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Market Comments 5/17/2012
May 17, 2012 6:00 PM
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WARNING: Reckless Indian government actions destroying their currency and creating serious threat to diamond market liquidity and price stability. Rupee falls to record low 54.6/$. Diamond markets cautious ahead of Las Vegas shows as European crisis fuels uncertainty. Gold jewelry demand +14% to $28.3B but volume -6% to 519.8 tonnes in 1Q as Indian demand slumps and China grows. ALROSA FY11 sales +21% to $4.4B, profit +126% to $856M. Richemont’s FY jewelry sales +32% to $5.9B. Christie’s Geneva jewels sells $110.2M (87% by lot). Sotheby’s Geneva jewels sells $108.4M (94% by lot) with Beau Sancy 34.98 ct., modified pear, double rose cut diamond fetching $9.7M ($277K/ct.).
Global Markets
United States: The mood is cautious as economic challenges remain and polished trading has slowed slightly in the past few weeks. Dealers are traveling abroad to sell their polished, especially as demand for larger stones above 3 carats remains weak in New York. There is steady demand for smaller pointer and carat-size certified diamonds. Some report a shortage of well-cut commercial quality stones and fancy shape goods which are in demand. Overall retail sales remain slow as can be expected for this time of the year.
Belgium: Polished dealers in Antwerp remain cautious as political and economic uncertainty in Europe weighs heavily on the trade. Trading is also slow given that it is a shorter week due to a public holiday in Belgium on Thursday. Buyers are focused on commercial quality goods with 1.00-carat, G-I, SI stones being the most popular. There is steady demand for fancy shape diamonds as dealers report shortages of well-cut fancies. There are serious buyers in the market but most are prepared to wait to assess whether polished prices will soften or strengthen in the coming weeks. Suppliers are operating on tight profit margins.
Israel: Trading is relatively slow but deals are taking place. Dealers are preparing for the JCK Las Vegas show as the U.S. remains a key market for Israeli diamantaires. Polished prices are stable but the volume of trade taking place is not especially large. Buyers are resisting higher prices. Suppliers are prepared to wait until they get their required price, especially during the weeks before Las Vegas, as high rough prices are putting pressure on their profit margins. There is good demand for certified 1.00-carat, G-H, SI diamonds with triple ex cut.
India: Local polished demand remains low due to instability in the rupee-dollar exchange rate, tight liquidity and the ongoing summer vacation. There are not many foreign buyers in the market and domestic buyers are purchasing cautiously. There is steady demand for SI and piqué goods, but overall trading remains controlled. Demand for VVS and VS goods remains relatively soft. Similarly, rough trading remains subdued as market sentiment is weak due to high prices and the exchange rate volatility. Domestic buyers are watchful due to wide price differentials and manufacturing continues at levels below capacity.
China: Wholesale trading has slowly improved but buyers remain cautious and are focused on sourcing what they need to fill orders, rather than making large inventory purchases. This is becoming increasingly difficult since the market has narrowed to focus on commercial quality VS2-SI goods, which have become scarce. As a result, there is a growing interest among buyers to attend the JCK Las Vegas show as buyers seek opportunities to source well cut stones.
Hong Kong: Trading is stable but cautious as wholesale and retail buyers are not replenishing sold inventory in a significant way. There are a lot of goods stuck in the pipeline and dealers are not moving goods due to price uncertainties, even with a steady flow of retail sales in Hong Kong and Mainland China. There is good demand for SI clarity stones but these goods have become difficult to find.
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