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Economic Bulletin

Feb 1, 2009 7:29 AM   By Rapaport
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RAPAPORT... U.S. Polished Diamond Imports Hit Three-Year Low  

U.S. polished diamond imports hit a three-year low in November 2008, dropping 37 percent to $1.1 billion and decreasing 45 percent by volume to a record low of 665,361 carats. The price per carat for polished imports, however, rose 15 percent compared with November 2007 to $1,635 a carat.

Polished exports fell 17 percent to $975 million in November and the country’s net polished imports — the extent to which imports exceeded exports — dropped 79 percent to $113 million. Data on the U.S., the largest economy in the world and the biggest market for diamonds, highlighted the impact that weak demand at the counter has had on major manufacturing centers in Israel, Belgium and India since the recession took hold. U.S. polished imports from Israel decreased 42 percent to $543.6 million in November. The decline in U.S. trade in rough diamonds was even more dramatic. Rough imports fell 82 percent to $13 million, the lowest they have been since tracking began.

India’s Polished Exports Tumble

India’s polished diamond exports fell 26 percent to $663.2 million in December, according to data published by the Gem & Jewellery Export Promotion Council (GJEPC). By volume, exports dropped 19 percent to 2.279 million carats. Polished imports for the month declined 15 percent to $469.5 million as net polished exports — exports minus imports — decreased 44 percent to $193.7 million.

India’s rough diamond imports fell 91 percent to $85.8 million due mainly to the voluntary one-month freeze on rough imports that the GJEPC enacted in an effort to control the industry’s debt exposure. Rough exports dropped 43 percent to $24.4 million and net rough imports — rough imports less exports — declined 94 percent to $61.4 million. 

Israel’s Polished Exports Fall in 2008

Israel’s polished diamond exports fell 12 percent to $6.2 billion in 2008 as the global financial crisis continued to have a major impact on year-end results, the country’s Ministry of Industry, Trade and Labor reported. Polished imports for the year decreased 4 percent to $4.4 billion. Net polished exports — exports minus  imports — dropped 26 percent to $1.9 billion.

Israel’s polished exports to the U.S. accounted for 43 percent of total sales, followed by sales to Hong Kong, which comprised 23 percent, Belgium, which accounted for 9 percent, Switzerland at 8 percent and the U.K. with 3 percent.

Shmuel Mordechai, the country’s diamond controller, withheld publication of Israel’s November and December monthly data due to the sharp slump in trade seen during those months. Rapaport News records show that polished exports for November and December fell 62 percent compared with the same two months of 2007 to $428 million. Polished imports dropped 43 percent to $594 million. Rough imports fell 68 percent to $315 million, while rough exports plummeted 73 percent to $141 million.

Belgium’s Exports Decline in December

Belgium’s polished exports fell 22 percent to $689.2 million in December 2008, the Antwerp World Diamond Centre (AWDC) reported. By volume, exports declined 19 percent to 580,318.62 carats.

Declines were registered for almost all of Belgium’s major export destinations in December, most notably Switzerland, with a 68 percent decline, the U.K., which dropped 66 percent, China, down 46 percent, and Israel, which fell 32 percent. 

Japan’s Polished Imports Slump

Japan’s polished diamond imports fell 26 percent to $55.6 million in November 2008, according to data compiled by The JClub based on statistics from the country’s Customs Bureau and Ministry of Finance. By volume, polished imports were down 38.7 percent compared with November 2007 to 121,825 carats.

Among Japan’s three largest sources for polished diamonds, imports from India took the biggest knock, dropping 49.4 percent to $14.5 million. Polished imports from Belgium were flat at $23.5 million, but those from Israel rose 19.3 percent to $9.6 million. During the first 11 months of the year, Japan’s total polished diamond imports declined 12.5 percent to $726.5 million. *

Sierra Leone’s Diamond Exports Sink

The government of Sierra Leone reported that diamond exports, a major source of revenue for the West African nation, dropped 31 percent in 2008 due mainly to industrial strikes. Total diamond exports for 2008 were valued at nearly $98 million based on the sale of 371,285 carats, compared with $141.5 million for the sale of 448,928 carats in 2007, according to the Mineral Resources Ministry.

Mining expert Patrick Smith, who runs Diamond Enterprise, a private mining watchdog, said the mining industry in Sierra Leone is changing. Most miners are now involved in the deep-mining kimberlite process, which a decade ago was the preserve of huge mining companies because of the expense involved in drilling.

“The impact of the mining sector in Sierra Leone remains in the area of employment…some 250,000 people derive their livelihood from mining-related activities, [representing] about 15 percent of the total labor force,” he stated. Mining accounts for more than 90 percent of the country’s export income. Smith expects that figure to decline to 70 percent within the next decade in the absence of new investment.

China’s Diamond Trade Up

The total transaction volume of China’s Shanghai Diamond Exchange (SDE) increased by 30.5 percent year-on-year to $1.3 billion in 2008, the highest volume to date, according to the Diamond Administration of China. However, the growth rate of diamond imports shrank in the fourth quarter of 2008 amid the spreading financial crisis.

On the whole, China’s diamond imports still grew significantly for the year. In 2008, Chinese diamond imports and exports increased 29.1 percent from the previous year to $1.2 billion, with imports up 21.7 percent to $535 million.

Diamond Output in Armenia Drops

Between January and November 2008, Armenia produced 96,086 carats of diamonds, according to the country’s National Statistical Service, constituting a drop of 13.8 percent from one year ago. Diamond output reached $42.8 million (AMD 13.1 billion), a decrease of 14.3 percent. During the 11-month period, 768.1 kilograms of jewelry were produced in Armenia, a 51 percent decline from the 1,562.4 kilograms produced in the same period of 2007. *

Gold and Silver Trading Set New Records

Global gold and silver trading experienced record activity in 2008, according to the Bullion Markets 2009 report published by International Financial Services London (IFSL). Gold turnover rose 58 percent to a record $20.2 trillion, while silver trading increased 39 percent to $2.6 trillion — another record. The traditional safe-haven appeal of precious metals attracted many investors to gold as the stock market sank.

Growth was also generated from increases in the price of precious metals. Gold hit a record $1,032 an ounce in March 2008, according to Rapaport News records, and the average per-ounce price for the year rose 25 percent to $872.

Futures and options trading of gold on the exchanges increased more than 80 percent to a record $5.1 trillion in 2008. Silver trading increased 60 percent to a record $1.2 trillion.

Lazare Kaplan’s Net Sales Plummet

Lazare Kaplan International recorded a 54 percent drop in net sales to $41.3 million for the second quarter of its fiscal 2009, which ended November 30, 2008. The company did, however, lower its cost of sales by 52 percent to $40.6 million. Polished diamond revenue fell 53 percent to $20.2 million due to lower sales, the company reported. Rough diamond sales declined 56 percent to $21.1 million, primarily reflecting Lazare Kaplan’s reduced sourcing activities. Lazare Kaplan reported a net loss of $3.8 million, or 45 cents per share, for the quarter, a significant departure from a profit of $291,000 during its second quarter of fiscal 2008.

*Additional reporting provided by Dialog NewsEdge.


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Tags: Antwerp World Diamond Centre (AWDC), AWDC, Belgium, China, Economy, Government, Hong Kong, India, Israel, Japan, Jewelry, Lazare kaplan, Manufacturing, Mining Companies
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