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Market Comments 6/14/2012

Jun 14, 2012 6:00 PM  
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Diamond markets under increasing price pressure as Indian liquidity dries up and rough prices too high relative to polished. U.S. market stable but demand insufficient to support unsustainably high rough price levels. DTC June sight estimated at $540M with re-assortments that adjusted prices upward for SI quality and lower for better qualities. Christie’s NY sells $14.6M (89% by lot) with 22.46 ct., E, VS2 diamond selling for $1.9M ($84K/ct.). U.S. April polished imports -17% to $1.4B, polished exports -13% to $1.2B. Belgium’s May polished exports -15% to $1.2B, rough imports -21% to $1.1B. Israel’s May polished exports -8% to $1B. Botswana’s April diamond exports -42% to $174M.

Fancies: Demand for fancy shape diamonds improving with reductions in discounts. Price conscious consumers buying more fancy shapes as their prices appear more attractive than rounds. Manufacturers are shifting production back to fancies in light of shortages. Square cuts doing better than curves (Pear Shapes, Ovals, Marquise etc.). Fancy shapes remain less liquid than rounds and may trade at significantly higher discounts for medium to less-well-shaped diamonds. Very large (5 ct.+) top-quality well cut fancies attracting some investment demand.
Global Markets

United States: The wholesale market is stable relative to the weak macro-economic ‎environment as dealers were satisfied with their sales at the JCK Las Vegas show. There ‎is demand for SI and lower-clarity, better-color goods and fancy shapes, which offer ‎more affordable price points for buyers. There remains caution in the market, particularly ‎among mid-priced and small- to medium-sized retail businesses. Bridal sales have picked ‎up slightly ahead of the summer season with good demand for 0.50-carat to 1.00-carat, ‎G-, SI- center stone engagement rings. ‎

Belgium: Polished trading is weak as European economic uncertainty continues to ‎impact market sentiment. Buyers are expecting some softening of prices and are holding ‎back slightly on large-scale purchases. Suppliers are holding prices relatively firm, but ‎trading levels are down. There is relatively good demand for certified G-H, VS-SI goods. ‎Rough trading is weak with tight liquidity affecting secondary market buying. ‎

Trading in the bourse was relatively quiet as dealers prepared for next week’s ‎Hong Kong show. A large delegation of Israeli suppliers is attending the show as they try ‎to further penetrate the Far East market. However, expectations are low as economic ‎concerns continue to diminish trading activity. Polished buyers are traveling to overseas ‎markets to capitalize on the weak sentiment, while suppliers in the bourse are holding ‎their prices firm. There remains a strong focus on more affordable fancy-shape goods ‎and SI clarity rounds.      ‎

India: Rough and polished trading is quiet as tight liquidity is limiting buying. There are ‎some overseas buyers in the polished market but local buyers aren’t showing any ‎urgency to purchase goods. Uncertainty is being fueled by the continued instability of the ‎rupee. There is steady demand for fancy shapes, VS-SI and lower-clarity stones, but ‎demand for VVS goods remain weak. Rough trading is weak as prices are considered ‎high relative to those for polished stones and tight liquidity has impacted dealer demand. ‎This week’s Diamond Trading Company (DTC) sight did little to ease these concerns. ‎

The wholesale market is quiet with some buyers waiting for next week’s Hong ‎Kong show, which begins June 21, to make their purchases. There is some uncertainty ‎regarding prices and buyers are taking their cues from the weak economic environment ‎to push for bigger discounts. The retail jewelry market is stable but below levels seen one ‎year ago.  ‎

Hong Kong:
The diamond trade is gearing up for next week’s Hong Kong show. While ‎the fair is the smallest of the three local trade shows that take place during the year, there ‎is some anticipation that the event will provide a better sense of market sentiment among ‎Far East and Indian buyers.‎
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