Surat’s diamond sector is feeling more upbeat following the end of the national jewelers' strike and rising demand from China and the United States for polished goods. After picking up in January-February, trade again plummeted in March due to the nationwide jewelers' strike over a proposed new tax on gold that served to put a dent in domestic demand for diamonds, The Business Standard reported. Traders believe that a rise in domestic and international demand as well as the effect of the end of the strike will create a rise in business levels.
"I see or rather have been told that my mate Boney (ed: Rapaport) has lowered prices in the better end of the larger sizes
Given that his price list is concocted by him for him, except those who willingly enrich him by buying it, he of course has every right to do whatever he wants with prices…, which of course is exactly what he does anyway.
I would presume that most in the industry would be less than amused at his latest participation in the workings of their daily life.
In the light of demand for polished diamonds which is far from spectacular and rising inventory levels, rough diamond trading was "surprisingly upbeat" in April, writes Avi Krawitz in Rapaport, asking whether the industry is again headed for an oversupply of polished goods in the market which will push prices down. De Beers posted its largest sales cycle so far this year at last week’s sight – and that despite raising prices by an average of 2%. Meanwhile, ALROSA sold most of its offering after slightly reducing prices.
The fact that diamond miners have been unable to prevent prices from dropping below where they were a decade ago is a clear sign that the industry is failing to maintain the cachet of its brand. Today's consumers have different desires than those of their parents who may remember Marilyn Monroe singing 'Diamonds are a girl's best friend' and are more likely to spend their money on nice vacations, fancy handbags and high-tech gadgets. They likely only think of diamonds when it comes to a (mostly) once-in-a-lifetime engagement ring or a wedding band.
Diamond industry analyst and wholesale diamond supplier Melvin Moss believes the diamond industry is heading down the same road that led to a "glut of unwanted goods" last year, and that this will soon lead to a fully-fledged buyers' market. He writes, "Total rough supply to the market in the first quarter of 2016 is estimated at 3 billion dollars. Manufacturers have purchased large quantities of rough but their purchases are not converting into a greater demand for polished diamonds.
Diamond industry analyst Ehud Arye Laniado reflects on uncertainties and lingering questions about the direction the diamond trade is taking in the wake of BaselWorld, and wonders whether it is even appropriate to sell loose diamonds at such a high-luxury show? We have selected a few choice comments: "Business [in the diamond section] was not good. This luxury-oriented show is not a good fit for small goods or even 1-2 carat items.
Charles Wyndham wonders about the sense of jewelry retailers in Antwerp, London, New York and many other places offering huge discounts which makes the products, touted as the ultimate luxury goods, "look exceedingly grubby". "I have never understood why so many, if not the vast majority, of retailers selling diamond jewelry insist on stuffing their windows as if it were a butchers shop. Just as the industry itself has in essence changed so little over the past however long, so retailing of diamonds has hardly progressed, and indeed in many ways regressed."
There was a 2.9% increase in jewelry prices in the United States last month, according to statistics from the Bureau of Labor Statistics which showed the rise in the consumer price index (CPI) for jewelry, reported Rapaport. The figure was 6.2% higher than a year before. The increase followed a rise in polished diamond prices in February, with the RapNet Diamond Index (RAPI™) for 1-carat, GIA-graded diamonds rising 0.3 percent. RAPI for 0.30-carat diamonds advanced 0.4 percent and RAPI for 0.50-carat diamonds added 0.7 percent.
If there is one lesson to be learned from the Hong Kong shows that took place during the first week of March, it is that the diamond industry is focused on the very short term and uncertain about market developments in two-to-three months, writes Avi Krawitz for Rapaport News. Traffic was better than expected and the exhibition was busier than last year’s show, and it appeared that dealers again had the confidence to close deals.
Diamond industry analyst Ehud Arye Laniado took the occasion of the international jewelry show in Hong Kong to ascertain the mood of the diamond market, specifically its reaction to the high levels of rough supply in early 2016 in light of demand for polished goods, and more specifically to guage the resulting profitablility.
