Friday, 8 January 2016





A 2015 Year in Review

January

• U.S. retailers report higher than anticipated inventory as Christmas sales disappoint. 
• Electronics better than diamonds as mining companies failed to invest profits in generic advertising. 
• U.S. consumer confidence improves with overall holiday retail sales +5.5%, according to MasterCard Advisors SpendingPulse. 
• Far East markets cautious ahead of Lunar New Year as China’s 2014 GDP growth slows to 7.4%. 
• Markets look to the U.S. for support. 
• Polished market improves with steady U.S. demand for I1-I2 clarity diamonds but buyers push for lower prices. 
• Liquidity and rough price concerns continue into 2015. 
• Better to trade polished than manufacture rough. 
• Indian diamond manufacturing below capacity while polished inventory levels remain high. 
• Rough prices under pressure. 
• De Beers relaxes deferment policy and reduces prices estimated 4%. 
• Sightholders defer 20% to 25% of rough at $486M sight. 
• RapNet Diamond Index (RAPI™) for 1ct. diamonds -0.4% in January.

February

• Diamond markets cautious as trading stalls amid concern that market has not bottomed out. 
• Russians, Arabs and Chinese not buying as ruble and oil prices collapse and Chinese anti-corruption activity takes hold. 
• Significant reduction in transaction volume due to very low levels of consumer demand. 
• Dealers can’t buy if they can’t sell. 
• Chinese New Year looking sheepish as luxury demand slows. 
• Liquidity is tight but prices holding steady as sellers await outcome of Hong Kong show and possibility that shortages will stabilize the market. 
• Oversupply of diamonds throughout the distribution chain as India cuts production by about 30%. 
• Botswana factories cutting back due to unprofitable rough. 
• GIA backlog eases as diamond cutters reduce rough purchases and production. 
• Rough trading improves at Antwerp rough fair as De Beers reduces prices estimated 2% at $586M sight. 
• RAPI for 1ct. diamonds +1% in February.

March

• Polished trading stalls as Hong Kong show sales disappoint. 
• Chinese middle class growing with continued demand for under-the-carat lab-graded stones, but excess inventory is limiting sales. 
• Govt. anti-corruption campaign against conspicuous consumption sharply reducing demand for large expensive stones. 
• Basel shows slow. 
• Weak demand severely restricting trading volume at current price levels. 
• Buyers have become more selective as the market slows creating opportunities for suppliers with the best goods. 
• Sharp decline in manufacturing expected to create shortages which will help future demand. 
• Antwerp concerned as bank financing dries up. 
• De Beers $536M March sight destabilizing the market as it severely reduces liquidity and increases supply, while polished demand slumps due to weak currencies, Chinese crackdown and lower oil prices. 
• Sightholders refused about 30% of rough diamonds offered for sale. 
• Too many diamonds chasing too few buyers.
• Trade is advised to buy polished instead of rough and stop adding fuel to the fire. 
• RAPI for 1ct. diamonds -2.5% in March.

April

• 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. 
• Miners keeping rough prices high but selling less goods. 
• Mining companies are encouraged to lower rough prices to levels that ensure reasonable manufacturer profitability and a sustainable diamond trade. 
• ALROSA rough prices rise 2% to 3% at April sale, but reportedly allows deferrals up to 40%. 
• Miners increasing rough production despite weak 1Q sales. 
• Diamond market sentiment improving slightly as prices stabilize, but cutters still losing money on overpriced rough. 
• Shortages developing with very low trading volume and reduced manufacturing activity as Indian market heads for vacation. 
• Good U.S. demand for commercial-quality diamonds. 
• Lower gold prices raise expectations for good jewelry sales during China’s May Day holiday. 
• Rough markets quiet as sightholders expect reduced prices at next De Beers sight. 
• RAPI for 1ct. diamonds +0.4% in April.

