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Market Comments 1/3/2013

Jan 3, 2013 6:00 PM  
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Diamond prices stabilize in December easing sharp declines for the year: 2012 RapNet Diamond Index (RAPI™) for 1ct. -12.5%, 0.3ct. -7.4%, 0.50ct. -11.1%, 3ct. -11.6%, Rapaport Melee Index (RMI™) +2.3%. Diamond buyers conservative as higher U.S. taxes expected to reduce luxury spending in 2013. Expectations rise for Chinese New Year as China’s economic outlook improves. Israel’s 2012 polished exports -23% to $5.6B, rough imports -13% to $3.8B. Japan’s Nov. polished imports +9% to $68M. Tiffany extends partnership with designer Elsa Peretti for 20 years. De Beers executives to address U.S. DMIA on Jan. 8. 

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: Despite the last-minute agreement reached in Washington this week to ‎avoid the fiscal cliff, unresolved deficit discussions and higher taxes continue to shake ‎confidence. A tax hike on wealthy consumers is expected to impact discretionary ‎spending this year. Wholesale diamond trading is expectedly slow with many dealers ‎taking vacation during the week of Christmas and New Year. They are hoping to build on ‎the momentum gained from the holiday season but expect conservative restocking from ‎jewelry retailers in January – especially given initial reports indicating disappointing ‎holiday retail sales. Activity in the retail sector has slowed since Christmas and store ‎owners are returning their focus on bridal again.    ‎ 

Belgium: Bourse services remained closed this week during the Christmas-New Year ‎break and most diamond businesses were also closed. Future credit to the industry ‎continues to dominate discussions in Antwerp since the ABN AMRO-Arjav dispute in late ‎December, while manufacturers are assessing prospects in the rough market for the ‎coming year.    ‎

Polished trading was quiet over the New Year with most U.S. clients closed for ‎the week. Israeli businesses took the opportunity to get their houses in order, particularly ‎in time for the December 31 financial year-end for some. The focus is shifting toward the ‎Far East ahead of the Chinese New Year in February with rising demand for dossier, VS-‎SI, nice-make, triple Ex goods. Manufacturers are seeing improved margins from their ‎Russian supply but rough trading remains relatively weak. ‎

India: Polished trading was restrained as U.S. and European buyers have been absent ‎during the Christmas-New Year week. There is steady Far East demand for dossiers, ‎while visiting Antwerp-based Indian buyers continued to focus on small-size goods. There ‎is good demand for SI- clarity stones, which continue to be in short supply. Domestic ‎demand is slightly weak. Rough trading remains reserved because overall demand hasn’t ‎picked up as manufacturing continues at lower capacity. The exchange rate remained ‎relatively stable this week.‎

China: Wholesale trading is quiet as businesses were closed for most of this week. There ‎are rising expectations for retail sales with the approach of the Chinese New Year season ‎as economic forecasts have improved. However, diamond buying is still conservative ‎and retailers are not yet ready to make large inventory orders. They remain uncertain ‎whether the recent polished price stability will be sustained or whether the market has ‎bottomed. There is improving demand for 0.30-carat to 0.40-carat, H+, VS-SI goods ‎ahead of the holiday.‎

Hong Kong:
Retailers continue to express caution as forecasts have been subdued due ‎to global economic uncertainty and the rising trend among tourists from mainland China ‎to travel to Europe rather than Hong Kong as their luxury goods shopping destination. ‎Diamond dealers are seeing opportunities in the Pacific Rim and hoping that prospective ‎growth in Mainland China will help stimulate better trade in 2013.        ‎

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