Diamond manufacturing technology maker Sarine Technologies posted a 32% drop in revenue to $12.4 million in the fourth quarter which ended December 31 due to declining levels of diamond manufacturing. Meanwhile, profits dropped even more – down 62% on the year to $1.5 million in the quarter. For all of 2015, revenue plunged 45% to $48.5 million and profits dropped 87% to $3.6 million.
Speaking about the approximate $1 billion of rough goods sold by ALROSA and De Beers alone in January, International Diamond Manufacturers Association (IDMA) President Maxim Shkadov writes in GemKonnect that while it is encouraging, it must be borne in mind that the midstream sector is still weak and that most diamond traders yet have to receive payment for their holiday sales. The relatively large volumes, therefore, pose a threat to manufacturers who may now face higher prices for rough diamonds.
Prices of some categories of polished diamonds have risen by 4-5% since the start of the year in India due to shortages in the market, according to the Economic Times. The report cited Vipul Shah, the managing director of diamond manufacturer Asian Star Company, as saying: "It is good for the manufacturing industry, which has been languishing for so long. But rising prices can affect the retail demand for diamond [jewelry] in India," he said.
Namibia's desire for beneficiation of its diamonds will require large-scale investment and big sacrifices by the country's population, says Professor Roman Grynberg, a senior research fellow at the Botswana Institute for Development Policy Analysis, a nongovernmental research organization. The government and people of Namibia will have to ask themselves if the high costs involved are worthwhile. He also writes that Botswana and Namibia have to recognize that there is currently no commercial advantage to cutting and polishing stones domestically, miningweekly.com reports.
Diamond industry veteran Ehud Laniado said he and other market players expected the strong demand seen in January for rough diamonds to fizzle out before February, but instead the increase in demand has been sustained. He says current market conditions are characterized ongoing strong demand from De Beers’ Sightholders, with the second Sight of the year, opening today (Monday), expected to be similar in size to the January Sight, at around $500 million.
The U.S. consumer price index (CPI) for jewelry rose by 6.7% on the month in January, according to the U.S. Bureau of Labor Statistics. The reading was 2.9% higher than a year ago, Rapaport reported. The rise in jewelry prices follows increases in polished diamond prices last month as a result of shortages. Rapaport said its proprietary price index had shown 1-carat, GIA-graded diamonds increasing by 0.9% during January, while 0.30-carat diamonds increased by 4.7% and 0.50-carat diamonds showed a price increase of 4.5%.
De Beers will carry on limiting supply to the market in a bid to help the industry recover from weak demand. “We’re very mindful of not pushing it too far,” Gareth Mostyn, head of strategy at De Beers, told Bloomberg. “We would much prefer a steady, sustainable recovery rather than any spectacular takeoff.” Miners slashed about a quarter of global supply last year in an attempt to stem an 18% fall in rough diamond prices due to an economic slowdown in China and a credit crunch.
Fancy color diamond prices increased 0.3% on average during the fourth quarter of 2015 as better-than-expected holiday sales outweighed sluggish Asian demand, according to the Fancy Color Diamond Index created by the Fancy Color Research Foundation (FCRF). Rapaport News notes that lower supply from diamond producers has led to a shortage of fancy yellow gems. This led to strong prices for the fancy yellow segment, which increased 1.1%, the FCRF said in a statement February 9.
Industry analyst Edahn Golan says fine jewelry retail sales in the US in 2015 posted a modest 1.1% rise, in the November-December holiday season, sales increased 2.5% YoY. The increase is good news, says Golan, but he adds the industry should remain cautious, "we are not out of the woods yet".
Depending on which index one follows, polished diamond prices either rose (RapNet) or fell (IDEX) slightly in January. IDEX writes that, "Restocking following the holiday season failed to stimulate an increase in polished diamond prices in January," but "January’s very slight slide provides hope that a corner has been turned." Meanwhile, Rapaport writes that, "Polished diamond prices rose in January as shortages continue to support the market. U.S.
