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Rapaport Weekly Market Comment

Feb 27, 2020 10:58 AM   By Rapaport News
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Diamond market weak as coronavirus shuts down China and weighs on global economy. Financial markets slump with Dow -7% (Feb. 21-27). Gold rallies +4% to $1,653 per ounce (Feb. 1-27). Indian market facing severe liquidity crunch as sales to China stop. Luxury retailers reviewing Hong Kong presence after 2019 protests and ongoing epidemic lead to drop in sales. De Beers gives sightholders added flexibility on Chinese goods, with projections for small Feb. sight. Rio Tinto diamond unit 2019 revenue -11% to $619M, loss of $21M vs. profit of $118M the previous year. India Jan. polished exports -6% to $1.7B, rough imports -11% to $763M.

Fancies: Ovals are strongest shape, driven by US fashion jewelry demand. Emeralds above 2.50 ct., D-G, VVS2-VS2 also selling well. Pears slightly slower due to sluggish Hong Kong market. Princess and Marquise continue to struggle. Well-shaped and fine-cut fancies have become a profitable niche with good demand and strong prices, especially Ovals, Emeralds and Pears. Fancies with classic and long ratios trending in fashion segment. Shortage of top-make fancies 1.50 ct. and larger in all categories except D color. US sustaining market for commercial-quality, medium-priced fancies. Off-make, poorly cut fancies illiquid and difficult to sell.

United States: US demand supporting global market as dealers seek ways to compensate for decline in China. Dealers concerned that too much excess inventory is being sent to the US amid plummeting stock markets. Steady orders of 1 ct., G-J, VS2-I1 diamonds for engagement rings. Bridal picking up ahead of summer wedding season.

Belgium: Market conditions deteriorating as coronavirus impacts demand. Virus’s recent spread to Italy and other European countries has added to uncertainty. Dealers reducing purchases and assessing inventory requirements. Antwerp Rough Diamond Days, scheduled for this week, postponed due to virus. AWDC delays sale of HRD Antwerp and tasks new CEO with implementing turnaround plan.

Israel: Sentiment weak amid worries that India and Hong Kong dealers will reduce prices to raise liquidity. Suppliers focused on US as China and Hong Kong shut down. Steady demand and firm prices for round, 1.50 to 5.99 ct., G-J, I1 diamonds and oval and pear, 1.50 to 5.99 ct., G-J, VS2-SI2 goods. Rough dealers struggling to sell boxes during De Beers sight. Solid interest at large-stone rough auctions.

India: Polished trading slow due to lack of Asian buyers and reduced liquidity. US market stable, but buyers seeking discounts. Diamonds with lower color and clarity moving better than higher-end items. Manufacturers maintaining low production since polished demand is down. Diamantaires with Hong Kong offices operating with reduced teams.

Hong Kong: Wholesale very quiet due to lack of orders from China during coronavirus epidemic. Sporadic orders from other countries in the region, such as Japan, Singapore, Thailand and Malaysia, with 0.20 to 0.50 ct., D-F, VVS-SI1 selling. China retail stores remain closed; consumers in big cities making some purchases online. Jewelry manufacturers starting to resume operations at reduced capacity. Hong Kong retailers trying to renegotiate rental rates.   
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