|
|
Israel
By Avi Krawitz
Given the low profit margins and tough competition from other centers, local polished suppliers praised the U.S./International Diamond Week that took place in the bourse in Ramat Gan in mid-March. More than 200 prospective buyers from 15 countries participated in the event, with around 190 Israeli companies exhibiting on the bourse trading floor. Buyer delegations attended from the U.S., Italy, Iceland, the U.K., Belgium, South Africa, India, Hong Kong, Turkey, Japan, China, Spain, Canada, Russia and Switzerland. In opening the event, Varda Shine, executive vice president of global sales at De Beers, stressed that in the current volatile global economy, such initiative and innovation were vital to keep Israel at the forefront of the global trade. Yair Sahar, president of the Israel Diamond Exchange (IDE), which organized the event, added that similar future events will be central to IDE’s strategy to help grow the industry in the next few years. “This event is putting us on the front line of the global diamond business,” Sahar said. The only criticism of the event was that some of the buyers were too reserved and unwilling to pay premium prices. Josef Frei of Josef Frei Ltd. said that in addition to providing suppliers with a strong selling opportunity, the event also gave Israelis in the bourse an opportunity to buy goods that are in short supply from other Israelis who brought these goods in for the event. “During the week of the show and in the week following, these goods are unlikely to leave the country, which gives us an advantage in finding goods we need after the Passover holiday,” he explained, adding that some Americans attending the event were also looking to sell goods.
In addressing the bourse audience on the state of the industry, Martin Rapaport, chairman of the Rapaport Group, explained the price of rough was higher than that of polished due to easy credit facilities in India, the phenomenon of round-tripping and irresponsible banks financing rough purchases. He warned diamantaires not to become hooked on bank loans since it was clear that interest rates, particularly in Europe, will eventually start rising. “Expect bank liquidity to tighten up, expect volatile demand and prices and expect rough diamond prices to continue being manipulated,” Rapaport advised. “Expect higher interest rates and tight money, don’t manufacture unprofitable rough, and support small businesses because they — not large, fat companies — can bring about change.”
The mood among Israeli diamantaires arriving at the U.S./International Diamond Week activities was already upbeat because they were coming from a relatively positive Hong Kong International Jewellery Show. “The show was positive as it was the first time in a long time that we had quality buyers from both China and India,” said Emanuel Namdar, managing director of Schachter & Namdar Asia, which specializes in .30-carat to 4.99-carat stones. “Usually, it’s one or the other, but the two main markets from Asia were present this March.” Jeremy Medding, a partner at EMA Diamonds, which specializes in .10-carat to 3-carat stones in all colors and clarities, noted that there is currently decent demand from various individual markets but added that the market as a whole is not booming. He explained that the range of goods in demand remains a bit narrower than hoped for. Medding reported that demand was focused on diamonds in the range of .30-carat to 2-carat, VS-SI goods, with some spillover to other areas, including seasonal demand for I1 and I2 clarity goods in the U.S. He reasoned that .30-carat to .40-carat stones have been hot in the past couple of months because prices were previously too low and have now bounced back to a more realistic level. Namdar gave a similar range of in-demand stones but argued that even VVS1 goods were selling when buyers realize that prices for some of these goods are attractive compared to VS stones.
Manufacturers are still operating at well below capacity, causing shortages. “There’s a shortage of supply of the right types of goods,” Medding said. “There has been less production because demand fell in 2012 and, even though demand has improved so far this year, the volumes aren’t back to where they were in 2011.” Medding expects it will take some time before manufacturing returns to significantly higher levels since most cutters are hesitant to manufacture rough at any price. Even though manufacturing profit margins have improved “from making a loss to a small sustenance,” he questions whether sustainable profitability has returned to the manufacturing sector. Rough prices remain one step ahead of the polished, according to Namdar, so the current improvement in polished prices is justifying rough that was bought a month ago. “And I don’t know what the next reaction will be in the rough market,” he said. “If next week rough is more expensive, even at today’s higher polished prices, it will be hard to make money on manufacturing.”Article from the Rapaport Magazine - April 2013. To subscribe click here.
|
|
|
|