Rapaport Weekly Market Comment May 17, 2013
Rough markets under pressure with some boxes selling at about 5% discounts following De Beers 4% price increase at last weeks $600M sight. Polished trading very slow as Chinese and Indian consumers and retailers buying gold instead of diamonds. Big stone boom continues. Christie’s Geneva sells $102.1M (86% by lot) with Pear Shape, 101.73 ct., D, FL diamond sold to Harry Winston for $26.7M ($254K/ct.). Sotheby’s Geneva sells $78.2M (87% by lot) with Cushion, 27.90 ct., D, IF diamond ring selling for $4.4M ($156K/ct.). Belgium’s April polished exports +23% to $1.2B, rough imports +38% to $1.4B. Swatch chairwoman Nayla Hayek appointed CEO of Harry Winston.
RapNet Data: May 16
Diamonds 1,003,940
Value $6,465,629,457
Carats 1,093,051
Average Discount -27.12%
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RAPAPORT ANNOUNCEMENTS
May-Jun
27-3
Mon-Mon
Rapaport Jewelry Auction
Las Vegas
View details.
May-Jun
30-6
Thu-Thu
Rapaport Melee Auction
Las Vegas
View details.
May-Jun
31-3
Fri-Mon
RapNet Diamond Listing Service
Register HERE for RapNets
Diamond Listing Service
at JCK Vegas 2013!
June
2
Sun
Rapaport Breakfast & Conference at JCK
Mandalay Bay Resort
8 a.m. to 10 a.m. -- South Seas Ballroom, breakfast and Martin Rapaports State of the Diamond Industry presentation.
10:30 a.m. to 12:30 p.m. -- Banyan Ballroom, Rapaport Certification Conference with RapNet insights into grading reports.
2 p.m to 4:30 p.m. -- Banyan Ballroom, Rapaport Fair Trade Jewelry Conference.
Register now, or email conference@diamonds.net or call 1.702.893.9400, these events are free but seating is limited.
QUOTE OF THE WEEK
Despite the retrenchment in the gold price during the quarter, there was a dramatic increase in demand for jewelry, bars and coins. That is a testament to the fact that demand for the physical asset is robust.
Jason Toussaint | World Gold Trust Services
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INDUSTRY
Gold Jewelry Demand Jumps
The World Gold Council (WGC) reported that global jewelry demand by weight jumped 12 percent year on year for the first quarter of 2012, led by 19 percent growth in China and 15 percent growth in India and the Middle East. Demand from the U.S. rose 6 percent. Demand for coins and bars surged 52 percent in India, jumped 43 percent in the U.S. and increased 22 percent in China.
However, overall demand for gold in the first quarter fell 13 percent due to large outflows from gold exchange-traded funds. By value, gold demand fell 16 percent to $50.5 billion and the average price of gold fell 3 percent per ounce.
Marcus Grubb, the managing director at the WGC, explained that first quarter figures showed the fundamentals of gold remained robust prior to the price drop in April.
De Beers Raises Prices
The De Beers May sight had an estimated value of $600 million as the company raised its rough diamond prices by approximately 4 percent. The price hike reflected a change in list prices on various goods as well as adjustments made to De Beers box assortments.
Dealers noted that trading on the secondary market was significantly reduced following the sight that ended on May 9 as De Beers goods are now selling at around list price, erasing the 5 percent premiums they had gained in the past few months. One India-based sightholder noted that they were losing money on the secondary market when accounting for the various broker fees and other costs associated with the goods.
Most sightholders were frustrated by the sight and expressed surprise at the price hike as it followed an increase of approximately 3 percent implemented in April. Rapaport estimates that rough prices have increased by approximately 10 percent so far in 2013. In contrast, the RapNet Diamond Index (RAPI) for 1-carat certified polished diamonds has increased by only 0.3 percent, while RAPI for 0.30-carat stones has risen 9 percent this year, driven by strong Chinese demand for these goods.
RETAIL & WHOLESALE
U.S. Jewelry Store Sales +10%
Jewelry store sales in the U.S. rose 9.9 percent year on year to $2.31 billion in March. In addition, the consumer price index (CPI) for jewelry fell 2.9 percent in March. Jewelry store sales remained strong during the first quarter, increasing 8.2 percent to $6.99 billion compared with the first three months of 2012. The CPI for jewelry has also been lower each month this year. Meanwhile, advanced estimates for sales at U.S. department stores in April reflected a decline of 6.9 percent year on year at $13 billion. The estimated sales for all retail and food services, excluding motor vehicle and parts, rose 3 percent in April to $334.3 billion. Retail trade sales improved 3.6 percent during the month.
