Friday, September 9, 2011

Market Comments 9/8/2011

Diamond markets quiet due to price uncertainties with some suppliers offering goods at low prices. Market waiting for Hong Kong show amid hopes that Far East demand will improve industry sentiment and stabilize prices. One carat RapNet Diamond Index (RAPI) falls 4% to 103.91 in August. Rough trading weak. ALROSA sales +23% to $3.2B in first eight months of 2011. Harry Winston 2Q group sales +45% to $222M, net profit -23% to $10M. U.S. July polished imports +25% to $2.06B, polished exports +20% to $1.42B. Volatile gold sets new record ($1,922.20/oz).

Global Markets

United States: Some polished trading is taking place with retail buyers pressing for deeper discounts in the hope that a stronger buyer’s market will develop ahead of the fourth-quarter season. Wholesalers are hoping that the Hong Kong Gem & Jewellery Fair, which starts on September 19, will bring price stability and inject some confidence for the season. There is a shift toward cheaper stones with buyers focused on SI goods. Bridal continues to carry the market with rising interest in branded goods, but at lower price points.

Activity is slow in Antwerp, despite being the first full week of trading since the summer break. Polished buyers are prepared to hold back from making large purchases while prices continue to downtrend. Rough inventories remain high but trading in the dealer market is low. Overall, sentiment is restrained as dealers lack the confidence to close deals at while price levels appear uncertain.

Trading remains slow as local and international buyers are waiting to assess if further rough and polished price reductions are pending. There is some concern that the market slump will extend through the Hong Kong show, which could negatively impact the fourth-quarter season. The Inquiries are being submitted, but it appears that most of the activity is about understanding prices, rather than finding goods. Buying is focused on filling existing orders.

Activity in the local polished market has improved slightly after many dealers returned to business following the recent Jain festival of Paryushan. There is good demand for star and 1.00-carat size goods, but buyers and sellers are uncertain about whether to close deals given the significant price variations prevalent in the market. Indian retailers and polished dealers have adopted a wait-and-see attitude to assess near-term price trends. Sentiment in the rough market remains weak as buyers refrain from buying since they expect prices to decline further.

Wholesale activity has improved slightly as retailers have begun preparations for the National Day Golden Week celebration on October 1. However, buying remains cautious due to price uncertainties. There is a sense that the upcoming Hong Kong show, which starts on September 19, will provide strong last-minute buying opportunities for the festival and inject some stability in prices.

Hong Kong:
Trading remains cautious as buyers are uncertain about price trends in the coming weeks. Many are waiting for the Hong Kong show to assess prices and make larger purchases to fill inventories. Wholesalers are focused on getting ready for the show. Polished diamond demand is stable as jewelry retail sales continue to rise across the region.

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