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Rapaport Weekly Market Comment

Jul 30, 2020 11:18 AM   By Rapaport News
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Sentiment weak as trading centers reinforce Covid-19 restrictions. Supply shortages supporting polished prices as cutters refrain from rough purchases. Manufacturing profit margins better than pre-pandemic, resulting from select rough buying that aligns with polished demand. Focus on online trading. D, IF investment demand improving. Miners building rough inventory as sales slump. De Beers 1H revenue -54% to $1.2B, underlying loss of $214M. Rio Tinto diamond sales -48% to $141M, loss -88% to $40M. LVMH 1H jewelry & watches revenue -38% to $1.6B, loss of $20M. GIA partners with IBM Research to adopt automated clarity grading. Diamond Development Initiative merges with NGO Resolve.

Fancies: Reduced inventory supporting prices for select fancy shapes. Ovals in 1.50 to 3 ct. are the strongest category, followed by Pears. Excellent cuts and nice shapes in demand. Dealers hoping for improved sales of fancy shape engagement rings as consumers seek alternative designs at lower cost. High availability of fancies below 1 ct. Off-make, poorly cut fancies illiquid and difficult to sell.

United States: Cautious optimism as retail improves but coronavirus cases surge in southern states. Dealers struggling to find the right stones to fill orders. Jewelers increasingly taking goods on memo. Steady demand for round and oval, 1 to 2.75 ct., G-I, VS-SI diamonds for engagement rings. Conference Board Consumer Confidence Index down 6% in July amid pandemic uncertainty.

Belgium: Market quiet as government introduces strict Covid-19 rules and summer vacation begins. Antwerp to go under nighttime curfew after city becomes virus hot spot. Trading floors closed, but rough viewings continue during De Beers sight week. European luxury weak amid tourism slump, with Boucheron owner Kering maintaining uncertain outlook for second half.

Israel: Trading slow as the country fights second coronavirus wave. Dealers maintaining firm prices since they expect limited supply of new polished in the coming months. Shortages in 1.50 to 2.99 ct., F-J, VS-I1 categories. Buyers with specific orders paying higher prices than those buying for stock. Israel Diamond Exchange calls for government to establish tax-free zone in the bourse to attract overseas companies.

India: Activity down due to businesses reducing staff and operating hours as Covid-19 continues to spread. Surat expecting to ease restrictions slightly after August 1. Low availability of rough further limiting manufacturers’ ability to increase operations. US and Chinese demand supporting polished trading. Stable interest in 1 ct., D-F SIs (3X, none). High gold price putting additional strain on local jewelry market.

Hong Kong: Weak sentiment as government tightens social distancing rules amid third wave of infections. Luxury retailers struggling since tourism has disappeared. Jewelers seeing some rise in gold demand as local consumers shift to safe-haven products. China retail better than Hong Kong, having stabilized after initial reopening. Dealer demand slow.
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