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Market Comments 3/24/2011

Mar 24, 2011 6:00 PM  
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TRADE ALERT: KP authorizes export of Marange diamonds that violate U.S. OFAC regulations. Rapaport warns the trade not to deal in these diamonds or list them on RapNet. Rapaport calls on all U.S. trade organizations to expel members that deal in these diamonds. News: Melee prices surging with significant price increases for top quality, very small sizes (0.005-0.03 ct. stars), due to powerful demand from developing markets for watches and branded jewelry. High expectations for large stone demand at Basel show. Tiffany & Co. 4Q sales +12% to $1.1B, net earnings +31% to $181M. Harry Winston 4Q sales +61% to $215M, net earnings of $10M vs. net loss of $3.4M. India’s Feb. polished exports +62% to $3.1B, rough imports +8% to $1.1B.

Global Markets

United States: Wholesale trading is stable and most wholesalers appear to be satisfied that improvements in the market continued through the first quarter of 2011. Larger retailers appear to be making greater inventory purchases while smaller mom and pop stores continue to be more cautious in their buying. There is good demand for 1.00- to 2.50-carat, F-I, VS-SI stones, and buyers are emphasizing better make, Triple EX goods. Retailers appear to be focusing on bridal goods again as the summer wedding season approaches. Engagement rings with center stones between 1 carat and 1.5 carats continue to be the most popular items.   

Belgium: Trading has quieted slightly but remains positive as dealers continue to absorb the recent increases in polished prices. There is good demand for 0.50- to 2.00-carat, D-H, VS-SI goods. Prices are strong and dealers report shortages of certain items in the polished market. There remains good demand for rough with strong prices, while many are waiting to see if De Beers makes any changes to its prices at next week’s Diamond Trading Company (DTC) sight.

The market is stable with good trading activity in the bourse. There is good demand for 0.30-carat, 0.50-carat and 0.70-carat dossier goods spurred by recent price increases. Demand for large stones above 5 carats is also improving as is demand for square-shape fancies. Many of the larger companies are attending this week’s Baselworld show focused on the higher-end market. Overall, dealers in the bourse are optimistic.

India: There has been a slight slowdown in polished buying as retailers appear to have grown skeptical of stocking up at the new prices. Dealers are waiting to see if a price correction is in the making. In addition, there are reported shortages of goods which has further influenced buyers to slow their activity. Similarly, many in the rough market are expecting premiums to decrease and are waiting to see what price patterns emerge at next week’s DTC sight. There remains strong demand for smalls in -2, stars and melee goods, in pique and SI+ clarities. There is also good demand for 1.00-carat stones in all categories with shortages in premium sizes and lower colors. Indians have been somewhat distracted by the Cricket World Cup taking place in the country this month with many businesses closing on big match days.

China: The wholesale market continues to be positive and it appears buyers are coming to terms with the new prices, especially as they require the goods to fill demand. As a result, conditions appear favorable for sellers and in particular those with large quantities and a wide range of goods available in their inventories. Demand continues to be focused on Triple Ex cuts although there is improved demand for lower quality makes below Ex cuts.

Hong Kong:
There remains strong activity in the market although buyers have become more specific in their requests than they were at the March show. They appear to be focused on good quality makes insisting on EX, Double EX and Triple EX stones, whereas at the show buyers seemed more willing to compromise more. Demand is strong for H+, VS2+, Triple Ex goods. 

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