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Market Comments 12/27/2012

Dec 27, 2012 6:00 PM  
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Caution: Automatic Jan. 1 U.S. tax hikes may significantly reduce diamond ‎demand… News: U.S. holiday sales disappoint as consumer confidence slides on ‎stalled budget talks. Final effort to beat fiscal cliff deadline expected but inevitable tax hike will ‎reduce 2013 jewelry demand. MasterCard Advisors SpendingPulse reports Nov./Dec.  ‎retail sales +0.7% vs. +2% in 2011. comScore says online sales +16%. Diamond trading ‎quiet as U.S. and Belgian markets close for Christmas break and Indian manufacturing ‎cautiously resumes after Diwali. Israel and other markets focusing on Far East Chinese ‎New Year demand. The Rapaport Group wishes everyone a happy, healthy, ‎prosperous and peaceful New Year.‎

Fancies: Fancy market steady. Smaller sizes selling well with good demand for 3/4's. ‎Lower fancy shape price points attracting price sensitive buyers. Demand for Princess ‎replacing Cushions.  Improving demand for fancies at attractive price points encouraging ‎manufacturers to shift production ‎to fancy shapes. Extreme price differentials ‎between ‎‎excellent/fine and average cut fancy shapes. Caution: Prices for green, grey ‎and brown tinted diamonds 10-15% below non-tinted. Green tint often indicates Marange ‎origin.

Global Markets

United States: Wholesale diamond trading is quiet with most businesses closed between ‎Christmas and New Year. There are still mixed reports regarding the holiday wholesale ‎season with many waiting for January returns before giving a final assessment. Nice-‎make, princess cuts in SI qualities are in demand and difficult to source. Retailers report ‎relatively flat sales compared to last year. While there is some optimism for a better year ‎in 2013, the stalled fiscal cliff negotiations are weighing down confidence amid concern ‎that higher taxes will result in tighter jewelry spending.    ‎

Belgium: Trading is quiet with most businesses closed between Christmas and New ‎Year and bourse services officially closed during the week. Many Antwerp-based Indian ‎dealers have traveled to Mumbai for the period. There is steady demand for 0.50-carat to ‎‎3-carat, G-H, VS2 goods and the same sizes in D-F, SI1 categories, as well as good ‎demand for nice-make fancies. Rough trading is weak due to the season but also as ‎dealers and manufacturers are concerned about high prices and their subsequent ‎potential to profit in the first quarter of 2013. ‎

Israel: Trading is stable in Ramat Gan with the focus shifting from supply to the U.S. ‎toward the Far East for the Chinese New Year. There is a sense that December was ‎better than expected even as trading remains below levels seen in previous years. ‎Demand is strong for nice-make, triple EX goods, which are difficult to find.‎ There is also ‎relatively strong demand for princess cut diamonds. Traders are optimistic the market will ‎improve in 2013.‎

India: Polished trading was restrained as most foreign buyers remained away during the ‎Christmas season. There is some demand for small size goods from visiting Indian ‎buyers based in Antwerp and stable Far East demand for dossiers. There is relatively ‎good demand and short supply of SI- clarity stones. Domestic jewelry demand is steady ‎due to the ongoing wedding season. Rough trading has yet to pick up as sufficient supply ‎and weak demand continue to define the market. Manufacturing remains at below ‎capacity.‎

Jewelers are working to boost year-end sales with promotions and discounts ‎amid rising competition from online retailers. Wholesale diamond buying remains ‎cautious and dealers are still avoiding large purchases. While sales growth cooled in ‎‎2012, many expect new government stimulus plans will boost consumption in 2013. ‎Demand is concentrated on the traditional Chinese goods in the category of round, 0.30-‎carat to 1.10-carat, D-H, VS-SI, GIA-certified stones, with rising interest for fancy shape ‎and fancy color diamonds. ‎

Hong Kong:
There has been some improvement in wholesale diamond demand but ‎concern about the global economy – particularly the U.S. fiscal cliff – continues to ‎diminish confidence to buy diamonds. Jewelry retailers note improved sales during the ‎Christmas shopping season, including for better quality diamond jewelry. ‎
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