SA diamond producers welcome ruling on Mining Charter

The South African Diamond Producers Organisation (SADPO) has supported a High Court ruling that the country’s Mining Charter is an instrument of policy, not binding legislation.

Today

Indian diamond exporter under Income Tax radar

The Income Tax department carried out search operations on premises connected to a leading diamond manufacturer and exporter from Gujarat and seized a large volume of unaccounted data. The raids, which began on September 22 based on intelligence input...

Today

New RJC standard for lab-grown materials

Responsible Jewellery Council, the world’s leading standard-setting organisation for the global jewellery and watch industry with 1,500 member companies in 71 countries, announced that it will develop a standard for laboratory-grown materials to establish...

Today

Mountain Province Diamonds announced appointment of director

Mountain Province Diamonds Inc. announced the appointment of Mr. Dan Johnson, P.E. to its Board of Directors. An accomplished leader in the mining industry, Johnson's expertise ranges from mine design, construction, and operations, to finance and...

Today

Minjar Gold Pty Ltd seeks proposal to acquire 100% ownership of Golden Dragon Gold Project

Australian miner Minjar Gold Pty Ltd announced that it is seeking proposals to acquire 100% ownership of the tenements of the Golden Dragon Gold Project and / or the neighboring Fields Find Project together the Assets. The Assets are located 350km...

Today

Celebrating Chinese Buyers Kill Hong Kong Fair

03 october 2012

The September Hong Kong Jewellery & Gem Fair closed without providing the kind of high demands for loose diamonds that everyone had secretly hoped for, Edahn Golan says on www.idexonline.com. So what did happen at the show, and why was demand lower than anticipated? Traders arrived at the fair knowing exactly what they wanted to buy, with almost no one stocking up for inventory. With such specific demands and buying, price was the sole factor, and buyers shopped around before purchasing.

The situation is a direct outcome of the runaway demand in the first half of 2011. At that time, Indian gold jewelry retailers started to offer diamond jewelry. More importantly, in China, retailers opened new stores and needed goods to stock them. The reaction among suppliers to this increased demand was a swelling in prices. However, by July 2011, they had had their fill, demand abated, prices dropped and have yet to recover. It has been more than a year since then, and the hope was that by now these retailers would have been back to restock their inventories.

Low Inventories, Low Demand

So if inventories are low, why is demand not rising? In India, consumers have somewhat lost their appetite for diamond jewelry. A combination of falling exchange rates and rising gold prices told consumers that if they wanted to protect their savings, gold jewelry was a better option. Retailers, therefore, were not that keen on buying diamond jewelry at the trade show in Mumbai in August, and – not surprisingly – still had limited need of goods when the Hong Kong fair opened a few weeks later.

Without heavy demand from India, hope is pinned on Chinese buyers. Consumer demand has slowed a little in China, but not enough to explain the continued sluggish demand from retailers and wholesalers. The issue, in this case, is timing. On October 1, China celebrates National Day, a weeklong celebration. During the week prior to the celebration, when the Hong Kong fair is held, factories close down and few buyers have the time to deal with a trade fair, especially if the goods will just be sitting idle while they are on vacation the following week.

Many Chinese buyers prefer buying after the vacation. Hence, the low demand from China. That is why the March Hong Kong show has been so strong in the past few years.

With both Indian and Chinese buyers essentially out of the picture, the Hong Kong fair had little to offer diamond wholesalers this year.

In one of my taxi rides to the show, I shared a cab with two metal suppliers. A few minutes into the ride, and after introductions, one of them asked, "If diamonds look so similar, basically the competition is price, isn't it?" Wham, he nailed it! It's now all about price.

With hundreds of suppliers exhibiting, naturally, it was the bigger firms that sold more. If price is the issue, selling large volumes means businesses can still generate a sizable income. In addition, the larger firms are more sensitive to bank credit and are motivated to sell. Mid-sized and smaller firms are less flexible and expressed less satisfaction from the fair's results.

Buyers were mainly interested in VS-SI goods, leaning more towards the top DEF colors. Lower clarities – SI-I1 goods in HIJ colors were also in good demand, however, both ranges faced serious price resistance by buyers.

Larger goods, +3 carats, items that are harder to come by, were in good demand whereas 1-2 carat goods – with more uncertainty over their price – were open to price wars between buyers and sellers.

And the path from here? Further price sensitivity may be seen for items that were in lower demand. At the same time, if wholesalers hold out and don't budge will likely see Chinese buyers succumbing to their inventory pressures and willing to pay the price come mid-October.