After a robust spring, the U.S. wholesale market has entered
the summer doldrums. “May and June
were strong, and JCK Vegas was a good show,” recalled Raphael Maidi, president
of Maidi Corporation, located in New York City, which specializes in fancy
color diamonds. “The summer so far, however, has been a bit quiet —
but this is usual for this time of year.”
Many are grateful that the current slowdown is not more
pronounced, given the stagnant domestic and global economies. “Sales for us
were slightly on the slower side, but we are not displeased given the
circumstances — a slower economy domestically and abroad — which seems to be
affecting consumer confidence,” said Jai Bhansali, vice president of sales at
Diagem, a loose diamond wholesaler in Chicago.
ROUND PRICES DROP
Though the slowdown in the market was predictable, many were
surprised at the price softening that started in July. “After the Vegas show,
there was some pressure on prices,” noted Maidi. “But now, there are
corrections — prices are down 5 percent to 7 percent for rounds.” These price
decreases, however, have not expanded beyond rounds. “While prices have
softened in rounds, in fancies, there is no reduction,” said Amish Mehta,
president of New York City–based loose diamond and jewelry manufacturer Amipi
Inc.
In fact, price pressures for fancies are pervasive. “Prices
are strong for fancies for everyone, and fortunately, the price decreases on
rounds haven’t hit us yet,” said David Wiener, vice president of Harry Kotlar
& Co., a Los Angeles–based manufacturer of platinum and diamond jewelry.
POPULAR ITEMS
In terms of loose stones, there are a few cuts that are
doing exceedingly well this summer. “Rounds, cushions and princesses are really
hot-selling items in almost all colors and all clarities,” observed
Shakeel Japanwala, manager of the certified diamond division of New York City’s
C.D. Diam.
Colored diamonds are also strong sellers. “Yellows and pinks
are doing exceedingly well,” noted Maidi, adding “sizes that are selling in
pinks range from 1 carat to 5 carats, and in yellows from 1 carat to 10
carats.”
And in terms of jewelry, consumers are going after larger,
more expensive items. “Rings and earrings are selling well in 3 carats to 5
carats,” observed Wiener, adding that high-end spending in the jewelry market
is strong as affluent consumers search for unique pieces. “It is likely the
wealthy will keep on spending, with so much cheap money around, while the
lower-income consumers might be more challenged as we close out the year,” he
predicted.
Wholesaler Nilesh Sheth, president of Nice Diamonds in New
York City, sees a similar trend: “While there is a shift toward
lower-price-point merchandise, like gold-plated silver jewelry, higher-end
consumers are still constantly looking for one-of-a-kind, collectible items.”
INVENTORY
Decreasing round prices have changed the inventory dynamics
for many wholesalers. “New rough prices are soft, so the goods are
replaceable — especially IF and VVS goods,” observed Wiener.
Some, however, are hesitant to replace their round inventory
in hopes that the prices may drop even further. “Many wholesalers are not
buying for stock, because if you buy today, tomorrow prices can go down,” remarked
Japanwala.
Aside from round goods, wholesalers are having a hard time
replacing popular items, like fancies, at reasonable prices. “To replace fancy
shapes in consumer-friendly price ranges is still difficult and will continue
to be so,” said Bhansali.
PRIDE AND HOPE
Given the unexpected faltering of markets in India and
China, many wholesalers expressed pride in the domestic U.S. market’s
resilience and its steady performance.
“I see, finally, a resurgence of the importance of the U.S. market in the
diamond industry. I don’t know how long it will last, but it is always
nice to feel loved,” declared Mehta.
Yet, while many think that the U.S. market will continue to
be steady, they are also careful to note that as long as global markets are
stalled, the U.S. market will not have much momentum behind it. “I see business
as being decent but not booming, because there is pressure in the U.S. market,
where unemployment is still high, and in the Far East and India, there is less
demand for merchandise. Because of all this, it is best to be cautious,”
advised Maidi.
The Marketplace
- Prices for rounds are down 5 percent to 7 percent, while
prices for fancies remain high.
- There is strong demand for G-I color stones ranging from
.50 carat to 1.50 carats in round and princess cuts.
- Colored diamonds from 1 carat to 5 carats in pink and from
1 carat to 10 carats in yellow are in demand.
- Cushions, princesses and ovals are the most popular fancy
shapes.
Article from the Rapaport Magazine - August 2012. To subscribe click here.