Bart De Hantsetters, President of the Belgian Diamond Manufacturers Association looks back at a difficult year for the global diamond industry and shares his views on how Antwerp should tackle the current crisis.
In a letter addressed to RapNet members, Rapaport announces changes in the RapNet structure, which will now include four Service Packages. Prices for the RapNet Dealer (available for members listing up to $7 million worth in diamonds) and RapNet Primary Supplier packages (for members listing over $7 million worth at the same time) will be raised starting January 1st to $100/month or $1,100/year and $500/month or $5,500/year respectively.
From their weekly snippets of industry sentiment across the major markets, Rapaport News writes that India is seeing steady trading activity with buyers looking for goods before next week’s Diwali break, there is steady demand from U.S. and slight improvement in China/Hong Kong orders. Meanwhile rough demand is weak as manufacturing activity remains low. Many factories will be closing early for the festival. Elsewhere, shortages of the finest select goods are helping to stabilize the market with improvement in U.S. memo demand as holiday season approaches.
Searching the Rapaport Market Comments (MC) for indicators as we approach the crucial diamond purchasing season, it appears that the best prospects are on the American market, with the De Beers-Signet “Ever Us” two-stone marketing campaign apparently generating early enthusiasm.
In his latest blog piece, JCK's Rob Bates talks about the decade-old controversy surrounding the Rapaport Raplist that pops every now and then. Despite the bickering and the fact much more data is generated and available today, the Raplist still is the number one source for diamond prices used by the industry. Bates argues discussion about price lists are not exclusive to the diamond industry, taking oil prices as an example.
"Current rough prices unsustainable and unacceptable", is how Rapaport kicks off their weekly Market Comments, which comes as little surprise after it was announced this week that sightholders rejected roughly 50% of goods at De Beers' latest sight. "We believe rough prices need to fall at least another 20% to ensure profitability", Rapaport adds. Market Comments reports that trading has been quiet more or less across the board, but that U.S.
Recapping an alltogether difficult and unusual year, the coming holiday season will be an important yardstick to determine where the diamond industry is heading, Rapaport analyst Avi Krawitz says. The stable but modest growth in the US market, turmoil on the stock markets and the continued pressure on the Chinese market - expectations for China's Golden Week sales results are low - don't call for optimism.
The Responsible Jewellery Council (RJC) said that the provenance claims provision in its 2013 Code of Practices should satisfy a diamond company’s need to trace its diamonds across the distribution chain. The comment came in the response to a Rapaport News request for comment on an article exploring whether a sufficient audit trail could be implemented to support a chain of custody for diamonds.
In a "Statement Regarding Diamond Specifications and the Rapaport Price List" Rapaport responds to recent criticism from the industry. The statement says "The Rapaport Price List provides benchmark prices based on the opinion of the Rapaport price analysis team, headed by Martin Rapaport.
Following the repeated criticism on Martin Rapaport's price list, Rob Bates analyzes the critic's arguments to set up alternatives, which they claim will be more stable and leave room for the market to work out discounts and premiums; an Israeli initiative involving a bi-annual price list, and an Indian alternative, which sources claim will list goods without prices. Martin Rapaport however is determined his list provides an adequate image of diamond prices for both sellers and buyers.
Diamond prices continued to soften in June with many categories trading at deep discounts to the Rapaport Price List. Markets were relatively quiet as U.S. demand after the JCK Las Vegas show was weaker and Far East demand was cautious. Manufacturers are under pressure and continue to lose money on their rough supply. The RapNet Diamond Index for 1-carat lab-graded diamonds fell 0.9% in June. RAPI for 0.30-carat diamonds declined 2.5% and RAPI for 0.50-carat diamonds dropped 2.6%. RAPI for 3-carat diamonds decreased 1.75%.
U.S. jewelry and watch sales across all channels were flat in May, up just 0.4 percent year on year, at $7.1 billion as estimated from preliminary government figures. According to Rapaport News calculations, jewelry sales rose a touch, up 0.5 percent, to $6.3 billion, while sales of watches fell 0.7 percent to $831 million during the month. Even though estimates were largely unchanged from May 2014, the very slight improvement broke a seven-month streak of sales declines for the sector.
Industry analyst Ari Kravitz presents the most salient and intertwined themes that emerged from the Rapaport conferences at JCK Las Vegas. A few key takeaways: desire for diamonds is largely dependent upon confidence in the product; this desire must be instilled and fostered; this involves improving the quality of retail and marketing content and ensuring a level playing field; and finally, confidence can only be safeguarded by reliable grading and the assurance of responsible sourcing.
