Rapaport Magazine

Israel

By Deena Taylor
Colored Diamonds Save the Day

While trading activity in the Israel Diamond Exchange (IDE) was slow to pick up following the summer break, especially in the round diamond segment, colored diamond dealers were more optimistic. They were feeling especially positive about prospects from Hong Kong and other Far East markets, where colored diamonds are being increasingly recognized — and sought after — for their investment appeal.
   “It appears that the Asian markets are waking up and the other key markets are waking up and will make up for the quiet period. People are stocking, people want to have the goods,” said Leibish Polnauer, the president of Leibish & Co., a supplier of fancy color diamonds.
   Polnauer noted that current demand is mostly for fancy color diamonds in IF clarity, a change from the lower clarities the market was buying during the past five to ten years. “It reflects the trend that people want total perfection, goods that might become very valuable down the road in a couple of years,” he said, explaining the investment appeal of flawless fancy colors.

Pink’s Appeal
   Manufacturers noted an increasingly tight supply of pink diamonds, adding that blue stones are extremely scarce now and even harder to source at a reasonable price. Red diamonds are even rarer, with deep oranges also difficult to source. Traders in colored diamonds subsequently have been forced to compete for a dwindling supply of goods, which is driving prices higher.
   “Pink and blue are always going to be in demand as can be seen by the prices,” said Shimon Ben-Mashiah, a managing director of Benma Diamonds, a supplier of fancy color diamonds. “Prices are strong and they are not going down. They have been going up every couple of months and the increase is always a couple of percent more than the previous time.” Each rise is in itself “not too steep an increase,” he added, “but prices are always going up and it all adds up.”
   Polnauer explained that prices for 1-carat to 2-carat intense yellow and fancy vivid yellow stones in high clarities — stones at the center of the engagement ring business — have increased between 5 percent and 10 percent over the past six months. He also noted that the prices for light pinks have advanced ahead of the market so much that their current high prices are dampening their appeal to buyers.
   “In fancy colors, you never have trends because you don’t have the critical mass to make the sales. It’s always a stone here, a stone there,” said Eden Rachminov, the managing owner of Rachminov Diamonds 1891. Still, even though fancy color diamond prices continue to rise and sourcing desirable stones is becoming more challenging, dealers explain that it remains worthwhile to sit and wait for a client or special order because profit margins from these fancy color diamond sales are significant.

Diamond Week Canceled
   Positive sentiment was dashed in Ramat Gan in early September when dealers returned from their summer vacations to find that the bourse had postponed the fourth edition of International Diamond Week due to logistical difficulties caused by the recent conflict with Gaza. The polished trading event, slated to take place September 1 to 4, can always be relied upon to create a buzz among dealers in the exchange.
   Jacob Kattan, the vice president of the bourse, confirmed that the event was called off for both security and insurance reasons. While the resumption of Hamas rocket launches on Israeli territory was not considered a significant threat to visiting or local diamond traders, the adjustments that would have had to be made in the exchange to ensure everyone’s safety and security would have impeded vigorous trading on the bourse floor, Kattan explained.

Asia and New York
   To bolster spirits across the bourse, diamantaires focused instead on the Hong Kong Jewellery & Gem Fair that took place September 15 to 21. They were hopeful that trading activity there would help them more accurately assess global market conditions and gain some insight into polished price levels. (See more show coverage in Prices Soften, Lower Quality in Demand in the Industry section and Hong Kong Stays the Course in the Shows section.)
   A large group of Israeli suppliers traveled to the show since Hong Kong is Israel’s second-largest market after the U.S. Nonetheless, many dealers voiced concerns in advance of the show, citing overly selective order-based buying trends coupled with Indian suppliers’ efforts to reduce the prices they are charging to raise their own liquidity levels.
   The IDE and the Diamond Dealers Club (DDC) of New York plan to hold the third edition of the Israel Diamond Week in New York on November 10 to 13, 2014. DDC President Reuven Kaufman noted that the November schedule for the event will offer jewelry manufacturers, retailers and designers an excellent opportunity to replenish their stock in advance of the Christmas holiday season.

Article from the Rapaport Magazine - October 2014. To subscribe click here.

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