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Israel
By Avi Krawitz
As diamond trading remained sluggish during May, diamantaires looked to internal and external causes impacting the market. Some blamed seasonal factors since trading tends to slow down in April and May, while others pointed to an underlying weakness in the global market. “You can’t just talk about Israel, because business is slow everywhere,” said Avraham Eshed, president of Eshed Diam Ltd., which specializes in large diamonds and fine emeralds. “It’s an election year in the U.S. and that influences consumers to be more cautious and therefore also affects sentiment in the diamond market.” Eshed also noted there is activity, but demand is for specific items such as SI-clarity diamonds earmarked for the engagement ring market. Arnon Juwal, vice president of S. Juwal & Company, a manufacturer of 30-pointer to 3 carat-plus diamonds in all shapes and qualities, agreed, adding that polished suppliers are still holding a large volume of old stock that is difficult to move. He urged the mining companies to maintain a balance by not bringing too much rough to the market and keeping rough prices stable. That’s especially true since on the polished side, no one is buying without having a client in mind, Eshed reported. People are not buying for stock and a lot of goods are being sent out on memo, he added, estimating that about 85 percent of the goods released on memo are being returned. Polished dealers and manufacturers have therefore been streamlining their operations to cope with the slower market and are more cautious regarding who they do business with. Juwal observed that dealers reduced their operations because they’re reluctant to give credit to others and they’re not getting credit from the banks. “The Israeli industry has a challenge with bank credit and bankruptcies are occurring, so the number of people in the industry is shrinking,” he said. According to Yoram Dvash, president of the Israel Diamond Exchange (IDE), the exchange is focused on influencing the banks to be more supportive of the industry by raising credit lines. In meetings with the banks, he stressed the Israeli diamond sector is very prudent in its business decisions and focused on diversifying risk and increasing trading opportunities. “We must secure more credit lines in order to expand the business,” Dvash said. “Let us remember that the diamond trade does not only employ tens of thousands in diamond centers, but millions of people around the world are dependent on the success of the diamond trade.”
Confidence in the sector was set back as murmurs of potential bankruptcies grew louder when Israel’s mainstream press reported in late April that diamond dealer Hanan Abramovici owed more than $60 million to the local trade. IDE acknowledged it is investigating a complaint brought by several bourse members against Abramovici. Eli Avidar, IDE’s managing director, explained such cases resulted from the fallout of the global economic slump over the past four years, which has influenced diamond companies to act contrary to regulations. “The Israeli diamond industry has been undergoing difficulties in the past several years and unfortunately we have seen cases where some factors have exploited this situation,” Avidar said. “The IDE Board will take stringent measures to investigate this case, including turning to law enforcement authorities.” Abramovici was arrested and is reportedly cooperating with police in the investigation. Eshed argued that the case did not impact overall sentiment as most dealers were already aware of Abramovici’s troubles before the story hit the mainstream press. Rather, Eshed appealed to diamantaires to be patient as he is confident the market will pick up again. “I’m comfortable with my inventory because I’m confident the market will come back,” Eshed said. “The U.S. election will pass, China is going through a transitional phase and will bounce back, and the industry has realized that it needs to invest in marketing.” “The bottom line is there is a lot of money in the world and there are still a lot of people who want to by diamonds,” Eshed added.
The IDE held its third International Rough Diamond Week in May, featuring tenders and auctions by De Beers, ALROSA, Rio Tinto and Tzoffeys 1818. Among the drawing cards, organizers showcased Rio Tinto’s 187.7-carat Diavik Foxfire, claimed to be the largest rough diamond discovered in North America. Other important stones presented for display include a 32.33-carat vivid pink, an 18.35-carat intense pink and a 245.42-carat, D color diamond. “We have made a great effort over the past several years to attract major diamond producers to Israel, to increase and diversify rough supply here, and the Rough Diamond Weeks have been an essential element to our strategy,” said IDE’s Dvash.Article from the Rapaport Magazine - June 2016. To subscribe click here.
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