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Market Comments 6/7/2012
Jun 7, 2012 6:00 PM
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JCK Las Vegas show exceeds low expectations with very good U.S. demand for affordable VS-SI certs and commercial goods. U.S. taking on role as leading market with steady but price sensitive consumer demand. Expensive large stone demand weak but Triple Ex cut certs selling well to Hong Kong. Polished prices steady with RapNet Diamond Index (RAPI) for 1 ct. -0.6% in May. Rough market cautious and cutting profit margins low. Expectations for another small DTC sight of around $550M with rising concerns that sightholders may start to reject goods. BHP Billiton prices estimated -7%. Harry Winston 1Q sales +34% to $193M, profit more than doubles to $12M.
Global Markets
United States: Polished demand is stable and the Las Vegas shows indicated strength in the high-end and low-end consumer segments. The majority middle market continues to struggle resulting in a shift toward more affordable price points. Retailers are buying to fill orders only and are not significantly building inventory. Retailers are looking for new, innovative designs and products that will create a niche in their respective markets. There is good demand for SI clarity goods and square fancy shapes, with shortages in both these category stones.
Belgium: Polished trading in Antwerp is weak relative to other centers as the Euro-zone crisis continues to affect sentiment. It is difficult to find the popular goods - well-made, commercial quality VS-SI, Triple Ex stones - in the market, but those with the right stock are selling and achieving firm prices. Rough trading is quiet as prices have softened and dealers expect further declines following next week’s Diamond Trading Company (DTC) sight.
Israel: Polished dealers are aggressively looking for goods and there was a strong Israeli buyer presence at the JCK Las Vegas show. There is good demand for square fancy shapes with small 0.20-carat to 0.25-carat cushion and princess cuts selling particularly well. There is also good demand for 0.90-carat-plus, SI goods from the U.S. market. Trading in the bourse was relatively quiet but is expected to improve as dealers return from Vegas in the coming week. Rough trading is cautious as cutters expect prices to decline in the coming weeks.
India: Polished trading remained relatively quiet as dealers were waiting for signals from the Las Vegas shows, which offered mixed reports but stable prices. Local dealers have returned from their summer vacations but overall trading remains muted. There is steady demand for SI stones while demand for higher color and clarity goods is weak, particularly in sizes above 2 carats. Local buyers are cautious due to the volatile rupee and weak domestic demand. Rough trading is subdued as buyers are cautious due to high rough prices, the fluctuating rupee and tight liquidity. Manufacturing is below capacity as profit margins are low, but cutters have sufficient rough supply.
China: Market sentiment is relatively low as economic concerns continue to impact trading activity. Wholesale polished trading is stable but well below levels seen one year ago. Retail buying is measured but continues at a steady pace while limited to what is required to fill current consumer demand. There is steady demand for 0.30-carat to 1.10-carat, G-H, SI, GIA certified goods.
Hong Kong: Wholesale trading is relatively quiet as consumer spending has slowed. Demand for commercial quality stones remains stable but relatively weak for higher- end goods. There is some anticipation for the Hong Kong show that begins on June 11. While the show is the smallest on the local jewelry show calendar, many are hoping the event will provide an indicator regarding the state of Far East demand.
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