Diamond Market Comments

Chinese New Year increases sales of affordable jewelry but luxury demand slows. Strong demand for 0.30-0.40ct. GIA dossiers. Large volume of polished goods expected to enter market with 50-day backlog at GIA and Indian cutters increasing manufacturing. January RapNet Diamond Index (RAPI) for 1ct. +1.2%, 0.30ct. +1.6%, 0.50ct. +2.3%. Rough trading steady as Indian cutters increase purchases before banks reduce credit in April. LVMH 2013 jewelry/watch sales -2% to $3.8B. Swatch 2013 profit +20% to $2.1B boosted by $500M Tiffany lawsuit. Blue Nile 4Q sales +7% to $146, profit flat at $4.9M. U.S. 2013 jewelry sales +8% to estimated $71.3B.

Fancies: Fancy shape diamond market waking up with good U.S. demand for commercial-quality Ovals, Pears and Cushions. Square-shapes still on edge. Availability of well-shaped fancies tight with shortages of select fine qualities in large 5ct.+ sizes. Rising investment demand for large expensive stones. Off-make, poorly-cut fancies hard to sell even at very deep discounts. Buyers very selective regarding shape- and cut-quality with extreme price differentials between excellent- and average-cut fancy. 

Global Comments:

 United States: Sentiment in both the diamond wholesale and jewelry retail markets is positive as independent fine jewelers had a good year in 2013 and maintain a positive outlook for 2014. The diamond market is stable with steady demand for commercial goods and for large stones above 5 carats. Diamond dealers are looking for goods in India and Israel with steady demand for GIA dossier-certified diamonds. There is some restocking after the Christmas shopping season but demand is selective and retailers are trying to control their inventory more efficiently. There is some promotional activity ahead of Valentine’s Day. 

Belgium: Polished trading is steady with commercial goods selling well. In particular, there is good demand for 0.30-carat to 0.50-carat, D-I, VS-SI diamonds and a reported shortage of dossier-certified goods in the market. There is good demand for SI-clarity diamonds in most sizes. Trading is mainly focused on the U.S. and European markets while dealers are looking toward the March Hong Kong show to assess their prospects in the Far East. Rough trading is stable with brokers and manufacturers absorbing the price hikes that took effect in January. 

China: Diamond wholesale trading was quiet as the Shanghai Diamond Exchange (SDE) was closed for the Chinese New Year holiday period. There has been strong promotional activity among retail jewelers during the week, which is expected to continue through Valentine’s Day to help boost sales. Gold demand continues to be robust with horse-shaped pendants standing out as a popular item for the start of the ‘Year of the Horse.’

Hong Kong: The wholesale market remained closed during the first week of the Chinese New Year as the focus of the diamond market shifted to retail. Jewelry sales were boosted by an influx of tourists from Mainland China during the week although there are concerns that more travelers are bypassing Hong Kong for other locations in their shopping excursions. 

India: The polished market is active with steady orders from the U.S. and Europe while Far East clients are on vacation during the Chinese New Year. Dealer trading has slowed slightly as buyers are holding back due to higher seller asking prices. Dossiers are strong with reported shortages while manufacturers ramp up production, and due to delays at the GIA. Overall, sentiment is positive and dealers are optimistic about their prospects for the first quarter. Manufacturers’ profit margins have improved as they’re selling polished, which was manufactured from rough bought a few months ago at relatively low prices, at slightly higher prices. Rough trading is stable with local manufacturers aggressively looking for goods as there is concern that liquidity will tighten around the second quarter, as the major banks are expected to reduce their lending for rough purchases. 

Israel: Activity in Ramat Gan is stable although it has slowed slightly from previous weeks. There continues to be strong demand for 0.30-carat to 0.50-carat diamonds and improving demand for 0.70-carat goods. The fancy shape market is steady with good demand for ovals and cushions, mainly for the U.S. market. Rough demand is stable but Israeli brokers and manufacturers are finding it difficult to compete for goods with their Indian counterparts. 

From: http://www.diamonds.net/News/NewsItem.aspx?ArticleID=46064&ArticleTitle=Market%2BComments%2B2%252f6%252f2014