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Market Comments 10/25/2012
Oct 25, 2012 6:00 PM
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Polished demand mixed with low expectations for the holiday season. Buyers delaying inventory purchases amid persistent price uncertainty. Dealers hoping polished market will stabilize but recent surge in rough sales will significantly increase polished supply. De Beers 3Q production -31% to 6.4M Cts. S.A. State Diamond Trader FY2011/12 sales -47% to $93M, profit -45% to $1.5M. Strong demand, higher prices at Rio Tinto’s Argyle Pink Diamond Tender. Signet Jewelers to buy Ultra Stores for $57M. Israel’s 9M polished exports -26% to $4.3B, rough imports -25% to $2.7B. WGC launches conflict free gold standard.
Fancies: Fancy market relatively steady with decent U.S. demand. Lower price points expected to attract price sensitive buyers this holiday season. Cushions market becoming over-supplied as Indians shifted production to them. Princesses may become the new hot item. Weak demand and lower prices for rounds are encouraging manufacturers to shift production back to fancy shapes. Large fancies stones softer and liquidity is weak. Extreme price differentials between excellent/fine and average cut fancy shapes.
Global Markets
United States: Diamond trading is erratic with some reporting steady sales and others struggling to profit. It all depends on the goods being held in inventory, with SI- clarity stones in demand while better quality stones still proving hard to move. It has become difficult to replace fast selling goods, and wholesalers who bought during the slow summer months are in a relatively strong position. There is steady wholesale demand for round, cushion, oval and princess cuts, 0.50-carat to 1-carat, G-I, SI-I1 stones. Retail sales are about in line with 2011 although jewelers are expecting consumers to do their holiday shopping later this year.
Belgium: Polished trading in Antwerp is stable with steady demand for goods below 2 carats, in VS-SI clarities. In particular, demand for SI-pique goods has improved in recent weeks. While there is some momentum in the market, there is also a lack of urgency both among suppliers, prepared to wait to achieve levels at least close to their asking prices, and buyers who anticipate further declines. Rough trading remains cautious as dealers continue to view supply from the major suppliers as expensive.
Israel: The mood in Ramat Gan improved slightly as trading has gotten better since the Jewish holiday period. Sales to the U.S. and the Far East are stable, but not signaling a boom holiday period ahead. Expectations for the season are subdued but dealers are satisfied that goods are moving. There is steady demand for polished below 2 carats, VS2-SI goods. Rough trading is weak as manufacturers continue to struggle to profit from expensive rough.
India: Polished demand is steady but trading remains below levels usually seen before the Diwali festival, which begins on November 13. There are more foreign polished buyers in the market who are focused on sourcing SI and lower clarity goods. Domestic buyers remain cautious due to tight liquidity and as the exchange rate turned volatile this week. Rough trading continues to be limited as demand has softened ahead of the Diwali vacation as manufacturing for the festival is basically complete or already in progress. There is stable demand for rough goods which yield polished of SI and lower clarities, but overall, manufacturers are operating their factories at reduced capacities.
China: Retail and wholesale activity have slowed since the National Day Golden Week at the beginning of October. Jewelers remain selective in their diamond buying, uncertain whether the market has bottomed out yet and hesitant to make large purchases in a downward moving market. Buying is expected to remain cautious at least until the end of the year before preparations start for the Chinese New Year season in February. There is steady demand for certified round, 0.30-carat to 1.10-carat, D-H, VS-SI goods.
Hong Kong: Sentiment remains weak after sales during the October Golden Week fell below expectations. Diamond dealers note that the Chinese economic caution has affected their businesses as visitors to Hong Kong are spending less than before. Buyers continue to test suppliers on price and are not under pressure to purchase goods at the moment. That said, there is steady demand for dossiers in VS2-SI2 clarities.
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