Christies Sells 101.73ct. for $27M
WATCH NOW: Christie’s Geneva sale of magnificent jewels totaled $102.1 million and was 86 percent sold by lot. The top lot was a 101.73-carat, D, flawless pear-shaped diamond that sold for $26.7 million, or $254,400 per carat, to Harry Winston Inc., which promptly named the stone the Winston Legacy. The second top lot of the sale was a single-strand natural pearl necklace that sold for $8.5 million. Laurence Graff bought a 26.24-carat, D, potentially flawless oval-shaped diamond ring for $4.5 million and a 23.43-carat, D, potentially flawless diamond sold to Essex Global Trading for $3.6 million.
Sothebys Sale Nets $78M
Sothebys Geneva garnered $78.2 million at its auction of magnificent and noble jewels with 87 percent sold by lot. The top lot was a 27.9-carat, D, internally flawless cushion-shaped modified brilliant-cut diamond ring that fetched $4.4 million or $156,362 per carat. A cushion-shape, 74.53-carat, SI1, fancy yellow diamond sold for $2.9 million. A pair of natural pearl and diamond pendant earrings from the collection of screen legend Gina Lollongbrigida sold for $2.4 million, setting an auction record for a pair of pearl ear pendants. Jewels from Lollongbrigida sold for double their presale estimate and fetched $4.96 million.
Online Retail Sales +13%
Online metrics firm comScore Inc. reported that retail ecommerce sales in the U.S. jumped 13 percent year on year to $50.2 billion during the first quarter that ended on March 31. The top-performing online product categories were, digital content and subscriptions, apparel and accessories, sport and fitness, consumer electronics and consumer packaged goods all of which grew at least 20 percent year on year. The ecommerce spending at retailers during the quarter accounted for 10.6 percent of discretionary dollars spent, the highest share on record, according to comScore.
JCPenneys Loss Jumps to $348M
J.C. Penney Company Inc. reported sales plummeted 16.4 percent year on year to $2.64 billion for the first fiscal quarter that ended on May 4. Same-store sales dropped 16.6 percent. The retailer reported a loss of $348 million or $1.58 per share compared with a loss of $163 million or 75 cents per share one year ago. The company began to reverse a major restructuring program during the quarter for which it incurred $72 million in management transition charges. JCPenney took a home office and stores charge of $28 million, store fixtures charge of $28 million and management transition charge of $16 million.
DGSEs Profit -40%
DGSE Companies reported that revenue fell 7 percent year on year to $30.5 million and profit plunged 40 percent to $300,412 for the first quarter that ended on March 31. While the company experienced revenue increases for its bullion segment and the wholesale watch division, this was offset by decreases in sales for jewelry, and scrap and rare coin segments. Gross profit margin dropped to 18.4 percent from 20.5 percent one year ago, due primarily to a change in product mix with more revenue from lower-margin bullion sales, and less from higher-margin jewelry and scrap sales.
Hayek to Head Harry Winston
The Swatch Group appointed Nayla Hayek, the chairwoman of the company, as the new CEO of Harry Winston Inc., the former retail arm of Harry Winston Diamond Corporation. Hayek had already been nominated chairwoman of Harry Winston when the luxury retailer was acquired in March. Swatch purchased Harry Winston as part of $1 billion agreement with Harry Winston Diamond Corporation, which changed its name to Dominion Diamond after the sale.
Swatch reported group sales of $8.8 billion in 2012, up 14 percent year-on-year and profit surged 26 percent to $1.8 billion. The company anticipates revenue growth of 5 percent to 10 percent in 2013.
MINING
Gemfields Production +33%
Gemfields reported that production from its Kagem emerald mine in Zambia jumped 33 percent year on year to 6.5 million carats for the third fiscal quarter that ended on March 31. Kagems grade also improved during the period, from 236 carats per tonne of ore one year ago to 265 carats this year and Gemfields lowered unit production costs 34 percent to 56 cents per carat.
