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Hong Kong Show Reflects Slow Chinese Demand
Sep 24, 2019 5:03 AM
By Joshua Freedman
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RAPAPORT... The timing of the September Hong Kong Jewellery & Gem
Fair was unfortunate, coming amid a wave of anti-government demonstrations in
the city. But for many participants, the political tensions were masking the
bigger issue: Chinese demand has slowed, compounding the wider problems
in the diamond industry.
“The protests are an excuse [for not attending], but really
the market is not good,” said the director
of a large Indian diamond manufacturer on condition of anonymity.
The trade war, the depreciation of the Chinese yuan currency,
and high gold prices have reduced the buying power of companies and consumers
in the country, exhibitors noted at the fair, which ended Sunday. Trade
customers are mostly unwilling to buy for stock or make advance bulk orders, as
they want to keep their inventory down. Some Chinese jewelers believe they can
get better deals if they wait for polished prices to fall further.
“Retailers have a lot
of polished goods that haven’t been sold,” a Hong Kong-based supplier noted at
the show last week. “They were buying at a consistent pace, but the consumption
level has gone down. They used to buy bigger parcels for the long term, but now
they’re working three months at a time.” That change has occurred since May, he
added.
Shift to lower qualities
Consumers are seeking cheaper jewelry items, observed
Lawrence Ma, president of the Diamond Federation of Hong Kong, China. “The
market has adjusted to a level that represents the [current] supply and
demand,” he explained.
On a positive note, growing interest in those lower-priced
items — such as 0.30- to 0.50-carat diamonds with SI clarity — could boost the
trade as shortages start appearing, he added.
“Commercial goods have become very popular in China,” Ma
said. “In the last two to three months, the supply of rough has decreased,
which is a healthy sign. We’re already seeing certain sizes and qualities of
goods might be in demand. We might find we do not have enough of these goods.”
Lower footfall, slower sales
Sales at the show were focused on commercial goods, with stable demand for 1- to 1.50-carat, G to I, VS2 to SI2 diamonds. The market for 0.30- and 0.40-carat stones was weak, but showed signs of stabilizing. Demand for diamonds weighing 3 carats and higher was sluggish, especially in better colors.
Fewer exhibitors and buyers came because of the protests and
the market weakness. Trading and traffic were slow, with suppliers observing a
drop in the number of Chinese clients attending. But the event still exceeded
many exhibitors’ extremely low expectations, as the buyers who turned up were
serious ones.
“The show has been better than expected for us, because we
didn’t expect many people to come,” said Chetan Shah of R A Gem Centre, the
Hong Kong unit of Indian manufacturer S. Vinodkumar Diamonds. “Whoever [came to
our booth] were people who really wanted to buy diamonds. They were looking for
goods at an attractive price, and if we have the goods, they will buy.”
Sensing an improvement
While buyers were mainly cautious, a minority of exhibitors
said clients were aiming to take advantage of the relatively low polished
prices to stock up on merchandise.
“People have come to find cheap goods because prices are
down,” said
Aashay Bhansali, a trader at Antwerp-based diamond supplier Veera Dimon.
“Prices have fallen so much, and they don’t think there will be another price
fall.”
Diamantaires expressed some optimism that the upcoming holidays
would boost Chinese demand, beginning with Golden Week, which starts October 1.
Retailers have slowly been working down their inventories by reducing
purchases, and will soon be ready to buy again, another Antwerp-based company
executive predicted. Golden Week, Christmas and Chinese New Year all offer
opportunities for local diamond sales, he noted.
“They haven’t bought much over the last few months, so I’m
sure demand will come back,” he explained. “They can’t keep on like that.”
Image: The Belgian diamond pavilion at the Hong Kong show. (Informa Markets)
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Tags:
Aashay Bhansali, Antwerp, asia, AsiaWorld-Expo, Baselworld, Chetan Shah, China, Chinese demand, Chinese New Year, christmas, Diamond Federation of Hong Kong, Far East, Golden Week, Hong Kong, Hong Kong Convention & Exhibition Centre, Hong Kong Jewellery & Gem Fair, JCK Las Vegas, Jewellery & Gem World Hong Kong, Joshua Freedman, Lawrence Ma, Michel Klein, R A Gem Centre, Rapaport News, S. Vinodkumar Diamonds, SDI, Veera Dimon, Yuan
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