|
|
Market Comments 5/10/2012
May 10, 2012 6:00 PM
|
|
|
TRADE ALERT: Indian Reserve Bank orders all foreign currency holders to convert 50% of their balances to rupee in reckless attempt to control plunging rupee. Recent irresponsible government actions include retroactive taxation and penalties, import taxes on gold and diamonds and on/off excise taxes. Out of control Indian government now posing serious threat to diamond market liquidity. Petra Diamonds 3Q revenue +87% to $98M, production +126% to 622,509 cts. Blue Nile 1Q revenue +4% to $83M, net income -94% to $154K. U.S. 1Q polished imports -7% to $4.8B. Hong Kong’s 1Q polished imports +9% to $4.3B. Belgium’s April polished exports -7% to $943M, rough imports +20% to $1B.
Global Markets
United States: There is mixed sentiment in the wholesale market as trading has slowed slightly in the past few weeks. Still, trading is taking place with many overseas buyers looking for goods. Wholesalers who stocked up on inventory during the past few months are in better shape than companies who need to source goods currently as scarcities are prevalent. While retailers are engaged in Mother’s Day promotions, bridal continues to dominate sales.
Belgium: Trading has been relatively quiet with political and economic uncertainty in Europe influencing the mood among buyers. There is demand for goods, particularly for 1.00-carat and 1.50-carat, commercial quality diamonds. Suppliers have noted a shortage of SI clarity stones. Rough trading is cautious following last week’s Diamond Trading Company (DTC) sight as manufacturing profit margins remain tight.
India: Polished trading is restrained due to the ongoing summer vacation and continued volatility in the rupee-dollar exchange rate. Domestic buyers continue to experience tight liquidity, while very few overseas buyers are seen in the market. Overall demand is weak, particularly for lower piqué goods. The local gems and jewelry industry is relieved with the government’s cancellation of the excise duty on jewelry, but consumer demand is not expected to pick up significantly in May since it is generally not a busy month for weddings. Local rough trading continues to be weak. There is sufficient rough supply but manufacturing levels continue at levels below capacity. Select trading is observed in rough goods which yields polished of I color and lower.
Israel: Polished trading continues to be affected by the money laundering investigations that allegedly took place in the bourse during the past three months. Dealers are cautious about who they do business with. Still, there is activity and good demand for 1.00-carat, 1.50-carat and 2.00-carat stones with G-H color and VS-SI clarity. Some have noted that it is not easy to fill requests due to shortages in the market. Dealers are focused on preparing for the JCK Las Vegas show hoping that steady U.S. demand will boost trading in the second half of the year.
China: The wholesale market is stable but dealers remain cautious mainly due to the weakened economic outlook. There has been some slowdown in activity since the May Day weekend as many trading partners in India are on vacation and many retail buyers still have inventory remaining from the holiday. Buyers are increasingly price sensitive. There is steady demand for 1.00-carat, G-H, SI1 certified polished diamonds.
Hong Kong: Wholesale trading has slowed in the past month due to a weaker outlook for the Chinese economy. Suppliers are trying to push prices higher but they are meeting resistance from buyers, particularly on round diamonds. There is continued strong demand for fancy shape stones and well cut fancy shapes sell relatively easily. Local retail sales are also relatively slow.
|
|
|
|
|
|
|
|
|
|
Tags:
|
|
|
|
|
|
|
|
|
|
|