Israel’s diamond trading activity improved in November,
injecting some much-needed confidence into the market, but also leaving many
wondering when stability will set in. “The market was quiet but then suddenly
it woke up. It’s impossible to understand,” said Ami Parter, of Belisdiam Ltd.,
a specialty manufacturer of larger diamonds. “I think the Chinese were holding
back orders to assess what was happening in the market and now they are
starting to prepare for the Chinese New Year.”
However, Parter noted that it’s not just the Chinese buying
goods; American buyers also have become more active. Yoni Serrouya, owner of
PDD2000 Ltd., a specialist in better-quality diamonds in 1-carat sizes and up,
added that the U.S. market is, in fact, performing better than Asia at the
moment. He noted that people in Hong Kong are confused and worried about the
global economic situation and still lack the confidence to buy.
Diamond Exchange Busier
Traders reported a strong
presence of American buyers in the Israel Diamond Exchange (IDE) in
mid-November, helping some dealers pick up new customers. Given that trading
activity improved in Israel, Serrouya said he was confident that other centers
would follow. “Usually, when there is a recovery, it starts with trade between
dealers, and we have seen this in the past two to three weeks in Israel,” he
explained. “So it will take a month or two for the retail centers to catch up,
but I believe that, come January, the positive cycle will start again.”
Serrouya, whose company
sources polished stones in India and the U.S., noted that while the U.S.
has become a supplier of goods to his company in the past few years, in
November, it was not selling so easily. This he took as a sign that the
domestic U.S. market may be awakening. “In my experience, when the Far East is
down, the U.S. is up, and vice versa,” he added. “So it looks like the year-end
holiday season will be okay. But I’m not a prophet – you can never tell.”
Volatile Reality
Steve Tugendhaft, owner of 2G Diam, which buys and sells
certified polished diamonds, stressed that the recent volatility in the market
has made it difficult to forecast short-term trends. “Historically, diamond
trading has been relatively stable, but this year it changed. It became more
like the stock market, where anything can happen each day,” he explained. “The
volatility we are seeing is not normal. The market has never been so dynamic.”
Tugendhaft observed that globalization of the industry and faster
access to information also have influenced the change. He stressed, however,
that the volatility is problematic for
diamantaires because the market, and prices, often change between the
purchase and sale of a diamond, while retailers maintain their price points
pretty consistently. The result, he noted, is that most in the trade have been
scared to buy extra goods. “Now it’s the Christmas season, so you want it to be
good and if you’re at the right price, you can sell. But the market is still
driven by specific demand,” Tugendhaft
said.
Most diamantaires who
spoke with Rapaport Magazine reported that there is a shortage of SI goods in
the market, specifically rounds, princesses and cushions, which are popular in
the U.S. Parter noted that prices strengthened for these goods within the space
of a week around mid-November as demand rose.
Cause for Concern
Still, there is an air of caution within the bourse as the
global economic environment remains on edge, while developments within the
industry have also added to the insecurities. Parter stressed that the recent
decision by the Kimberley Process (KP) to allow rough diamond exports from
Zimbabwe’s Marange fields is cause for concern as there may yet be a consumer
backlash against the industry due to the human rights issues that have plagued
these mines in the past three years.
Furthermore, while many
viewed the recent Anglo American
buyout of the Oppenheimer’s 40
percent stake in De Beers as an Anglo vote of confidence in the industry, others expressed some concern for the
long-term implications of the deal. “We
don’t know how De Beers will operate in
Botswana under Anglo,” Parter said. “I do believe that rough prices will
increase because it’s now a new game and they need to make a return on their
investment.”
While these concerns cast
something of a shadow over the industry, most were relieved that November
brought renewed activity to the market after the quiet experienced in the prior
months. The downturn since August, or the “mini-2008,” as Serrouya termed it,
was a reminder that the diamond market is very dependent on the global
economy. “It’s not that the diamond has become a commodity, but it has moved
closer to being one,” Serrouya said. Tugendhaft agreed, adding that “Everything
could change within two weeks.”
The Marketplace
• Dealer activity improved in the polished market, while
rough trading remains weak.
• The global economy remains a primary concern for Israeli
diamantaires.
• There is a shortage of round, cushion and princess cuts in
SI goods.
• Fancies are in demand because the manufacturing preference
for rounds has created a shortage.
Article from the Rapaport Magazine - December 2011. To subscribe click here.