The bulk-sampling operations at the companys Mozambican ruby project are progressing, according to Gemfields, which plans to hold its first ruby auction in about one year from now. The core infrastructure is largely established and the miner and its partner have stepped up security at the property to reduce illegal mining. Primary stage mining and processing equipment is on site and operational. A pilot and semi-mobile ore processing plant has been designed, fabricated and commissioned and continues to test the characteristics of the ore.
Dominion Revises Rough Forecast Higher
Dominion Diamond Corporation revised its production forecast at the Diavik diamond in Canada up 11 percent to 6.6 million carats for 2013. The increase was attributed to processing more of Diaviks stockpiled ore, with Dominion Diamond adding that further revisions may be forthcoming in June. A new mine plan and budget for the companys recently acquired Ekati diamond mine is currently under review, but Dominion foresees production of approximately 1 million carats in 2013.
Mine production follows the calendar year, but Dominion Diamond is currently in its fiscal year 2014 and it expects rough diamond sales to reach $730 million, with $365 million each worth of revenue coming from the 40 percent share of Diavik and the 80 percent share of Ekati.
STATS
Hong Kong
1Q $Mil. %Chng.
Polished imports $4,485 4%
Polished exports $2,962 -10%
Net imports $1,523 49%
Rough imports $465 45%
Rough exports $696 61%
Net imports ($231)
Net diamond account $1,292 42%
Belgium
Apr. $Mil. %Chng. YTD $Mil. %Chng.
Polished exports $1,157 23% $4,506 0%
Polished imports $1,009 8% $4,227 -9%
Net exports $147 $279 116%
Rough imports $1,422 38% $4,877 8%
Rough exports $1,528 28% $5,111 6%
Net imports ($105) ($234)
Net diamond account $253 42% $513 300%
ECONWATCH
Diamond Industry Stock Report
As of noon in New York, U.S. shares were mostly higher this week with Zale (+15%) pulling ahead. European shares were all higher led by Richemont (+12%), but Indian shares were mainly lower as Winsome (-28%) and Classic (-28%) fell the most. Mining shares were mixed with Rockwell (+18%) and Firestone (+20%) leading gains and Anglo and Rio Tinto (-6%) lower. View the extended stock report.
May 17 Open May 9 Chng.
$1 = Euro 0.780 0.770 0.010
$1 = Rupee 54.89 54.29 0.6
$1 = Israel Shekel 3.67 3.55 0.12
$1 = Rand 9.39 9.03 0.36
$1 = Canadian Dollar 1.03 1.01 0.02
Precious Metals
Gold $1,360.20 $1,456.40 -$96.20
Platinum $1,451.00 $1,502.00 -$51.00
Stock Indexes Chng.
BSE 20,286.12 19,939.04 347.08 1.7%
Dow Jones 15,289.24 15,065.14 224.10 1.5%
FTSE 6,725.38 6,592.74 132.64 2.0%
Hang Seng 23,082.68 23,211.48 -128.80 -0.6%
S&P 500 1,658.15 1,625.43 32.72 2.0%
Yahoo! Jewelry 1,022.61 1,225.57 -202.96 -16.6%
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Rapaport Weekly Market Comment May 31, 2013
All eyes on Vegas as U.S. consumer confidence rises and DJI rallies. Jewelry sentiment improves after strong 1Q with Tiffany & Co. revenue +9% to $896M, profit +3% to $84M. Indian markets very cautious due to tight liquidity and weak rupee. Christies HK sells $83M (81% by lot) with 75.35ct., D, IF diamond briolette selling for $11M ($148K/ct.). ALROSA agrees to sell unique polished at Sotheby’s, reports 1Q production -8% to 7.5M cts., sales +5% to $1.2B. Petra sells 25.50ct., blue rough for $17M ($663K/ct.). Gitanjali Gems FY sales +27% to $2.9B, profit +21% to $105M. Shrenuj FY sales +22% to $711M, profit +4% to $14M. Dominion appoints Chantal Lavoie president and COO.
RapNet Data: May 30
Diamonds 1,029,090
Value $6,629,253,748
Carats 1,121,711
Average Discount -27.18%
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RAPAPORT ANNOUNCEMENTS
May-Jun
27-3
Mon-Mon
Rapaport Jewelry Auction
Closeout and estate jewelry
Las Vegas
View details.
