Work hard and you will find success

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Italian Exhibition Group (IEG) is a leader in Italy in the organisation of trade fairs and one of the main operators in the trade fair and conference sector at European level, with structures in Rimini and Vicenza, as well as further sites in...

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30 august 2021

The Diamond Trade Week in Review

28 august 2009

Retailers in the U.S. are surviving primarily due to bridal market demand for wedding bands and engagement rings – there is only a trickle of other jewelry selling, RAPAPORT reported in Diamond Trade Review. Business is still extremely slow and it is becoming increasingly difficult to sell without steep discounts as consumers use the depressed marketplace to their advantage and demand reductions. Retailers have already been operating with extremely thin margins, which continue to restrain long-term growth prospects.
In Belgium, bourses remained calmer than usual after the August vacation period ended. This year, buyers lack the positive energy traditionally associated with post-summer holiday. Indian manufacturers in Antwerp also delayed returning to work due to the Jain religious holiday. There has, however, been some improvement in small stones and sizes above 5.00 carats
Manufacturers in Israel also returned to work after the summer holiday and business activity remains quiet. There are signs that manufacturers are starting to buy goods to stock up for the Hong Kong show in September, but not en masse. Some sellers in Tel Aviv speculate that polished prices will rise or that shortages will develop and are therefore standing firm on prices. Demand is best for 0.50-1.50 carat, D and J-M, VS1+ goods.
Activity for both the polished and rough markets in India is restrained due to the Jain religious festival in Paryushan. Manufacturers are looking for alternative sources of rough to no avail as reports of price increases from the Diamond Trading Company (DTC) have dealers concerned, especially since polished has remained relatively unchanged. Buyers are expecting polished prices to either rise or rough to fall as they feel the two markets are out of sync. There is some activity in Mumbai, with demand basically confined to stars and melees and goods of 0.30-1.49 carats, I+, SI1+. Demand from the Far East is keeping Mumbai relatively active, with a rising number of suppliers trying to break into the Chinese market with attractive prices.
The market in China is stable and wholesalers are focused on preparing for a big retail opportunity with the National Day Holiday Golden Week in October. Activity is expected to pick up further next week, driven by domestic demand for 0.30-1.00 carat, D-H, VVS-SI stones. Chinese wholesalers are concentrating on buying from India, which represents a cheaper alternative than other centers. India also supplies sizes suitable for the Chinese market – triple-X goods below 1.00 carat.
The market in Hong Kong is stable and dealers are buying diamonds both in bridal lines and jewelry. Confidence is up based on reports that growth has returned to the Chinese and Hong Kong economies and expectations are high that diamond business activity will further improve in September. However, prices from cutting centers are high for Hong Kong buyers, who are trying to purchase at unrealistically low prices. Demand is healthy for rounds, 1.00-2.00 carat, H-J, VVS-VS, excellent cut and fancies, collection D-F, VS goods. There are reports of shortages in pear and heart shaped fancy cut diamonds.
It appears that mining companies are squeezing manufacturers by increasing rough prices further in August. Reports from DTC's sight 7, BHP’s tender and Petra Diamonds' tender in South Africa all indicate price hikes ranging between 3 percent and 10 percent. This has caused a speculative atmosphere to return amongst manufacturers ,who are expecting polished to follow suit or for rough to fall again. Either way, rough appears to be trading at unsustainable levels, particularly as demand seems to have tapered off again this month, and as weak retail and consumer trend data from the U.S. continues to filter through.
Reports indicate that ALROSA rough is coming onto the market at prices that are in line with other mining companies, dispelling expectations that the Russian miner would dump goods at discounted rates. Furthermore, this week, Russia’s Prime Minister Vladimir Putin pledged $1.1 billion to support the industry and it is believed that these funds will go to state repository Gokhran for diamond purchases. Such a move would make ALROSA’s ambition to sell $2.6 billion worth of rough in 2009 more realistic. Having withheld rough sales during the first half of the year, sales in July and August are estimated at about $300 million. The company would therefore still have to sell about double its normal levels in the remaining months to achieve its goals. Questions also arise regarding what Gokhran will do with its stockpiles. More than $1 billion worth of Russian rough could find itself dumped this year or next.
There were some signs that India’s polished diamond exports are creeping back to 2008 levels after July exports fell only 7 percent to $1.2 billion. While volumes rose 12 percent to 4.3 million carats, the total was impacted by the drop in prices, which fell 17 percent to $286.6 per carat. At the same time, rough imports continue to slide and dropped 25 percent to $848.3 million in July, with volumes down 9 percent to 14.7 million carats. The country’s net diamond account (total exports of rough and polished less total imports) was in a deficit of $331.9 million, meaning that more diamonds stayed in India than went out, thus continuing the trend of the industry catering to a growing domestic market.
New Zealand-based jewelry retailer Michael Hill, which operates locally, in Australia, Canada and the U.S., reported fiscal-year results for the period that ended June 30, 2009, providing some perspective on its respective markets. The company noted that the strongest market was in Australia, where most leading indicators show that the economy did not suffer as much from the global recession. New Zealand, Canada and the U.S. were more impacted by the economic downturn. Michael Hill entered the U.S. as the crisis unfolded in September, purchasing 17 stores from the bankrupt Whitehall Jewelers. The U.S. segment generated $9 million in sales amidst difficult trading conditions and reported an operating loss of $3 million. The company is still confident that the “acquisition represents a good opportunity for the future.”