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Market Comments 8/9/2012
Aug 9, 2012 6:00 PM
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Rounds: Diamond trading very quiet with deep
concern about Far East and Indian demand ahead of the Mumbai and Hong Kong
shows. Indian cutters under pressure to keep workers while demand is below
capacity and liquidity is tight. Unity Marketing reports U.S. luxury spending
-27% in 2Q. Rio Tinto’s 1H diamond revenue +12% to $350M, loss of $38M vs. loss
of $10M in previous year. Sarin Technologies’ 2Q revenue +16% to $18M, profit
+31% to $7M. U.S. June polished imports -15% to $1.6B, exports -6% to $2.2B.
Belgium’s July polished exports -20% to $1.3B, rough imports -45% to $785M.
Japan’s June polished imports +28% to $91M. Botswana’s June diamond exports -51%
to $353M.
Fancies: Fancy market doing relatively well as
significantly lower prices than rounds attract value
conscious buyers. Cushions are very hot with supply shortages. Weak demand and lower prices for rounds are encouraging manufacturers
to shift production back to fancy shapes. Dealers report
fancy shape market for excellent shapes and cuts is better
and more profitable than round markets. Large fancies stones relatively stable
but sales and liquidity are weak. There are extreme price
differentials between excellent/fine
and average cut fancy shapes. Fine cut stones may not be available as suppliers tighten discounts and resist lower prices. Square
cuts doing better than curves.
Global Markets
United States: Diamond trading in the U.S. is relatively stable even as the economic outlook remains repressed. Dealers are working with tight margins and are focused on enhancing their value-added niche programs to increase their profits. Buying is below levels seen last year as retailers are keeping inventories low and are holding back from replenishing stock for now. There is steady demand for commercial SI clarity stones and relatively good demand for fancy shapes, particularly for excellent shapes and cuts. Cushions and princess shapes are the most popular items in the fancies market. Retail sales are steady with bridal strong, although consumers are compromising on size and quality to meet their tighter budgets.
Belgium: Most traders are on vacation and the Antwerp diamond bourses will remain closed until August 19 for the annual summer break. For many, the break could not have come at a better time as polished and rough trading was somewhat depressed in July. Buyers are willing to delay purchases as they expect further softening of prices and most are content to keep inventories low. Rough trading is weak as most goods are considered overpriced at the moment. In general, Antwerp is in a wait-and-see mode until dealers return in late August.
Israel: Dealer trading in the Israel Diamond Exchange is very quiet as the bourse services are closed until August 19 and many have taken their annual summer vacation. Polished demand has declined since July as prices have softened and trader confidence is low. Some are traveling to the Mumbai show hoping to spur sales while others are happy to stay clear of the market for a week or two, hoping some price stability will drive stronger activity in late August and September. Similarly, rough trading is weak although lower purchases in July helped alleviate some pressures in the market.
India: Polished demand improved slightly from last week but overall trading is still constrained. Domestic buyers are cautious and are purchasing in small quantities to fulfill their immediate requirements. Demand from foreign buyers remains weak. There is steady demand for SI-I1 clarity stones while demand for VVS goods is soft. Rough trading is also subdued as manufacturers are cautious due to wide price differentials. They are worried about recovering their costs on the resulting polished due to the prevailing fragile market. Several manufacturers are operating below capacity and have also reduced their working hours. Rough inventories are rising.
China: Wholesale trading is weak as many suppliers in Israel and Belgium have taken their annual summer vacations. Adverse weather has also impacted business with additional typhoons hitting the east coast of China mid-week. Consumers have tightened their spending amid economic caution, especially on discretionary items such as jewelry. As a result, the volume of retail sales is down from previous years.
Hong Kong: Diamond trading is quiet, as it has been over the past month, as the seasonal slowdown has been a bit more pronounced this year. There is some anticipation that stronger trading will resume ahead of the September Hong Kong show but dealers are holding off on major purchases for now, especially as demand for jewelry at the retail level is weak.
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