May-Jun
30-6
Thu-Thu
Rapaport Melee Auction
Las Vegas & New York
THEhotel Su. 61-903
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May-Jun
31-3
Fri-Mon
RapNet Diamond Listing Service
Register HERE for RapNets
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at JCK Vegas 2013!
June
2
Sun
Rapaport Breakfast & Conference at JCK
Mandalay Bay Resort
8 a.m. to 10 a.m. -- South Seas Ballroom, breakfast and Martin Rapaports State of the Diamond Industry presentation.
10:30 a.m. to 12:30 p.m. -- Banyan Ballroom, Rapaport Certification Conference with RapNet insights into grading reports.
2 p.m to 4:30 p.m. -- Banyan Ballroom, Rapaport Fair Trade Jewelry Conference.
Register now, or email conference@diamonds.net or call 1.702.893.9400, these events are free but seating is limited.
QUOTE OF THE WEEK
Tiffany & Co. results suggest relatively sound demand for jewelry in the U.S. market and still growing off take in Asia. This follows some increases in sales from Blue Nile and Gitanjali. While we do not cover these companies, we conclude that these sales and the strong U.S. housing market should firmly underpin demand in the major U.S. market, which accounts for up to 40% of global diamond jewelry sales. The five-year high in the Conference Boards U.S. Consumer Confidence Index (1985=100) in May, to a reading of 76.2 from 69.0 in April, gives us further comfort that diamond jewelry sales in the U.S. should be strongly underpinned. A more cautious note has been sounded, however, by retailer Chow Tai Fook (not covered) on China cautioning about slower growth in demand.
Des Kilalea | RBC Capital Markets
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INDUSTRY
ALROSAs 1Q Revenue +5%
ALROSAs rough diamond production fell 7.5% year on year to 7.48 million carats for the first quarter that ended on March 31. However, rough and polished diamond sales in the first quarter jumped 5% to $1.22 billion. ALROSA stated that market conditions favored higher rough demand as global supplies decreased. Having insignificantly adjusted rough diamond prices in the first quarter, ALROSA fixed its current cost levels of rough diamonds as demand moderated in April.
Capital investments amounted to $128 million, with $57 million for construction of underground mines at Mir, Aikhal and Udachny. ALROSA reported that its rough diamond reserves grew by 13.6 million carats during the period due to exploration at its operating mines as well as those being prepared for production.
ALROSA signed a letter of intent with Sotheby’s to sell large and unique diamonds that are manufactured by the mining giants subsidiary Brillianty ALROSA. The agreement aims at further promote ALROSA as a diamond brand across the international market and optimize the company’s cutting and polishing complex at Brilliant
Marange Miners Owe Zims Treasury
Once again Zimbabwes diamond mining companies in the Marange region have not remitted revenue to the nations Treasury, according to the Minister of Finance, Tendai Biti. Presenting his State of the Economy Report for April at his government offices, Biti said revenue from the diamond mining companies would have financed voter registration for the upcoming presidential election in Zimbabwe.
"There are no receipts on diamonds since January. The revenue from the diamonds could have gone a long way in sponsoring the elections," said Biti. By his estimate, Biti said that at least $113 million was required to fund the elections. Zimbabwes Treasury secured $25 million for voter registration, following the signing of the new Constitution this past week.
KP Suspends Central African Republic
The Kimberley Process (KP) suspended the Central African Republic (CAR) from exporting certified rough diamonds, following continued violent clashes between rebel groups. The main rebel group, known as Seleka, overthrew the government in March and is suspected of using diamonds to fund its illegal activities including arms sales and human rights abuses.
Following the KPs decision, the World Diamond Council called upon all industry members to be vigilant and take necessary measures to ensure that no rough diamonds from the CAR are handled or traded until further notice. The KPs working group on monitoring will review its decision and the political situation in CAR, in conjunction with other working bodies, at the upcoming intercessional meeting which will take place in South Africa on June 4 to 7.
RETAIL & WHOLESALE
Diamond Briolette Sets World Record
A 75.35-carat, D, IF diamond briolette fetched $11.2 million or $148,000 per carat at Christies Hong Kong spring sale of magnificent jewels, setting a new world record for a briolette shape at auction. Christies Hong Kong jewelry sale achieved a total of $82.9 million and was 81% sold by lot.
