Rapaport Magazine

Israel

By Avi Krawitz
Positive Signs Amid Tumultuous Global Market

The mood in Ramat Gan was mixed during September as dealers tried to keep up the trading momentum that was created at the U.S. and International Diamond Week. However, they had varied success in their efforts.
   “The diamond week was excellent and we sold a lot,” said Ami Parter, director of Belisdiam Ltd., a manufacturer and polished dealer. “But after that week, trading activity softened, partly because of the weak global market and because people are uncertain which direction the market is heading.”
   The diamond week, which took place the last week of August, spurred confidence in Israel in advance of the Hong Kong show, with local suppliers holding firm on their prices. “People are trying to buy nice goods for the right price,” Carl Edelstein, owner of Edelstein Diamonds, a U.S.–based importer of fine diamonds, said during the diamond week. “We had an easier time selling than buying goods. We actually had a hard time buying, which I guess is positive news for the market.”

Hong Kong in Mind
   However, trading slowed the following week as the bourse closed for the Jewish New Year holiday of Rosh Hashanah. In fact, additional Jewish holidays later in September kept trading sporadic throughout the month. Besides, dealers had Hong Kong on their minds as they ushered in the New Year. A large number of Israeli suppliers — as well as buyers — traveled to the Hong Kong show, hoping they could maintain the same price stability seen during Israel Diamond Week.
   Hong Kong is Israel’s second-largest market after the U.S. and the September show presents a strong networking opportunity for Israeli traders. However, some decided not to travel this year due to the Yom Kippur Jewish holiday falling during the show. Still, the show represents an important indicator of trading and prices for the Israeli market.
   “We’re waiting for the results from Hong Kong. If prices hold, there is hope on the horizon but if prices drop, a crisis may await us,” Parter said. He expressed caution because prices had softened in the week prior to the show and Far East buyers were pushing for higher discounts.
   Many in Israel were also aware that weaknesses in other centers were impacting global trading, particularly in India, where the manufacturing sector was facing constrained liquidity. Tight bank credit, the strong dollar and high rough prices weighed on confidence in the manufacturing sector.
   Nurit Rothmann and David Harary, co-founders of Bluedax, an online rough broker, noted that sentiment in the rough market, both in Israel and abroad, was weak following the August sight, with very little trading on the secondary market. They expect De Beers will have no choice but to reduce prices at the next sight in October. “Rough prices are high and dealers are giving long-term credit in order to make a bit of profit on the boxes,” Rothmann and Harary explained. “Sightholders refused a lot of goods so there are not a lot of goods around at the moment.”

Holiday Hopes
   On the whole, dealers dismissed suspicions that there were widespread shortages of polished goods in the market. Some noted a shortage of certified .30-carat to .40-carat, G to I, VS to SI goods, which have been in strong demand throughout 2013. They’re hoping that jewelry retailers in the Far East and the U.S. have sufficiently depleted their inventory to spur buying in advance of the fourth-quarter holiday period.
   Parter remains optimistic. While noting that the Far East is still cautious and India is weak, he stressed that demand from the U.S. remains steady. “There is caution out there and everyone is afraid that the Indians will dump goods,” Parter said. “But one feels that the U.S. has improved. Christmas can help, especially if market conditions remain normal and there are no unexpected economic surprises. Christmas will be good as long as Wall Street behaves.”

NYC’s Israel Diamond Week
   Reuven Kaufman, president of the New York Diamond Dealers Club (DDC), agreed, adding that the larger, important chains in the U.S. are already placing nice orders for Christmas. That’s good news for U.S. and Israeli diamantaires, who, like Parter, are pinning much of their hopes for a successful year on the closing season. To spur trading for the holiday, Kaufman and Yair Sahar, president of the Israel Diamond Exchange (IDE), announced that the second Israel Diamond Week in New York will take place from November 11 to 14.
   “When Israel came to New York in 2012, it was a tremendous success. We had almost the whole New York industry coming down to buy and sell goods,” Kaufman said. “It was so busy you couldn’t move. Israelis were ecstatic and so were the New Yorkers. We expect to replicate that success this year.”

Article from the Rapaport Magazine - October 2013. To subscribe click here.

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