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Rapaport Weekly Market Comment

January 10, 2019

Sentiment improved after relatively good holiday season, but dealers and cutters concerned about low profit margins, excess supply, and selective demand. Indian bank credit tightening, with ICICI to close Antwerp branch. Stock markets rebound, with Dow index +2% since Jan. 1, amid optimism for US-China trade deal. Suppliers focused on Chinese New Year orders, with steady demand for lower-color and -clarity goods (G-J, VS-SI). Lab-grown producers gaining investor interest. Diamond Foundry to raise annual synthetic-rough production tenfold to 1M cts. Tiffany & Co. declares geographical provenance of diamonds over 0.18 ct. De Beers approves changes to its disclosure rules.

Fancies: Fancy-shape market stable, driven by US and European demand for fashion jewelry. Ovals are best sellers, followed by Emeralds, Cushions and Pears. Supply shortage supporting prices for Pears. Radiants improving. Marquises and Princesses weak. Oversizes selling well. Steady demand for fine-quality 6 to 10 ct. Ovals, Pears and Emeralds, with prices firming for 3 to 5 ct. due to shortages. Chinese consumers seeking fancy shapes at better prices. US supporting market for commercial-quality, medium-priced fancies under 1 ct. Off-make, poorly cut fancies illiquid and hard to sell, even at very deep discounts.

United States: Dealers slowly returning from New Year vacation; stronger trading expected from next week. Mixed feedback about holiday selling season. Good demand and short supply of excellent-cut VS2-SI1 diamonds. Jewelers note busy January, with a lot of repair work and gift-card purchases. Steady sales of engagement rings ahead of Valentine’s Day.

Belgium: Sentiment positive as dealers return from Christmas break.More confidence in European luxury market than Indian dealer trading. Steady interest in 1 to 2 ct., G-J, VS-SI diamonds. Dossiers weaker. Deep concern about credit scarcity and banks’ caution regarding the diamond industry. Rough sector quiet.

Israel: Companies uncertain about prospects for year ahead. Optimism for US demand, caution about China. Subdued local trading amid unease about new tax laws, with some companies considering relocating. Dealers bargain-hunting rather than focusing on niche specialties.Polished inventory levels stable compared to last year.

India: Slow trading, with few foreign purchasers in the Mumbai market. Buyers selective, but having difficulty finding the right goods at the right price. Suppliers maintaining stable prices on fresh supply, but have a lot of older merchandise in stock. Manufacturers keeping production below capacity for now, as concerns about profitability persist. Banks raising collateral requirements, with liquidity crunch expected through the end of the fiscal year on March 31.

Hong Kong: Polished trading steady as jewelers prepare for Chinese New Year sales. Retailers reducing in-store inventory of larger certified goods, preferring to contact suppliers as orders come in. Solid market for 0.30 to 0.50 ct., G-J, VS1-SI2 diamonds. Good engagement-ring demand for 1 ct., F-J, SI diamonds with no fluorescence. Dealers shifting to lower colors and clarities to meet price points.

Article originally published on Diamonds.net here

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