All of the top 10 lots achieved in excess of $2 million at the auction. A diamond and emerald-drop fringe necklace mounted by Boucheron fetched $5.7 million, while a pair of Burmese ruby and diamond ear pendants by Etcetera sold for $3.9 million.
Tiffany & Co.s Profit +3%
Tiffany & Co. reported that worldwide revenue rose 9.3% year on year to $895.5 million and cost of sales jumped 12% to $392.3 million for the first quarter that ended on April 30. Profit increased 2.5% to $83.6 million or 65 cents per diluted share. Gross margin as a percentage of sales fell to 56.2% from 57.3% one year ago as Tiffany & Co. continued to shift its product mix toward higher-priced, lower gross margin items.
By region, revenue during the quarter rose 6% to $408 million across the Americas, while comparable-store sales rose 3%, with relatively stronger growth in the New York flagship store due to the Blue Book anniversary event. In the Asia-Pacific region, sales surged 15% by dollar value, and rose 14% at constant exchange rates, to $223 million, with stronger growth in Greater China. Same-store sales jumped 9%. Sales in Japan rose 2% to $145 million, but on a constant exchange rate basis, revenue surged 20% as comparable-store sales skyrocketed 21%. In Europe, both overall and same-store sales rose 6% to $93 million and on a constant exchange rate basis revenue rose 8%.
Sterne Agee analyst Ike Boruchow raised Tiffany & Co.s earnings per share (EPS) estimate by as much as a dime to $3.46 to $3.95 and raised its price target from $68 to $80 per share. Gross margins remain under pressure, but they benefited from slightly lower raw material costs and Sterne Agee believes the tailwind will accelerate over the course of the year.
Gitanjalis Profit +21%
Gitanjali Gems Ltd. reported that group sales rose 27% year on year to $2.9 billion during its financial year that ended on March 31. Strong sales were noted for gold jewelry and ecommerce channels. Profit soared 21% to $105.4 million. Sales at the company’s diamond business grew 26% to $1.2 billion, while jewelry segment sales increased 45% to $1.8 billion. Gitanjali’s sales in India rose 59% to $1.7 billion, while international sales increased 6% year on year to $1.2 billion.
Shrenujs Profit +4%
Shrenuj & Company reported that revenue increased 22% year on year to $711.3 million for the fiscal year that ended on March 31. Profit rose 4% to $13.5 million and earnings per share improved to INR 9.56 from INR 9.23 one year ago. During the fourth quarter of the companys fiscal year, revenue jumped 10% to $162 million. Profit surged 126% to $5.5 million. Shrenuj & Company just recently commissioned a new manufacturing unit in Patna to expand its diamond-manufacturing base for smaller size diamonds.
Movados Profit +21%
Movado Group reported that revenue increased 6.1% year on year to $110 million for the first quarter that ended on April 30. Gross profit margin as a percentage of sales slipped to 54.5% compared with 56.9% one year ago. Cost of sales jumped 12.2% to $50.1 million, nonetheless, net income rose 21% to $8.2 million, helped along by a $1.5 million pretax gain from property sale in Switzerland. Inventory levels were flat year on year at $172.3 million and Movados cash and cash equivalents fell 10.9% to $141.5 million. Movado reiterated guidance for the current fiscal year, anticipating sales growth of approximately 12% and net income to improve about 28% to $48 million or $1.80 per diluted share.
Robbins Bros. Buys E.E. Robbins
Robbins Brothers purchased all the assets of E.E. Robbins in Seattle, Washington. Robbins Brothers started as a family-run business in Seattle in the 1920s, with the grandfather, Ben Tipp, operating a jewelry store downtown. The family moved to California in the 1950s where his son-in-law, Eugene, opened William Pitt in Pasadena, just north of Los Angeles. Robbins Brothers, The Engagement Ring Store was founded by Emerson Robbins and his brother in the mid-1990s south of Los Angeles, in Orange County. Emerson went on to open additional independent stores under his own name in Seattle in the late-1990s. E.E. Robbins store locations are in Belltown, Seattle and in the east side’s Bellevue. Robbins Brothers will offer Seattle-area shoppers an expanded private label and designer selection of styles including halo, vintage, modern and classic rings.
