influencing manufacturers to pay a premium for rough. However, it was not clear if they would be able to continue to do so and both Mandler and Graus noted that there is tight liquidity in the manufacturing sector. “You sense there is a shortage of money in India, and also in Hong Kong,” Graus observed. Mandler proposed that Indian manufacturers stopped using “industry money” to invest in real estate after the property market there stagnated, and are now using the credit they receive from banks to manufacture diamonds, a business that delivers smaller margins. “So liquidity has become a problem, not only in India,
but in Israel, too,” he said.
Mandler expressed concern that Israel’s bureaucratic hurdles continue to challenge the local industry following the raids in the bourse by the tax authority that occurred around this time in 2012. “You get a feeling that we haven’t seen the end of the tax authority and that the 2012 episode is still negatively impacting the industry and discouraging foreign buyers from doing business here,” he cautioned. Graus countered that the Israeli market is still relatively strong and that there has been a slight increase in foreign buyers in the bourse in the past few months. He reported that he started selling more in Israel in the past two to three years. “Israel is a no-nonsense market. We have the goods and give it to the brokers and they sell it, so it works,” he added.
In an effort to attract more foreign buyers to Israel, particularly from the U.S., the Israel Diamond Exchange (IDE) is hosting International Diamond Week in Israel (IDWI) March 17 to 20, encompassing customized rough and polished diamond sales for dealers. The event follows the success of Israel Week held in New York’s Diamond Dealers Club (DDC) in December. Yair Sahar, IDE president, hinted there’s more to come. “The IDWI in March is the first of several customized diamond buying opportunities IDE will be organizing in 2013 with the specific aim to lower the threshold and attract diamond buyers to Israel,” he said. Sahar explained that IDE will initially invite members of DDC, members of the respective bourses in Miami and Los Angeles, and of the Diamond Manufacturers and Importers Association of America (DMIA) to participate in the event. However, IDWI will also be open to members of other international bourses. Israeli dealers are hoping the event will spur greater confidence in the market for the remainder of 2013, especially when compared to the conservative mood that engulfed the bourse in the first two months of the year. Overall, both short- and long-term expectations for this year are mixed. Graus noted that while business is okay, it’s not booming, and that
while sales were down approximately 20 percent in 2012, they were expected to remain about flat in 2013. Seeking out the positive, he added, “February was better than January.”Article from the Rapaport Magazine - March 2013. To subscribe click here.
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