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Rapaport Weekly Market Comment

Jul 25, 2019 10:58 AM   By Rapaport News
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Summer lull continues. Polished suppliers cautious for 2H amid trade-war uncertainty, weak dealer demand and tight manufacturing profit. Miners reducing rough supply, with De Beers allowing additional deferrals at July sight. De Beers 1H revenue -17% to $2.6B, earnings -7% to $187M, rough price index -4%. Petra lowers 2020 production plan to 3.8M cts. US jewelry sales stable, despite weakness at majors and declining store count: JBT reports 185 retailers closed in 2Q, 56 opened. Tariff tensions and political protests impact Hong Kong luxury spending as Luk Fook FY1Q same-store sales -10%. New India data shows June lab-grown polished exports +64% to $24M, imports +132% to $16M.

Fancies: Fancy shapes soft, reflecting slowdown in high-end demand. 3 to 8 ct., I-K, VS-SI1 moving better than rounds as dealers and consumers shift to lower price points. Well-known brands are paying best prices, as are buyers with specific requests. Ovals for fashion jewelry moving well, especially 1.50 and 2 ct., G-H, VS and H-K, SI2. Marquises and Princesses weak despite reduced manufacturing. US sustaining market for commercial-quality, medium-priced fancies under 1 ct. Chinese consumers seeking fancy shapes at better prices. Off-make, poorly cut fancies illiquid and hard to sell, even at very deep discounts.

United States: Polished trading seasonally quiet. Buyers focused on round, 1.50 to 2.10 ct., G-H, VS-SI range of goods. Fancy shapes and other sizes slow. A lot of available inventory that’s difficult to move. Suppliers of melee shifting to better qualities to get better profit margins. Retail sales steady, but mall-based jewelers struggling.

Belgium: Active market before the bourses close for three-week summer vacation (July 29 to August 19). Suppliers trying to hold prices firm, hoping demand will improve after the break. Dossiers slow, but 0.30 to 0.50 ct., E-G, VVS goods moving well. Rough-market sentiment weak amid concerns of financial distress. Low rough supply during De Beers sight week.

Israel: Trading sluggish amid weak global demand. US orders supporting the market, whereas Far East remains quiet. Dealers looking for opportunities in niche items. Difficult to source the right commercial goods. Tight profit margins on available stock. Steady demand for 1 to 1.99 ct., G-H, VS-SI, RapSpec A3+ diamonds. Rough trading slow.

India: Trade cautious amid tight liquidity and diminishing credit. Some overseas buyers in Mumbai looking for bargains from companies that need to boost cash flow. 0.30 to 0.49 ct. selling well in parcels after suppliers stopped certifying SI goods. Manufacturing down by estimated 25% to 30% compared to a year ago. Improvement in cheap melee suggests some resistance to CVD.

Hong Kong: Wholesale and retail sectors continue to struggle as ongoing political protests deter foreign traders and tourist shoppers. Chinese market also cautious due to trade war. Other Asian markets such as Indonesia, Thailand and Vietnam stable. Dealers avoiding large-volume purchases as polished prices continue to soften. Steady demand for 0.30 to 0.50 ct. and 1 ct. H-J, VS-SI dossiers.
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