After sharply criticizing De Beers' policy just a couple of months ago, Martin Rapaport writes that De Beers is now "moving forward in the right direction by reducing rough prices sufficiently to enable increased sales of rough diamonds and a resumption of diamond manufacturing activity." As evidence, he points to the rise in De Beers rough diamond sales to $540 million in the first sight of this year from $248 million in the final sight of 2015.
"Diamond sector profitability came under the spotlight in 2015 due to sluggish consumer demand in emerging markets and high rough prices relative to the resulting polished", writes Avi Krawitz for Rapaport Magazine. "Consequently, the year was one the industry would rather forget as it was characterized by excess supply and consolidation. Polished prices fell as manufacturers held large quantities of diamonds that were difficult to sell.
Last year was an exceptionally difficult one for the diamond and jewelry business for many reasons, writes CIBJO (World Jewellery Confederation) President Gaetano Cavalieri in GemKonnnect. But it might come to be seen as a pivotal one where the industry took control of its destiny and realized that past practises were no longer acceptable. This is particularly the case regarding the distribution of profit in the midstream of the pipeline.
In the traditional sightholder reception during the first De Beers sight of the year, De Beers Group Chief Executive Philippe Mellier said there were some encouraging signs in the diamond industry at the start of 2016, but cautioned that the recovery in the diamond sector remained delicate and that there was likely to be some volatility in 2016.
IDEX announcement: Major diamond and jewelry organizations, including the World Federation of Diamond Bourses (WFDB), Jewelers of America (JA), CIBJO (The World Jewellery Confederation), the Diamond Manufacturers & Importers of America (DMIA), the Indian Diamond & Colorstone Association (IDCA), the International Diamond Manufacturers Association (IDMA) and the World Diamond Mark (WDM), have all announced an exclusive offer to their members to join the thousands of international traders already doing business on the IDEX trading platform.
Two companies behind the world’s first diamond-backed ‘cryptocurrency’ will start selling the digital currency on January 18. The asset class being used is colored diamonds, which the founders of the PinkCoin say have not lost value since tracking began in 1959. Precious Investments and its subsidiary BitGem Asset Management (BAM) will launch the PinkCoin crowdsale – a crowdfunding process in which investors acquire PinkCoin tokens – on January 18.
Rapaport's "Weekly Market Comment", sums up the current mood of the diamond market as follows: "Polished prices [are] firm, market mood [is] much better and rough demand [is] improving due to polished shortages. Manufacturing [is] still at about 30% below capacity. We advise caution as current market prices are based on shortages created by artificial rough prices that are higher than resultant polished. Rough market volatility expected in 1H as miners reduce prices to increase revenue." Meanwhile, with the Chinese New Year right around the corner (Feb.
Rapaport News reports that, "Polished diamond market sentiment improved in December as shortages supported prices and dealers filled last-minute holiday orders. Initial reports about U.S. holiday season jewelry sales are positive." They also note that uncertainty about post-Christmas demand in the US and Chinese New Year sales has resulted in limited dealer and retailer inventory buying. Most importantly - though perhaps too early to know if it is sustainable - polished prices finally saw an uptick in December.
Diamond industry analyst Edahn Golan takes a cold hard look at the diamond industry in 2015, citing the well known issue of inventory buildup throughout the pipeline, but emphasizing the miners' slow response - and only then after their hands were forced by sightholder refusals and even contempt. He writes, "[De Beers] started taking steps and initiatives in earnest only in the second half of the year. We could argue that 2015 was the year of carrying 2014 mistakes. Producers ignored the high inventories and continued to pump rough into the market.
Israel's exports of polished diamonds plunged by more than 20% in 2015 from the year before to almost $5.0 billion from $6.27 billion, according to figures released by Shmuel Mordechai, Israel’s Diamond Controller. He said the sharp drop was due to the global decline affecting the diamond industry with falling demand in the United States and China together with the high prices of rough and polished diamonds. However, Mordechai said that the declines have affected the Israeli diamond industry less than other diamond centers.
