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Market Comments 5/28/2015

May 28, 2015 6:00 PM  
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Sentiment improves as JCK Las Vegas show opens. Stable prices for select categories with shortages supporting the market. Poor makes are still in over-supply. U.S. demand good but not great as jewelers experience mixed 1Q: Signet Jewelers same-store sales +4%, sales +45% to $1.5B, profit +23% to $119M; Tiffany & Co. revenue -5% to $962M, profit -17% to $105M. Richemont FY revenue +4% to $11.5B, jewelry sales +4% to $6.2B, group profit -36% to $1.5B. Shrenuj & Co. FY revenue +18% to $858M, profit -20% to $11M. Dominion 1Q sales +7% to $188M, production +9% to 1.4M cts. Miners form Diamond Producers Association with $6M budget for industry research and marketing.

Fancies: Ovals hot, Cushions steady, Pears and Princess improving, Hearts slow. Prices for curves improving slightly. U.S. demand supporting market for commercial-quality fancies, especially for sizes under the carat. Larger sizes softening. Far East fancy demand weak. Buyers are very selective and insisting on excellent-shape proportions. Significant price differentials between excellent- and average-cut fancies. Off-make, poorly-cut fancies illiquid and very hard to sell, even at very deep discounts.


Global Comments

United States: Trading slowed slightly after the Memorial Day weekend as many dealers have been waiting for the JCK Las Vegas show to source goods. Sentiment has improved in anticipation of the Las Vegas shows and as buyers have gained enough confidence to make purchases. There are mixed signals from the retail sector with jewelers noting to Rapaport News that sales volume has declined but they’re selling higher ticket items this year compared with 2014. Still, jewelry prices declined in April according to the latest government statistics. Bridal remains strong with rising interest in fancy shape diamonds as center stones.
 
Belgium: Trading has slowed as many Antwerp dealers traveled to Las Vegas for the shows. Local buyers are still focused on finding bargains but suppliers are holding firm, at least until Vegas. There is steady demand for 0.30-carat to 0.40-carat, G-J, VS2-SI, while demand for diamonds larger than 1-carat is a bit weak. There is excess supply of diamonds above 3 carats in size. Rough trading is slow but stable with De Beers and ALROSA goods trading at slight premiums but with long credit terms on the secondary market.
 
Hong Kong: Activity remains slow with some diamantaires away at JCK Las Vegas. There is steady demand for 0.50-carat to 0.60-carat, F-G, VVS2-VS1, triple EX diamonds but buyers are cautious overall. Retail sales in Hong Kong are also relatively soft as tourist arrivals from Mainland China have slowed. The Chinese government this week announced that it will reduce the duties on many goods imported to Mainland China effective June 1, in an effort to boost domestic consumer spending. While import taxes on diamonds and diamond jewelry are not anticipated to change, the new policy may still hurt diamond and jewelry sales in Hong Kong as fewer tourists from Mainland China are expected to go on luxury shopping trips to the special administrative region.
 
India: Diamantaires are slowly returning to the market from their summer vacation. However, many are still away on vacation or have traveled to the Las Vegas shows. As a result, activity in Mumbai is relatively quiet. There are positive expectations for the JCK show as U.S. demand for piqué goods remains steady. There is good demand for parcels of 0.20-carat to 0.50-carat, D-H, SI-I goods, while demand for large stones above 3 carats is weak. Among fancy shapes, there is steady demand for marquise and ovals below 1-carat in SI and lower clarities, and for princess cut, 0.50-carat to 0.60-carat, G-J, VS-SI diamonds. Manufacturers are maintaining lower production levels with some smaller factories staying closed for an extended summer vacation. Liquidity in the manufacturing sector remains tight.
 
Israel: Trading in Ramat Gan is quiet as more than 100 Israeli polished suppliers are exhibiting at this week’s JCK Las Vegas show. Sentiment among local diamantaires has improved, although confidence is still being affected by the recent discovery of undisclosed treated stones at the GIA’s Israel laboratory. Dealers hope that positive U.S. demand at the JCK show will boost global trading levels in the coming months. Far East demand remains weak. There is good demand for 0.20-carat to 0.70-carat, H-J, SI-I goods. There is also good demand for 0.30-carat to 0.99-carat, D-H, IF and VS diamonds. Stones above 3 carats are moving slowly. Demand for fancy shapes is stable with ovals and pears being the strongest selling shapes. Rough trading is quiet but stable.
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