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Market Comments 8/21/2014

Aug 21, 2014 6:00 PM  
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Markets relatively quiet and conservative. Steady U.S. demand for commercial quality SI-I1 diamonds helping Indian market. Major Chinese buyers have completed large purchases. HK market improving before very important Sept. show but Chinese consumer demand remains cautious. De Beers keeps average prices stable at large Aug. sight but rough trading slows and premiums weaken on secondary market. Gem Diamonds 1H revenue +54% to $149M, net profit +129% to $20M. Dominion 2Q sales +6% to $277M with rough prices +8% in 1H. India’s July polished exports -11% to $1.9B, rough imports +14% to $1.9B. Belgium’s July polished exports +5% to $1.4B, rough imports +20% to $1.2B.

Fancies: Fancy shape market steady with fair demand for excellent shaped and larger polished sizes. Cutters are moving to fancy shapes because of significantly high rough prices for identical-quality round diamonds. Curves (Pears, Ovals) are doing better than Squares (Emerald, Princess) in larger sizes with squares doing better in under the carat sizes. Demand for Princess cut weak. Far East markets becoming more aware of fancy shapes. Buyers very selective regarding shape- and cut-quality with extreme price differentials between excellent- and average-cut fancies. Off-make, poorly-cut fancies illiquid and hard to sell even at very deep discounts.

Global Comments:

United States: Polished trading is stable, albeit seasonally slow. The major retail jewelers continue to look for stable supplies for their programs, while independents are starting to assess their inventory requirements for the Christmas season. Price pressure is minimal. Still, trading is focused on filling orders rather than on building inventory. There is good demand for SI-I2 clarity diamonds while demand for better-quality, D-F, VVS goods is weak. The retail jewelry market is stable primarily due to engagement and bridal sales. 

Belgium: Trading remains weak with dealers slowly returning to work as the bourse resumed operations on Monday (August 18) after a three-week break. There is good demand for dossiers below 1-carat sizes, and stable demand for 1-carat to 1.50-carat, G-M, VS-SI diamonds. There is some uncertainty regarding prices and dealers expect trading to improve and prices to firm in September with rising expectations for the Hong Kong Jewellery and Gem Fair. Rough trading is relatively slow despite the relatively large De Beers sight.

Hong Kong: Polished trading has improved slightly as dealers are starting to prepare for the Hong Kong show taking place on September 15 to 21. There remains some caution among Chinese buyers and retailers note that shoppers from Mainland China are spending less than normal. There is good demand for dossiers, particularly for higher color E-G and lower clarity VS2-SI goods. Demand for large stones above 3 carats is improving.

India: The market is relatively slow with fewer overseas buyers in Mumbai looking for goods during the ongoing summer months. Domestic polished activity also slowed a bit with various holidays, including India’s Independence Day and the Jain festival of Paryushan, taking place during the period. Expectations for the Hong Kong show have diminished on account of relatively slow current Chinese demand. Liquidity is tight, particularly among mid-sized manufacturers and rough trading on the secondary market has slowed slightly as a result. There is good polished demand for SI-I1 clarity dossiers, mainly for the U.S. market. Rough trading has slowed with slightly weaker premiums garnered on the secondary market.

Israel: Activity remains slow in Ramat Gan as the bourse is closed until August 24 for the annual summer vacation break. There is some anticipation for the International Diamond Week that begins on September 1 as U.S. demand remains steady. There is good demand for below 1-carat, G-I, SI-I2 commercial-quality diamonds, and improving demand for 1-carat, D, IF stones. 
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