Diamond miners are expected to have to offer more price cuts in 2016 to help the industry clear a backlog of stock and revive sales, according to sector experts, Financial Times reports. Lower prices and possible supply cuts will put further strain on the balance sheets of some miners including Anglo American, which owns De Beers, the largest supplier of rough diamonds by value.
From polishedprices Weekly Market Report: Traders reported some last minute orders in the run up to Christmas in the main US market. In Asia, all hopes are on the next big sales season during the Chinese New Year next month. In the wider market, traders said tight supplies in certain areas was driving up prices.“Polished is reacting to shortages in certain items,” said one trader. “These are moving with higher prices, but are well made goods only,” he said. In lower quality polished, inventory levels remain high.
"Now that 2015 is coming to an end, mining companies are reportedly preparing to reduce rough diamond prices in January," writes Avi Krawitz. "Having held off from doing so in the fourth quarter of this year, the industry may be missing an opportunity to capitalize on an expected seasonal improvement in polished demand at the beginning of 2016. After all, U.S. jewelers will, in theory, need to replenish goods they sold during Christmas while Far East jewelers will place orders around the Chinese New Year.
Although prices of some types of rough diamonds have firmed up by 2-3%, for the first time in more than half a year, diamond traders in India are not increasing their prices of polished goods for fear that a price hike may hit sales which showed a degree of recovery in October and November mainly due to demand from the United States. Domestic traders are also worried that already cautious banks will further reduce credit lines if they see lower levels of business.
When De Beers had a monopoly position in the supply of rough, the diamond trade was provided with a sort of insurance policy regarding prices, writes Daniel Horowitz. "Diamonds may well be more affordable for now thanks to the drop in prices, but the trade is unlikely to benefit from it. Diamantaires, and also diamond banks, have lost their life insurance as a result of the loss of the market's custodian,” Horowitz concludes.
Diamond cutting and polishing companies want the Namibian government to save them from collapse by cutting the price of rough diamonds the state supplies to them. "Time is running out. The industry is about to collapse," said Burhan Seber, managing director of Windhoek-based factory, Hardstone Processing. Seber, a former president of the Diamond Manufacturers' Association of Namibia, commented. "All we are saying is that there is a crisis in the industry. There is a rough pricing issue. The factories are now like ghost towns.
Early reports are that De Beers stuck to restricted supply of rough diamonds at the December sight this past week, according to polishedprices. Alrosa has been following the same line, although some boxes were reportedly slightly more expensive but better assorted at the last sale. Meanwhile, RBC Capital Markets said the difficult market conditions for smaller goods were likely to continue for some time. “That Petra held back sales suggests pressure on cheap goods will continue for a while,” RBC said.
Deviating from his standard m.o., in his latest "Diamond Intelligence Briefing" Chaim Even-Zohar (CEZ) gives De Beers CEO Phillipe Mellier center stage by laying out his argumentation from his Dec. 8 address to Anglo American's top executives and shareholders about the current situation and future prospects of the diamond giant.
Martin Rapaport says that according to their RAPI system, the price of polished diamonds rose in November. “This is the first time in six months that there has been an increase in the benchmark 1-carat RAPI index and 17 months since the last increase in 30 pointers. The worst may be over for declining polished prices," says Rapaport. The announcement states, "The RapNet Diamond Index (RAPI™) for 1-carat, GIA-graded diamonds rose 0.7% in November, its first increase in six months. RAPI for 0.30-carat diamonds advanced 3.3% and RAPI for 0.50-carat diamonds grew 1.1%.
Bain & Co. has released its fifth annual report on the global diamond industry prepared by the Antwerp World Diamond Centre (AWDC) and Bain. This year’s edition takes a comprehensive look at the year’s major developments along the diamond value chain, focusing on the reasons for the recent drop in rough and polished prices against the background of continued but slowing growth in the macro economy.