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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. ‎

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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