In his editorial, Rapaport's Avi Krawitz notes that a vital element for the industry to ensure continuity in manufacturing operations is securing consistent long-term supply. But who is buying the rough through long-term contracts with De Beers, ALROSA, Rio Tinto and Dominion Diamond Corp., the suppliers that together account for about two-thirds of global production by volume ? Krawitz gives a comprehensive overview of which companies are buying rough?
Polished diamond trading improving as steady U.S. demand raises expectations for Las Vegas Shows. Far East demand soft despite improved China jewelry sales during May Day holiday. Polished prices stabilizing with shortages of good quality X3 diamonds. April 1ct. RAPI +0.4%. Fancy shapes weak. Rough markets cautious. De Beers reduces prices about 3% at small May sight, but rough still highly unprofitable. Titan's FY revenue +9% to $1.8B, profit +11% to $127M. U.S. March polished imports +9% to $2.2B, polished exports -8% to $1.7B.
Diamond markets were quiet in April. Many polished diamond suppliers did not lower their prices even though liquidity and profitability remain tight. Sentiment improved slightly as shortages helped stabilize prices toward the end of the month.
Martin Rapaport (Rapaport Group) released a comprehensive editorial entitled “Market Correction” that calls on the diamond trade to end unsustainable business practices, pointing at internal rather than external challenges as the main cause for the current state of affairs in the diamond industry. Citing the imbalance between high rough and low polished diamond prices, Rapaport calls on the banks, explicitly referring to the Indian government and banking sector, to stop financing unprofitable diamond manufacturing until polished prices rebound and profitability returns.
Rapaport Weekly Indian Market Report: "Very slight improvement for demand and trading activity in the local market, especially as prices firm and manufacturing units head for vacation. Liquidity remains tight and overseas payments are slow to materialize.
According to Rapaport market analysis, jewelry sales dropped 1.5 percent to $4.756 billion, while sales of watches contracted 2.9 percent to $630 million during year on year in March. In addition, March became the sixth consecutive month to reflect a decline in sales for the sector.
Rob Bates elaborates on diamond traders' attempts, first in India then Israel, to question Rapaport's diamond RAPI price index, by publishing their diamonds on RapNet priced at full “list” (Rapaport) price.
A group of leading Israeli diamond traders and manufacturers have decided to post their diamond stocks at full prices on the RapNet Diamond Trading Network (RapNet). The decision follows the publication of the latest Rapaport price list which showed that Rapaport had reduced the prices of a wide range of diamond categories without any commercial justification.
Avi Krawitz compares the first quarters of 2014 and 2015, while the first was the last positive episode in the diamond industry, the first three months of 2015 were tough, caused by slower than expected demand, consequent hesitant restocking by retailers, tight liquidity, and the lack of price corrections on the rough market. Even though the challenges for the industry - improving liquidity levels by raising demand - remain difficult, Krawitz expects the cycle will turn with reduced rough supply and manufacturing, shortages will ultimately help stabilize the market and stimulate demand
"Rough buyer price resistance is rational and healthy for the market as it protects cutter liquidity and profitability, while reducing oversupply of diamonds during period of relatively weak polished demand."
Polished diamond prices softened in March as trading volume was restricted by weak demand. Diamond market sentiment was weak throughout the first quarter. Jewelry retailers avoided large inventory purchases and buying was focused on satisfying specific demand to fill existing orders.
The Israeli diamond industry today announced that the recent establishment of a subsidized diamond manufacturing facility near Ramat Gan, providing a work environment and equipment for up to 100 polishers, is the first step in a plan to bring back polishing activity to Israel. The idea is to offer IDE members, especially small and medium sized companies, the ability to polish their rough diamonds in Israel, at prices competitive with or even cheaper than offshore locations. The facility also houses an academy to train new polishers, especially the younger generations.
De Beers' industry insight report indicates that global diamond jewelry demand rose 2.9 percent year on year to $81.4 billion in 2014, mainly driven by the U.S. and China, though China demand softened slightly. Demand elsewhere has remained relatively stable.
In view of next week's large sight Rapaport advises caution: "Next week’s large sight may destabilize market as it increases supply and reduces liquidity in a highly problematic market with too many diamonds chasing too few buyers. Trade is advised to buy polished instead of rough and stop adding fuel to the fire."
As the Hong Kong March Show drew to an end Rapaport's Avi Krawitz looks back at the key take aways of the Show - meeting low expectations in the industry -, the prospects of a maturing Chinese market, the role of the Chinese anti corruption campaign, and the overall state of the industry, which seems to be heading more and more towards consolidation.