Rapaport Magazine

U.S. Wholesale

By Shuan Sim
Harsh Conditions

Many sellers have been experiencing slow but steady sales and attributed the lackluster month of April to depressed demand, the ongoing tax season and the uncertain buying mood caused by the upcoming general elections. Wholesalers were even apprehensive that the June JCK Las Vegas trade show would be insufficient to lift buying moods — as it usually does — and many had little expectations for the upcoming event. “Looking at the shows so far this year, in Miami and Basel, none of them performed well. I do not think JCK will fare any better than last year,” said Douglas Blank, president and chief executive officer (CEO) of Joseph Blank, Inc., a diamond wholesaler and manufacturer in New York City.

Tough Times
   “Business has been steady but it’s nothing exciting,” noted Andrew Slesinger, owner of Rough Diamond World, a rough diamond importer based in New York City. He added that while a slowdown during tax season is expected, it seemed that this year’s slowdown was more noticeable year on year. “Buyers have had a more steady buying plan instead of buying on an impulse when they get the money,” Slesinger said.
   Marc Nanasi, business development manager at the NEI Group, a diamond jewelry manufacturer in Hackensack, New Jersey, shared that while business has been good for him, many in his line have confided that the past six months had been miserable. “The continued weakness in the oil industry has led business in oil states like Texas, Oklahoma and the Dakotas to suffer,” he said. He commented that he would have goods out on memo and even after months, many of them were simply unsold.
   Some sellers felt that the challenging market conditions have led many wholesalers to close, which could benefit those left standing. “I think business for me is not bad, maybe even a little better than 2015,” said Garry Zimmerman, vice president of Windy City Diamonds, a loose stone and jewelry manufacturer in Chicago, Illinois. “Maybe it’s because there’s less people around now that so many business have closed down as things have gotten tough,” Zimmerman pointed out.

Tighter Inventory
   Popular goods have started to run into shortages, according to diamantaires. The supplies of smaller goods and better colors have started to run low and getting good prices for those goods has become more challenging. GIA-certified and triple EX goods were also running low as demand for those products in the past couple of months has left available supplies drier.
   “While we’re not able to get prices we want or need, we’re able to get the prices we expect,” pointed out Slesinger. “If the goods are within the proper ranges that’s in the market these days, there really isn’t a fight over prices right now,” he said. Zimmerman feels that prices have firmed up and he was optimistic that prices would take a turn for the better. Keith Zimmerman, president of Windy City Diamonds and brother of Garry Zimmerman, felt that the supply-side tightness should be temporary. “I think De Beers and ALROSA might have sold too much rough in the first quarter and that would bulk up the supply again,” Keith Zimmerman speculated, hoping that would allow them to restock their goods at more favorable prices.

Ho-Hum About JCK
   Diamantaires said they were definitely going to exhibit at JCK, though some felt that going to the show has become something they did every year without expectations that it would improve their sales by much. “While I think the turnout will be fine, the question is: ‘How much will they buy?’” wondered Blank.
   As wholesalers prepare for the JCK show in the month ahead, they do not expect the harsh selling conditions to improve. Nanasi noticed a dichotomy in the industry, and pointed out that people who are doing well are doing really well, and those who are not are struggling. “The gap between the top and bottom performers in the industry seems to be widening,” Nanasi said. Garry Zimmerman thought that it might be as late as November, when the general elections are over, before the diamond industry picked itself back up. “Until people know what direction the government is going to take, there will be a huge hesitancy among buyers to part with their money,” Zimmerman concluded.

Article from the Rapaport Magazine - May 2016. To subscribe click here.

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Tags: Shuan Sim