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Selective Buyers With Orders to Fill are Forced to Pay Good Prices

Jun 25, 2015 6:00 PM  
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Markets slow with low expectations for June Hong Kong show. Bargain hunters making low offers for popular VS-SI larger goods but suppliers holding back due to shortages and high replacement costs. Selective buyers filling orders forced to pay good prices, flexible inventory buyers getting very good deals. 30s and 40s weak and under pressure as China underperforms. Caraters showing life with improving demand. Indian liquidity tight and getting tighter with reports of approximately $100M Godhani Gems insolvency and additional smaller financial failures. U.S. May jewelry sales +0.5% to $6.3B, watch sales -0.7% to $831M. Luk Fook FY revenue -17% to $2.1B, net profit -13% to $209M.

Fancies: Ovals and Cushions steady, Pears and Princess improving, Hearts slow. Prices for curves improving slightly. U.S. demand supporting market for commercial-quality fancies, especially for sizes under the carat. Larger sizes softening. 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.

 
Global Comments

United States: Trading is quiet in New York and wholesalers report that the market has slowed since the JCK Las Vegas show. Buyers are competing over a reduced supply of both newly-manufactured and recycled diamonds. Demand has softened slightly for 1-carat to 2-carat diamonds while there is stable demand for stones larger than 2 carats. There is good demand for triple EX diamonds, which are in short supply. Among fancy shapes, there is steady demand for ovals and cushions, and improving demand for pears and marquises. Independent retailers are optimistic that consumers will gradually increase spending in the second half of the year.

Belgium: Trading levels are low in Antwerp and sentiment is slightly weak. Some diamantaires have sent their inventory to the June Hong Kong show that began on Thursday, hoping to make sales. There is little inventory restocking among buyers. Local dealers are concerned about a perceived lack of liquidity among Indian diamantaires. There is some demand for GIA dossiers from European buyers. There is steady demand for 2-carat to 3-carat, D-G, VS2-SI2 diamonds, while demand has slowed for diamonds larger than 3 carats. Rough prices on the secondary market have reportedly firmed slightly, although manufacturing remains at reduced capacity.

Hong Kong: The market has been quiet the past week as most companies have been preparing for the June Hong Kong show taking place from June 25 to 28. Expectations for the show are relatively low as demand from Greater China has slowed this year. Chinese buyers are selective and price sensitive. There is steady demand for 1-carat to 2-carat, H+, VVS-I, triple EX diamonds, while demand for 0.30-carat to 0.40-carat, D-H, VVS-VS diamonds remains weak. Retail sentiment is relatively low and several brand name retailers have announced plans to consolidate their presence in the Hong Kong and Macau markets. Chow Tai Fook noted that fewer wealthy tourists from Mainland China are traveling to Hong Kong while traffic has increased among visitors from less affluent Chinese cities who are spending less on jewelry.

India: The market is stable, but the trading volume is relatively low in Mumbai. Sentiment is being affected by lingering rumors of bankruptcies in the market. A number of diamantaires have traveled to Hong Kong, hoping the show will signal stronger Far East demand in the second half of the year. Still, they have fairly low expectations for the June show, which tends be the smallest of the three annual Hong Kong shows. Suppliers note that there is weak demand for 0.30-carat to 0.40-carat dossiers, and steady demand for 0.50-carat to 0.60-carat and 0.80-carat dossiers. There is good demand for 1-carat, VS, F-H, triple EX diamonds. In fancy shapes, there is steady demand for ovals and cushions. Manufacturers continue to complain that rough is too expensive and their polished production remains well below capacity.

Israel: Trading has slowed in Ramat Gan. Israeli diamantaires have low expectations for the Hong Kong show, but still hope to make some sales. Far East demand improved slightly ahead of the show, but the U.S. remains Israel’s strongest market. Overall demand is order-specific and buyers continue to avoid making large purchases for inventory. There is stable demand for 1-carat, D-H, VVS-SI diamonds, and for diamonds larger than 3 carats. In fancy shapes, there is good demand for pears and ovals with good proportions. Demand for cushions and emeralds has improved slightly.
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