May

• Diamond market sentiment improving slightly with prices stabilizing as steady U.S. demand raises expectations for Las Vegas shows. 
• U.S. demand good but not great as jewelers experience mixed 1Q
• Far East demand soft despite improved China jewelry sales during May Day holiday. 
• Polished prices stabilizing with shortages of good quality 3X diamonds. 
• Shortages developing but rough prices have not come down sufficiently to enable profits. 
• Cutters still losing money on overpriced rough. 
• Stable prices for select categories with shortages supporting the market. 
• Poor makes are still in over-supply. 
• Rough demand stable after $506M De Beers sight even though cutting center profit remains problematic. 
• GIA recalls 424 grading reports for diamonds treated to temporarily improve their color by up to three grades. 
• RAPI for 1ct. diamonds +0.3% in May. 

June

• JCK Vegas show meets low expectations and creates healthy positive mood even though sales were slow for many suppliers. 
• U.S. market is stable and consistent but post Vegas show demand not as strong as previous years as vacation period approaches. 
• Diamond trading activity slow with polished prices coming under pressure due to continued sluggish demand. 
• Some improvement in caraters with good U.S. demand. 
• Better-quality 30s-40s weak as Chinese demand remains soft amid concerns that some Chinese firms are not making payments. 
• Big stone supply and prices tight, demand spotty, sales weak. 
• Slow polished sales resulting in significant excess inventory positions. 
• Bargain hunters making low offers for popular VS-SI larger goods but suppliers holding back due to shortages and high replacement costs. 
• Selective buyers filling orders forced to pay good prices, flexible inventory buyers getting very good deals. 
• Indian liquidity tight and getting tighter with reports of approximately $100M Godhani Gems insolvency and additional smaller financial failures. 
• De Beers, ALROSA expected to maintain low volume, steady prices. 
• De Beers raises some prices and improves assortments at $586M sight. 
• RAPI for 1ct. diamonds -0.9% in June.

July

• Polished prices low, inventory high with steady demand for U.S. goods that will be in tight supply as new production plummets. 
• Hong Kong June show very slow reflecting poor Far East luxury demand. 
• Far East luxury market declining as Chinese stocks drop 6% and trim wealth. 
• Chinese buyers are delaying payments to polished suppliers. 
• Sizes below 1ct. under severe pressure. 
• Shortages holding up prices for large stones but some very good deals available. 
• Liquidity is tight and manufacturers continue to lose money and reduce activity. 
• More Indian companies file for bankruptcy with estimated $200M outstanding debt. 
• Indian cutters reject rough import ban. 
• De Beers July sight much lower than expected at $200M with some 65% of goods rejected. 
• De Beers allows sightholders to defer 75% of their August purchases. 
• Rough prices unsustainable and likely to fall significantly. 
• Sightholders buying polished at reduced prices rather than expensive rough. 
• Low expectations for upcoming India and Hong Kong shows as Chinese stock market bubble bursts. 
• RAPI for 1ct. diamonds -2.5% in July.

August

• U.S. stable, rest of world very, very slow (VVS). 
• Large attendance at Mumbai IIJS show good for gold, not good for diamonds. 
• India has potential to become the new China with over 420M people under the age of 18. 
• Indian diamond cutters should reduce reliance on overseas buyers and develop Indian consumer market for sustainable diamond sales, prices and profits. 
• Indian domestic market cautious as the rupee falls below 65/$1. 
• Chinese consumer diamond demand plunges as Shanghai stock market drops 8%. 
• NY market waking up as cash buyers seek good deals and picky buyers forced to pay full market prices. 
• Polished trading cautious as financial markets tumble and dealers in Belgium and Israel go on vacation. 
• Rough markets under extreme pressure as De Beers, ALROSA allow clients to reduce and refuse purchases. 
• De Beers restarts generic marketing spend to restore U.S., China holiday sales growth, drops prices 8-10% at $250M sight. 
• Cutters hope cheaper rough will enable profitable 4Q season but trading is still restrained. 
• RAPI for 1ct. diamonds -0.9% in August.

