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Rapaport Weekly Market Comment

July 21, 2016

Jul 21, 2016 11:00 AM   By Rapaport News
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Markets weak during summer trading lull. Dealers frustrated by sluggish demand, rising inventory and tight profit. Rough market quiet with lower premiums during ALROSA sale. De Beers 1H production -15% to 13.3M cts., sales +29% to 17.2M cts., prices -14% to $177/ct. ALROSA 1H production -16% to 16.9M cts., sales +21% to 21.7M cts., prices -3% to $117/ct. Rio Tinto 1H production +2% to 8.96M cts. Letšeng 1H sales flat at $106M, average price -16% to $1,899/ct.Israel 1H polished exports -14% to $2.6B. Chow Sang Sang warns 1H profit -50%/-60%. Luk Fook 1Q same-store sales -22%. Morgan Stanley predicts lab-grown diamonds to capture 15% of melee market, melee prices under pressure.

Fancies: Markets slow with some weakening of prices. Ovals and Pears doing well. Cushions supported by specific orders. Emeralds selling with improving large-stone demand. Princess and Hearts slow. Top quality fine-cut fancy shapes OK but buyers are extremely picky. Overall fancy shape prices relatively soft. U.S. demand supporting market for commercial-quality fancies, especially for sizes under 1 ct. Far East fancy demand weak. Buyers are very selective and insisting on excellent-shape proportions. Significant price differentials between excellent- and average-cut fancies. Off-make, poorly-cut fancies illiquid and very hard to sell, even at very deep discounts.

United States: Trading quiet after dealers returned from vacation. Tough to sell goods that are not typical, commercial-quality diamonds for engagement ring market. Steady demand for 1 to 3 ct., G-I, VS2-SI2 diamonds. Design trends under spotlight at next week’s JA shows (July 24 to 26) with very few diamond vendors involved. Consumer confidence slides in July as Brexit concerns high income earners.

Belgium: Polished market slow. Dealers buying only what they need before vacation begins (August 1 to 22). Pockets of good demand with buyers seeking nice-make, commercial-quality RapSpec A2 (3X, none) diamonds. Fancy color diamonds steady.Top-quality pear shapes improving. Rough demand slow with lower premiums for Russian goods during monthly ALROSA sale.

Israel: Sentiment weak with July trading slower than usual. Some suppliers discounting to improve turnover and increase liquidity. Slow market expected at least until September. Slightly slower demand and increasing inventory for 1-carat, D-H, VS1-VS2 diamonds. Good fancy color demand for blue and pink diamonds. Yellows weaker. Rough market quiet with slight price decreases at auctions and tenders.

India: Some U.S. and Chinese buyers in Mumbai looking for bargains but trading slow and sentiment weak. Quiet market expected through August. Low expectations for Mumbai show (August 4 to 8) with gold jewelry demand sluggish at high gold prices in rupee. Manufacturing stable with less rough available and slower trading on secondary market ahead of next week’s De Beers sight.

Hong Kong: Dealer market quiet but stable during seasonally slow period. Jewelers only buying for specific customer demand and not for inventory as retail sales contract. Publicly traded jewelers cautious and noting that Hong Kong sales are weak, China just okay. Jewelers discounting to attract more consumers and reduce inventory. Diamond buyers looking for opportunities at lower prices which may encourage demand at September show.
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