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Market Comments 7/19/2012

Jul 19, 2012 6:00 PM  
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Trading centers quieter than usual ahead of summer vacations in Belgium and Israel. Buyers avoiding large purchases while suppliers adjusting to lower prices. De Beers drops prices average of 3% but sightholders continue to reject non-profitable DTC goods. July DTC sight estimated at $420M before rejections. Harry Winston estimates rough prices -8% in 2Q. Rio Tinto 2Q diamond production +3% to 2.8M Cts. BHP Billiton FY4Q production -28% to 413K Cts. Chow Tai Fook 1Q revenue +16%, same-store sales +4% reflecting cautious Far East demand. Birks & Mayors 1Q sales -3% to $69M. India’s June polished diamond exports fall 35% to $1.5B, rough imports -26% to $1.2B. 

Fancies: Complaints about reductions of Rapaport Pear Shape Price List on July 5. ‎Dealers feel fancy shape market is strong with shortages of desirable goods and that ‎prices should not have been lowered. Significant price differentials ‎between fine and average-cut fancy shapes. Fine cut stones may not be available as ‎suppliers tighten discounts and resist lower prices. Trade ‎comments are invited to ‎

Global Markets

United States: Polished diamond demand is expected to remain slow in the coming ‎weeks with many dealers on vacation in July. Some buyers are traveling to the ‎manufacturing centers to look for goods as they expect suppliers to come under pressure ‎and lower their prices. There is steady demand for lower quality, commercial SI clarity ‎stones, but retailers are keeping their inventories low for now. Retailers continue to be ‎selective in their buying, while sales continue to be driven by bridal lines.‎

Belgium: Polished trading is quiet as dealers are gearing for their August vacation period. ‎Buyers are focused on filling specific orders with VS-SI stones in stronger demand than ‎other categories. Rough trading is slow but stable after prices on the secondary market ‎have softened. However, manufacturing profit margins remain tight as primary rough ‎supply continues to be expensive relative to the resulting polished. ‎

Trading is quiet as is expected in July. However, many note that the market is ‎quieter than usual as dealers are concerned that prices will further soften in the coming ‎weeks. Suppliers are selling rounds at the new, lower prices with more foreign buyers ‎looking for bargains in the bourse. There is relatively steady demand for dossier and 1 ‎carat certified, VS-SI, clean cut goods. Rough trading is weak. While prices have ‎declined on the secondary market, manufacturing profits are tight as the primary supply ‎remains expensive.  ‎

Rough and polished trading is weak as buyers are cautious due to price ‎uncertainties. Demand for better quality polished goods is particularly soft and suppliers ‎are willing to adjust prices for these items. They are holding firmer prices for SI and lower ‎clarity goods due to relatively better demand for these categories. The absence of ‎overseas buyers, along with tight liquidity and exchange rate volatility, continues to ‎impact market sentiment. Rough demand is weak as dealers are cautious and trading ‎remains subdued. Rough inventories have increased as manufacturing continues at ‎levels below capacity and polished trading is weak.‎

China: Wholesale trading remained relatively quiet through July, as it was in June, as ‎buyers are still exerting the same caution. While trading volume is down from 2011 ‎levels, demand continues to be focused on certified 0.30-carat to 1.10-carat, D-H, VS-SI ‎goods. Retailers are sourcing what they need and are avoiding making larger inventory ‎purchases even though prices have decreased. Consumer confidence has softened due ‎to global economic uncertainty and a decline in local exports and manufacturing.      ‎

Hong Kong:
Polished trading has slowed as dealers are increasingly concerned about ‎market conditions. Buyers have taken the recent softening of prices as a signal that ‎further declines may be imminent and are holding back from buying. Consumer demand ‎from China has also declined in the past month. Trading is expected to continue to be ‎relatively slow until mid-August when dealers start to plan for the December Hong Kong ‎show.    ‎
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