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Israel
By Sonya Burlan
Activity in the Israel Diamond Exchange (IDE) was relatively quiet in November, with dealers expecting stronger trading as the U.S. holiday season approached. Sentiment improved after a large delegation of suppliers participated in the Israel Diamond Week, which took place from November 11 through November 14 at the Diamond Dealers Club (DDC) in New York City. Dealers who spoke with Rapaport Magazine reported that trading at the event was steady but slightly below expectations. However, they hailed it as an important networking opportunity. “This is an outstanding example of DDC-IDE cooperation,” said Shlomo Ashkenazi, founder and owner of S.A. Diamonds, a manufacturer of natural fancy color diamonds. “During the event, I was able to develop important business relations with other dealers and manufacturers.” Most agree that the current business environment is extremely price sensitive and many U.S. buyers attended Israel Week in order to shop around and assess prices. Israeli diamantaires were also looking for goods to buy but they avoided making any impulse purchases. While they focused on sourcing polished in India in previous months, they shifted to New York and Antwerp during November since their Indian suppliers had closed up shop for the Diwali holiday.
The strong turnout and interest at the New York event helped raise expectations for the holiday season, even though some are relying less on the end-of-year sales than in the past. Roy Fuchs, a manufacturer of fancy color diamonds under the company carrying his name, suggested that the various diamond shows that take place during the year have become more important for polished diamond suppliers than holiday seasons. He explained that there is more buyer interest in diamonds between the shows than in the periods leading up to holidays, and manufacturers and dealers prepare their inventory accordingly. “For us, there isn’t a season anymore and we don’t see big demand at this time of the year,” Fuchs said. “Rather, the shows determine the season.” He singled out the three annual Hong Kong shows and the JCK Las Vegas show as the most important trade events to attend. Jeremy Graus, owner of Spectra Gems, specializing in antique pieces and special diamonds, argued that the shows have not been especially profitable for exhibitors in 2013. But he explained that this has been in line with the weakness in the market throughout the year. “Activity is down. It’s not as quiet as it was in 2008, but we usually see higher turnover at this time of the year,” Graus said. He noted, however, that Spectra Gems has sold many more goods in the local market in the past three years than it had previously and that the local market has picked up in November after a relatively slow third quarter. Fuchs suggested that Israel has emerged as a strong dealer center that is very focused on the market. “While Indian diamantaires are also involved in other activity, such as real estate or financing, Israelis can’t compete with that,” he explained. “It’s forced us to be focused and cautious. If the market turns, we are in a stronger position.”
Manufacturers were encouraged by the slight reductions in rough prices that took effect in November even though many said the adjustments at the De Beers sight weren’t far reaching enough. They have been frustrated by the high rough prices in recent months that have resulted in tight profit margins because polished prices remained relatively stagnant. Fuchs suggested that rough tenders have leveled the playing field within the market. “The tender system has made everyone equal,” Fuchs pointed out. He explained that while everyone has access to rough via the tender system, there is greater competition for goods at the tenders and it is more difficult to win the goods you need.
Graus noted that competition had also increased in polished buying and stressed that it has become very difficult to buy to build inventory. Polished buyers have been placing very specific orders. As a result, many Israeli polished dealers have shifted to niche products like fancy color diamonds and are reporting strong demand for these goods for the holiday season. Strong prices for colored diamonds in the market this year have encouraged more dealers to enter this segment. “Fancy color diamonds were a niche until just a few years ago,” Fuchs said. “Since rough for white goods is impossibly expensive to buy, more players went into fancy colors because the margins there are still good. So it’s not that there are more colored goods available, it’s that there are more buyers for that specific market.”Article from the Rapaport Magazine - December 2013. To subscribe click here.
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