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Rapaport Weekly Market Comment
Mar 12, 2020 10:58 AM
By Rapaport News
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Diamond industry facing severe liquidity crisis as coronavirus spreads to US. Suppliers uncertain about prices as buyers push for deeper discounts. Jewelers holding large inventory and have scaled back polished purchases. Manufacturers are advised to stop buying rough and hold cash until conditions stabilize. Slump in oil price (-32% since Mar. 5) and stock market (Dow -10%) reducing consumer wealth and luxury demand. Chow Tai Fook Jan./Feb. sales -60% in Hong Kong & Macau, -42% in China. Belgium Jan./Feb. polished exports to the US -35%. Martin Rapaport to give Diamond Market Challenges webinar Thursday Mar. 19 at 10 a.m. GMT and 12 p.m. EST. Register at rapaport.com/webinar.
Fancies: Pears slower due to collapse of Hong Kong market. Weakness in fancy shapes below 1.25 ct., but overall demand more stable than rounds since fancies are not as popular in China. Ovals strongest shape, driven by US jewelry demand. Some demand for Emeralds above 2.50 ct., D-G, VVS2-VS2. Some shortage of top-make fancies 1.50 ct. and larger. US sustaining market for commercial-quality, medium-priced fancies. Off-make, poorly cut fancies illiquid and difficult to sell.
United States: Sentiment very weak as spread of coronavirus sparks stock market slump and shift to stay-at-home economy. New York’s JA show and MJSA expo canceled due to pandemic. Bridal supporting the market for 1 ct., G-J, VS-SI diamonds, as February through May is a popular period for engagements. Other categories sluggish. Consumers moving to lower price points.
Belgium: Very little activity amid uncertainty about impact pandemic will have on the market. Polished exports -42% to $1.2 billion in January-February due to drop in shipments to Hong Kong and US. European luxury struggling as sales slide and lockdown in Italy affects supply chains. Some rough demand during Alrosa monthly sale, with dealers focused on goods suitable for the US.
Israel: Foreign buyers absent as all visitors to Israel must enter two-week quarantine. Local suppliers also avoiding travel. Coronavirus has delayed delivery of goods and forced dealers to work from home. Government has relaxed regulations on diamond shipments between areas affected by outbreak after polished exports fell 73% in February. Dealers took one-day vacation over Purim festival.
India: Market quiet, with very few customers visiting from overseas due to virus. Some traders took vacation over Holi festival. Polished suppliers under pressure as inventories rise and prices soften. Demand down for SI-clarity and better diamonds. Some interest in I1 among local jewelers. Manufacturers have reduced polished production in response to the decline in orders. High gold prices and rupee depreciation (-2.7% since March 1 to INR 74.2/$1) weighing on domestic demand.
Hong Kong: Dealer trading stalled. Retail jewelers have reopened stores that were closed when coronavirus broke, but sales remain slow due to weak consumer sentiment and drop in tourist traffic. E-commerce retail also declined but less affected by the downturn. Jewelers holding large inventory and don’t need to buy goods. China manufacturing has resumed but is focusing more on lower-cost gemstone and gold jewelry.
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Rapaport News
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