September

• Hong Kong show OK but Chinese demand slow before October 1 Golden Week. 
• Chinese wedding demand stable but luxury purchases have been put on hold due to weak economy and stock markets. 
• Indian dealer market illiquid with no one buying for inventory. 
• Great opportunity for buyers as manufacturers and dealers looking for liquidity. 
• Polished buyers selective and making low offers. 
• Some action in Israel during Diamond Week but ~$15M insolvencies creating concern. 
• Dubai reports ~$136M retailer insolvency with similar failure expected in China. 
• Fair to good NY demand for large stones but stock market plunge reducing U.S. consumer confidence. 
• Dealer and retailer demand is price sensitive with strong focus on SI-I1 goods for the U.S. market and top grade 3X cut quality. 
• Certs slow with better demand for lower quality parcels.
• Manufacturers maintaining reduced (-30%-50%) polished production through Nov. Diwali season. 
• ALROSA cuts rough prices 8%-10%, allows 50% deferrals. 
• Botswana budget pressured by falling rough sales. 
• Rough prices still too high with no profits for cutters. 
• Rapaport estimates reasonable profitability would require an additional 20% rough price drop. 
• RAPI for 1ct. diamonds -3% in September.

October

• Hong Kong’s Golden Week weak as mainland Chinese tourists stay home. 
• China cautious despite better-than-expected 6.9% 3Q GDP growth.
• Rising expectations for U.S. holiday sales amid launch of Signet-De Beers “Ever Us” two-stone marketing campaign. 
• Trading activity improving as aggressive dealers try to buy select goods at deep discounts. 
• NY-Israel DDC show successful with motivated sellers giving good prices to buyers filling specific orders. 
• U.S. and Israeli dealers “cherry-picking” Indian goods before Mumbai shuts for Diwali. 
• Commercial goods better than high end with 0.50-0.75-ct., H-I moving better than 1ct., D-F, VVS goods. 
• Reduced Indian production before Diwali holiday creating some shortages. 
• Slight price reductions at De Beers $200M sight offset by changes in size assortments as cutters reject about 50% of allocations. 
• Current rough prices unsustainable and unacceptable. 
• Rough under continued pressure with reports of De Beers discounting. 
• Sight system falling apart as 100% deferrals allowed for Nov. 
• GIA invalidates 1,042 grading reports after computer hackers penetrate system and alter data, RapNet suspends 10 members that GIA says were involved. 
• RAPI for 1ct. diamonds -1.3% in October.

November

• Diamond trading improving but very cautious as India closes for Diwali. 
• Shortages developing before important U.S. holiday season which is reducing sales. High price to pay for high [rough] prices. 
• Shortages of the finest select goods helping to stabilize the market with improvement in U.S. memo demand as holiday season approaches. 
• Some signs of [polished price] stabilization as manufacturing activity plummets and factories close for Diwali. 
• Rough trading freezes as sightholders defer most goods at unprecedented $70M De Beers sight with factories closing for extended Diwali break. 
• Rapaport calls for resignation of De Beers CEO and 30-50% rough price cut to inject liquidity and profits into diamond trade. 
• De Beers stops buying and paying Botswana for rough, 2H15 De Beers rough sales expected to plummet at least 60%, possibly 70% Y/Y. 
• Retailers discounting with Amazon offering 70% on fashion jewelry and Macy’s 30% on engagement rings for Black Friday. 
• Chinese single’s day (11/11) online sales lift Far East sentiment (1derful). 
• U.S. retail okay as holiday season starts. 
• Dealers hope for last-minute orders but concerned as jewelers inventories are high. 
• RAPI for 1ct. diamonds +0.7% in November.

December

• Black Friday sales (-10%) signal shifting consumer behavior. 
• Millennials buying more on mobile as comScore reports online Thanksgiving-Cyber Monday sales +24% to $5.3B. 
• Polished trading improving with holiday demand as shortages support prices for RapSpec A2+ (3X, none) diamonds. 
• 0.30-0.40ct. improving with significant reductions in supply. 
• Shortages supporting polished prices but reducing sales during important holiday season as dealers fill last-minute orders. 
• Chinese New Year demand improving but very cautious. 
• Rough prices remain high at De Beers estimated $180M sight and small ALROSA sale. 
• Rough demand strong at tenders but very weak for De Beers overpriced rough. 
• De Beers, ALROSA say rough prices down 15% in 2015.
• Rough prices higher than resultant polished, significantly restricting rough trading and diamond production. 
• Sightholders expect rough price cuts in 2016. 
• RAPI for 1ct. diamonds +1.4% (December 1-24).

No comments:

Post a comment