MINING
Petra Sells Blue Diamond for $17M
Petra Diamonds sold an exceptional 25.50 carat blue diamond that was recovered from its Cullinan mine in South Africa in April for $16,910,180 or $663,144 per carat. Bidding was highly competitive due to the incredible rarity of a blue stone of such size and quality. This result further serves to highlight the Cullinan mine’s unique position as the world’s most important source of blue diamonds.
Rockwell Narrows Loss to $4M
Rockwell Diamonds reported that revenue increased 11% year on year to $9.1 million for the fourth quarter that ended on February 28. The average per carat value of rough diamonds sold rose 30% to $1,355 but the volume of carats fell 8% to 5,308. Diamond production dropped 5% to 3,854 carats and Rockwell carried over inventory of 1,248 carats. The company held a cash balance of $2.8 million at the close of the quarter. Rockwell narrowed its loss to $3.7 million from $10 million one year earlier. Gross rough diamond sales totaled $6.9 million and beneficiation revenue was $2.2 million.
Lucara Raises Sales Guidance
Lucara Diamond Corporation raised its guidance for the sale of diamonds from the Karowe mine in Botswana by 5% and said that it expects to sell 420,000 carats from the mine in 2013. The company anticipates revenue of $118 million for the year, with five sales still scheduled to take place, excluding the potential for a second large stone tender. Viewings are being conducted in both Gaborone and Antwerp. Lucara added that capital expenditures for 2013 are expected to reach approximately $5 million, an increase from its previous guidance of $3 million.
Lavoie Joins Dominion Diamond
Dominion Diamond Corporation, formerly Harry Winston Diamond Corporation, appointed Chantal Lavoie as its president and chief operating officer effective July 1. Lavoie will be responsible for the companys mining operations. Previously, he was the president and CEO of Crocodile Gold Corporation and the chief operating officer at De Beers Canada. As a mining engineer, Lavoie has more than 25 years of experience in open pit and underground mining operations including permitting, construction, operation and senior management.
ECONWATCH
Diamond Industry Stock Report
Very mixed reading on shares this week with Birks, JCP, Kohls, Nordstrom and Saks lower, but Blue Nile, Charles & Colvard and Zale up. Euro shares mostly flat, Indian shares little changed except Winsome (-15%) and Vaibhav (+14%). Lucara (+14%) lead gains for miners followed by Petra (+11%). View the extended stock report.
May 30 May 23 Chng.
$1 = Euro 0.766 0.770 -0.004
$1 = Rupee 56.39 55.72 0.7
$1 = Israel Shekel 3.68 3.70 -0.02
$1 = Rand 10.03 9.53 0.50
$1 = Canadian Dollar 1.03 1.04 -0.01
Precious Metals
Gold $1,414.20 $1,391.20 $23.00
Platinum $1,481.00 $1,460.00 $21.00
Stock Indexes Chng.
BSE 20,125.40 19,674.33 451.07 2.3%
Dow Jones 15,388.05 15,294.50 93.55 0.6%
FTSE 6,656.99 6,696.79 -39.80 -0.6%
Hang Seng 22,484.30 22,669.68 -185.38 -0.8%
S&P 500 1,660.08 1,650.51 9.57 0.6%
Yahoo! Jewelry 1,023.62 1,008.03 15.59 1.5%
Múdry sa teší objaveniu pravdy, hlupák falošnosti.
Rapaport Weekly Market Comment June 7, 2013
JCK Vegas well attended with good atmosphere as U.S. retail sentiment improves. Trading at the show was slow but met expectations. U.S. maintaining stability for global diamond market with steady demand for affordable VS-SI certs and commercial goods. Rough trading slow with small, uneventful De Beers sight expected next week. Dominion Diamond Corp. 1Q revenue -1% to $109M, profit $500M vs. $12M due to Harry Winston sale. Gem Diamonds sells 164ct., D, type IIa Letšeng rough for $9M ($54,911/ct.). Asian Star 4Q sales +21% to $110M, profit -4% to $2M. U.S. April polished imports +19% to $1.7B, exports +40% to $1.6B. KP appoints China as 2014 chairman.
RapNet Data: June 6
Diamonds 1,022,001
Value $6,553,685,868
Carats 1,111,442
Average Discount -27.44%
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RAPAPORT ANNOUNCEMENTS
June
10-13
Mon-Thu
Rapaport Melee Auction
New York
View details.
