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Rapaport Weekly Market Comment

Feb 18, 2016 11:00 AM   By Rapaport News
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Rounds: TRADE CAUTION: The recent surge of rough diamond prices on the secondary market is dangerous and unsustainable. Current polished price levels reflect artificial shortages created by 42% decline of rough supplies in 2H 2015. Production now normalizing which will soon significantly increase polished supply while overall demand remains weak. Chow Tai Fook Lunar New Year sales -29%. De Beers 2015 earnings -72% to $258M, revenue -34% to $4.7B, rough sales -36% to $4.1B, 2H rough sales -53% to $1.4B. ALROSA 2015 rough sales estimated -30% to $3.4B, 2H -26% to $1.6B. Gitanjali 3Q sales -2% to $499M, profit -18% to $12M. Jean-Marc Lieberherr appointed CEO of Diamond Producers Association.

Fancies: Pears and Ovals in short supply due to limited production. Emeralds improving. Fairly good market for large top-quality fine-cut fancy shapes but buyers are extremely picky and supply is very tight. Cushions steady, Princess and Hearts slow. Overall fancy shape prices relatively soft. U.S. demand supporting market for commercial-quality fancies, especially for sizes under 1ct. 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.

United States: New York polished prices remain firm despite slowdown in trading volume.Wholesalers are selling off old inventory and trading is driven by orders for specific goods rather than inventory purchases.Shortages of select goods due to lack of manufacturing in the second half of 2015. Good demand for better-quality SI (3X, none) and over-sizes. Consumer spending is cautious with retailers expressing concern about the economy in an election year. 

Belgium: Polished trading is quiet. Dealers are more positive about the market than they were toward the end of last year even as trading is slow. Dealers note a large amount of diamonds are out on consignment, with the U.S. being the most active market for memo goods. Steady demand for 1ct., G-H, VS-SI and for 0.30ct., G-H, VS-SI diamonds. Rough trading is steady with good demand for reasonably priced De Beers goods ahead of next week’s sight.

Israel: Mixed sentiment during International Diamond Week (Feb. 14-18). Lots of offers but few deals as suppliers hold prices firm. Difficult to find the right goods at the right price. Some Indian buyers looking for bargain cash deals. Focus shifting to March Hong Kong show. Concerns about possible insolvency and disappearance of Indian merchant operating in Israel affecting Israeli suppliers who are owed $30-50M. Steady demand for 1-1.99ct., D-H, VS-SI diamonds with shortage of better-quality RapSpec A2 goods. Rough trading stable with small premiums for large expensive ALROSA goods. 

India: Market remains relatively slow with Chinese buyers still on vacation for Chinese New Year. Trading expected to improve in the coming weeks as dealers prepare for the Hong Kong show. Low expectations for Far East dealer demand. Steady U.S. and Middle East demand, while Chinese buyers expected to return in the coming weeks. Pockets of steady demand for 0.30-0.50ct. and 1-1.50ct., G-J, VS-SI diamonds. Manufacturers increasing polished production but unsure of end-demand. Rough trading steady with dealers reporting better value from De Beers than ALROSA.  

Hong Kong: Polished trading quiet as dealers slowly return from Chinese New Year. Initial reports about the holiday season were weak as tourist arrivals fell and political unrest weighed on sentiment. Chinese buyers expected for the Hong Kong International Jewellery Show (March 1-7) but buying levels remain uncertain as Chinese economy slows and stock markets devalue. Jewelry manufacturers maintain cautious outlook for the year and have low expectations for upcoming show.  

See for full explanation of Rapaport Diamond Specifications.

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