Advanced Search

The Diamond Trade Week in Review 09/04/2009

Sep 4, 2009 3:00 PM   By Avi Krawitz
Comment Comment Email Email Print Print Facebook Facebook Twitter Twitter Share Share
RAPAPORT... Global Markets

Diamond wholesalers in the U.S. are reporting that business has returned to the busier pre-vacation levels in the past week. While July was slightly busier than previous months, the market slowed significantly during the three week August vacation period. Consumers are seeking cushions, radiants and rounds above 1.25 ct. Princess cuts are still in short supply from sizes above 1.25 ct. in the better colors and clarities and discounts for these goods are low. Rounds in 1.30-1.49 ct. and 1.75-1.99 ct. are hard to find, causing discounts to be almost non-existent for the better colors and clarities.

In Belgium, activity has improved slightly this week, with pockets of demand for 3.00 ct. commercial quality, and 1.00 ct. stones. Customers are trying to buy at cheap prices and premiums are being cut for both polished manufacturers and rough dealers, particularly since the mining companies raised rough prices in August. There is also a feeling that credit is becoming tighter again, given how aggressively Indian buyers procured rough in recent months.

The market in Israel is improving and there is growing activity in the bourse after a slow return from summer vacation. Dealers are more confident about selling prices and as a result, their buying bids have become firmer. They are looking forward to the Hong Kong show, which will signal the start of the end-of-the-year season. There is good demand for diamonds of 0.70-1.99 ct., especially 0.90-1.49 ct., H-J, VS. Demand is also increasing for D color stones.

Buyers in India have become more cautious in the wake of the rough price increases reported in August and are refraining from buying in bulk. Activity in the domestic market has improved due to the start of the festive season. Demand for princess cuts has picked up in the past few weeks, in particular for 1.00–1.49 ct., I+, VVS-VS. In rounds, activity has improved for 1.00-3.00 ct. offerings and there are reports of shortages for 1.00 ct. VVS-VS, excellent makes. Local retail demand is improving due to the ongoing wedding season and the upcoming Diwali festival.

Activity in China has improved as wholesalers step up preparatiosn for next month’s National Day Holiday Golden Week. Buyers are also looking forward to the Hong Kong Show later in September. Suitable sizes for the Chinese market include 0.30-1.00 ct., Triple-X or Double-X goods, which continue to sell well. Demand is healthy for 0.30-1.00 ct., D-H, VVS-SI stones. Melee goods for jewelry manufacturing are also in strong demand.

The market in Hong Kong remains stable and dealers are eagerly awaiting the show taking place there later this September. Even in the run-up to the show, diamond professionals are an increasing presence in Hong Kong. Still, there is a lot of price resistance and it is not easy to close deals. There are mixed expectations about the show, as some buyers expect prices from manufacturing centers to soften, while others still expect some resistance from sellers. Demand is healthy for rounds, 1.00-2.00 ct., H-J, VVS-VS, excellent cut and fancies, collection D-F, VS goods.

Between the Lines

There are reports that approximately $1 billion worth of rough was sold to the market in August by the major mining companies, which would make it the busiest month of the year so far. Diamond Trading Company’s (DTC) sight 7 had an estimated value of $480 million, while ALROSA reported sales of $200 million during the month. BHP Billiton, Rio Tinto, Gem Diamonds and Petra Diamonds also all hosted tenders. Despite reports that prices increased at all companies, it appears that manufacturers are still eager to buy rough. Most likely, they were out shopping for India’s Diwali festival, which begins on October 17, and for Christmas. The September Hong Kong show will provide an even better gauge of the prospects for both holidays, Christmas in particular. Either way, one would expect rough buying to slow down during the rest of the year.

Tiffany & Co. signaled continued difficulties in the retail market, especially at the high end, when it posted a 16 percent decline in second-quarter sales to $612.5 million. Sales in the first half of the fiscal year that ended July 31 were down 19 percent to $1.13 billion. The luxury jeweler has been hardest hit at its U.S. operations, where sales have dropped 28 percent in the six-month period, while sales in Japan fell 13 percent on a constant exchange basis, which discounts the effects of currency fluctuation. Sales in the rest of Asia rose 9 percent on a constant exchange rate basis, while in Europe, they grew 15 percent. Chief executive officer (CEO) Michael Kowalski said he expects some improvement in the rate of decline by the end of the fiscal year, adding that the company believes that “the current environment provides opportunity for significant gains in market share.”

Japan’s economic weakness continues to weigh on the diamond market, as reflected by the 36 percent drop in the country’s polished imports during July to $47.1 million. The month saw the largest drop in Japan’s polished imports so far in 2009, compared to the same month a year earlier, and marked a full year of consecutive declines. Imports for January through July were down 26 percent to $364.3 million. While Japan’s imports were consistently decreasing before the global economic crisis, the recession has intensified these declines. Whereas during the first half of 2008, the drops were predominantly in the low single digits, they have moved to range between mid-20 and mid-30 percent drops since then. Fixing Japan’s broken economy is expected to be high on the agenda of Japan’s newly elected Prime Minister Yukio Hatoyama, but it may take time for the diamond industry to observe growth in that country.

De Beers launched its Christmas marketing campaign, with sightholders and retailers unveiling the Everlon Diamond Knot Collection this week. The campaign will be the central theme of the mining company’s fourth-quarter marketing efforts and it again appears that De Beers is stepping to the plate to lead the industry to market diamonds, and, in its own words, “maximize demand for diamonds during the crucial holiday sales season.” That it has involved partner companies along the diamond pipeline is cause for further praise. De Beers has stated that it forecasts Christmas 2009 will be better than last year and we expect this campaign to play a major role in ensuring that it is. “Everlon provides a platform for trade members wishing to pool funds to create a more compelling program than could be achieved individually,” De Beers explained. “The launch of a big new diamond jewelry idea will create buzz and excitement for the entire diamond industry.”

Quote of the Week

After last week’s rough diamond price increases fed into some speculation on future price trends in rough and polished, we turn to Henry Luce, the founder of the Time-Life magazine empire, who said, “Business, more than any other occupation, is a continual dealing with the future; it is a continual calculation, an instinctive exercise in foresight.”

Comment Comment Email Email Print Print Facebook Facebook Twitter Twitter Share Share
Tags: Alrosa, Belgium, BHP Billiton, China, Consumers, De Beers, DTC, Economy, Gem Diamonds, Hong Kong, India, Israel, Japan, Jewelry, Manufacturing, Mining Companies, Petra Diamonds, Rio Tinto, Sightholders, Tenders, Tiffany
Similar Articles
Comments: (0)  Add comment Add Comment
Arrange Comments Last to First
© Copyright 1978-2018 by Martin Rapaport. All rights reserved. Index®, RapNet®, Rapaport®, PriceGrid™, Diamonds.Net™, and JNS®; are TradeMarks of Martin Rapaport.
While the information presented is from sources we believe reliable, we do not guarantee the accuracy or validity of any information presented by Rapaport or the views expressed by users of our internet service.