June
14-23
Fri-Sun
Rapaport Melee Auction
New York & Hong Kong
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QUOTE OF THE WEEK
We’re seeing that retail sales are better, inventory levels at the cutting centers have gone down, U.S. economic indicators are improving and we’ve seen the public listed retailers – Tiffany, Sterling, Zale, Blue Nile – have all done well in the first quarter. So, this year is looking like a good year.
Varda Shine | De Beers
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INDUSTRY
Cautious Confidence at JCK Las Vegas
The JCK Las Vegas show closed Monday as activity signaled improved sentiment in the U.S. jewelry retail market. Diamond trading was okay, although not booming, while buyers were selective and resisted any attempts to raise prices. Those who held their prices firm did not have a great show, but if you were prepared to compromise a bit there were buyers, according to dealers.
While diamond suppliers observed that traffic was slightly down from last year, many noted that buyers were more focused and knew what they wanted at the show. Activity in the diamond section at JCK was driven by dealer trading rather than wholesale and retail orders.
Diamond suppliers are hoping that positive reports from the retail market will filter to the diamond segment in the coming months as wholesale diamond jewelry suppliers reported a positive few days at the show. Commercial-quality, SI and lower clarity goods sold well, triple EX stones sell at 5 percent to 8 percent premiums to non-triple EX goods, although exuberant demand for these goods may be tapering off and good demand was observed for off-sizes – 2.50-carat and 3.50-carat, G-J, SI1-SI2 stones. Larger stones were soft, weak demand for VVS goods but good demand for clean, fancy color and shapes.
State of Diamond Industry Presentation
WATCH NOW Martin Rapaport, the chairman of the Rapaport Group, warns the trade not to buy overpriced rough diamonds. He also projects global diamond demand and supply, growth markets, consumer trends and economic indicators and he blames Indian governments credit policy and irresponsible banks for overextending credit to the diamond trade resulting in inflated rough prices. Rapaport also identified significant opportunities for the diamond trade such as how to reach the up-and-coming powerhouse market of the millennial generation, purchasing diamonds and jewelry from the public and the development of investment diamond markets.
Shine Discusses Liquidity, Rough Prices, Demand
WATCH NOW In an exclusive interview, Varda Shine, the executive president of global sightholder sales for De Beers, discusses bank credit availability and the growing pressure on diamond firms to become more responsible in managing their finances. Additionally, she addresses the outlook for global demand and consumer buying trends. De Beers rough prices have increased by mid- to high-single digit percentages since the beginning of 2013 and certain categories of rough have seen double digit percentage growth so far this year
RETAIL & WHOLESALE
Christie’s Sale Nets $13M
Christies London sale of important jewels achieved a total of $13,424,431 and was 77% sold by lot. The top lot was an important three-row natural pearl necklace that sold for $1,636,909, more than twice its presale estimate. A natural diamond and pearl brooch sold for $663,829 or more than 12 times its presale estimate.
Other top lots included an 18.79-carat, VVS2 circular-cut diamond pendant that sold for $425,149 and a 7.07-carat, VVS1 rectangular-cut fancy yellow diamond ring that fetched $305,809.
Asian Star’s Profit Falls
Asian Star Co. Ltd. reported that group sales rose 21% year on year to $109.7 million (INR 6.21 billion) during the fourth fiscal quarter that ended on March 31. Profit fell 4% to $1.9 million (INR 105.8 million). Sales at the company’s cut and polished diamond segment fell 0.6% to $2.6 million (INR 149.9 million).
Tara Jewels FY Profit +37%
Tara Jewels reported that sales jumped 18% year on year to $ 2.74 billion (INR $156 billion) for the fiscal year that ended on March 31. Profit rose 37% to $12.9 million (INR $737 million). Sales were bolstered by the company’s expansion as it added six of the scheduled 20 new stores during the period. Tara has aggresive expansion plans for India in the coming year.
U.S. Chain-Store Sales +3%
U.S. chain-store sales improved 3.2% year on year during the month of May, according to the International Council of Shopping Centers (ICSC). Cooler than average weather dominated much of the nation and negatively impacted outdoor-related merchandise. For the month of June, ICSC research anticipates that the upward trend will remain in the 3% to 3.5% range for same-store sales.
