Industry News by Nemesis

Rapaport Weekly Market Comment

February 5, 2017

Polished trading slow with Far East dealers on holiday during the Chinese New Year. Manufacturing profit margins squeezed with high rough prices and soft polished demand as 1 ct. RAPI -0.9% in Jan. U.S. 2016 jewelry sales +5% to $71.4B but consolidation continues as JBT reports 1,669 jewelry businesses closed in 2016. Signet makes key personnel changes to strengthen digital offering after lackluster holiday season. LVMH 2016 jewelry sales +5% to $3.7B. ALROSA 2016 production -2% to 37.4M cts., sales +34% to 40.1M cts. Belgium 2016 polished exports -10% to $11.8B, rough imports +9% to $12.1B. Rio Tinto to close U.S. office. Brendan Bell to step down as Dominion CEO. 

Fancies: Fancy-shape demand improving slightly with shortages of fine-quality, large Pears and Ovals. Cushions making comeback. Emeralds selling better than Princesses. Some demand for big fancy shapes, but buyers extremely picky. U.S. demand steady, Far East fancy shape demand weak. Large 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: Polished market stable but quieter than expected for this time of year. Dealers surprised by strong rough market while polished and retail sectors sluggish. Consumer confidence weakened in January with households less optimistic than before about business conditions. Steady engagement ring and bridal demand, while fashion diamond jewelry soft ahead of Valentine’s Day. Jewelers expect greater online focus after ecommerce outpaced bricks-and-mortar sales this holiday season. 

Belgium: Cautious polished trading during Antwerp Fair. Steady orders for specific goods with very little inventory buying. Stable demand for 0.30 to 2 ct., G-J, VS-SI, RapSpec A2+ diamonds. Dealers anticipate a gradual improvement in polished demand in light of strong rough trading and lower retail inventories. Profit margins tight as rough trading remains strong and prices firm. 

Israel: Polished trading quiet. Growing concerns about low profitability amid continued strength in the rough market. Steady demand for 0.30 to 2.99 ct., F-I, SI2-I1, RapSpec A3+ diamonds. Israelis struggling to compete in the rough market with Indian manufacturers who are supporting price levels at expensive De Beers and ALROSA sales. Sentiment improving as positive feedback surfaces about tax deal. Dealers seeking new trading avenues with auction center opening in the bourse and more companies partnering with online retailers such as James Allen. 

India: Trading subdued with limited transactions as foreign buyers push for deeper discounts. Very few large orders in place from retailers building up inventory. Suppliers waiting for Hong Kong International Jewellery Show (Feb. 28) to assess Far East demand and sustainable polished price levels. Steady rough trading after large De Beers and ALROSA sales. Manufacturers raising production in anticipation that polished trading will improve in February and March. 

Hong Kong: Dealer market on vacation with retailers focusing on Chinese New Year season. Busy shopping period calms as consumers spend holiday week with family or traveling. Early indications of improved jewelry demand in mainland China for Year of the Rooster. Chow Tai Fook opens ‘Monologue’ stores targeting young Chinese consumers with Pandora-like lower-priced jewelry. 

 

Source: Rapaport

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