Gold Demand to Increase
Asian gold demand from April to June will reach a quarterly record as bullion consumers in the region take possession of supply freed up by selling from exchange-traded funds (ETFs), according to the World Gold Council (WGC). The group expects Indian gold imports to reach 350 tons to 400 tons in the second quarter, or 200% higher than a year earlier and almost half of last years total imports. This also compares to imports of 256 tons in the first quarter of 2013.
India cannot afford high levels of gold imports and may review its import policy the countrys finance minister P. Chidambaram said, after imports of precious metals jumped more than 150% in April. India, the worlds biggest buyer of gold, hiked its import duty to 6% in January in an attempt to limit purchases and rein in a record high current account deficit. Gold is the second biggest import item after crude oil.
TBZ’s Profit Jumps
Tribhovandas Bhimji Zaveri Ltd.s (TBZ) net sales grew 66% year on year to $78.3 million (INR 4.43 billion) in the fourth quarter that ended on March 31. The Mumbai-based jewelry retailers profit increased three-fold to $4.4 million (INR 249.9 million) during the period. Despite volatile gold prices and adverse market conditions, consolidated net profit for the fiscal year rose 48% to $14.9 million (INR 845 million). Net sales rose 19 percent to $291.5 million (INR 16.45 billion).
Georland Unveils Diamond Masterpieces
WATCH NOW Georland Joailliers from Paris unveiled several new pieces during Las Vegas jewelry week at the Couture show. The atelier creates masterful jewelry centered around special stones the company procures. Romain Marteau, third generation jeweler in the family-run business, explains the thought process in developing iconic pieces that help propel the firm forward as an international player.
Madstone Debuts Mythology Collection
WATCH NOW: Kerri Halpern, owner of Madstone, embraces minimalism, coupled with a substantial background in fashion and art, in designing jewelry whether Edwardian or Victorian inspired. Her first collections are wild and wearable, and distinctly her, and the latest collection, Mythology, captures nature’s elements.
Michael M. Debuts Black Diamond Collection
WATCH NOW: Michael M. adds high-end jewelry designs to expand the brand past its successful bridal business with the Dreaming in Color collection. Michael M. debuts a number of couture pieces featuring black diamonds in polished and in natural forms at the Couture show in Las Vegas. All of the brands jewelry is manufactured in the U.S., specifically in Los Angeles.
Richline to Acquire HONORA
Richline Group Inc., a wholly owned subsidiary of Berkshire Hathaway, signed an agreement to acquire freshwater cultured pearl brand HONORA. The transaction is expected to be completed in July 2013. Richlines president Dave Meleski noted that a key goal of the acquisition will be HONORAs utilization of Richlines financial support and collaboration to champion the brand for domestic and international growth.
The new corporate structure will see HONORAs current CEO, Joel Schechter, as well as its president, Ralph Rossini, remain on board to run the company as a standalone brand within the Richline brands division of Berkshire Hathaway.
Tiffany & Co. to Open in Moscow
Tiffany & Co. announced plans to open its first retail outlet in Russia — a two-level store in Moscow’s GUM department store, located in Red Square. The store will be approximately 4,520 square feet and is expected to open in the first quarter of 2014. Frederic Cumenal, the executive vice president, of Tiffany & Co., noted that establishing a presence at the preeminent department store is a milestone in the companys growth strategy and underscores the importance of the Russian market.
Baker Leaves GIA
Donna Baker has resigned as president and CEO of the Gemological Institute of America (GIA) citing differing views on the direction of the institute. At the request of the board of governors, board chair Susan M. Jacques, the president of Borsheims Fine Jewelry and Gifts, will be interim president and CEO while the board conducts a search for a new executive. Tom Moses, the senior vice president of laboratory and research will continue overseeing all of GIA’s global laboratory operations. Bev Hori, the vice president of education and chief learning officer, will continue to lead GIA’s gemological and industry education efforts.
MINING
Dominion’s Profit Benefits From Harry Winston Sale
Dominion Diamond Corporation reported that revenue fell 1.2% year on year to $108.8 million for the first quarter that ended on April 30. Cost of sales rose 3.2% to $81.5 million and gross margin slipped to 25.1% of sales compared with 28.2% one year ago.
The mining companys profit benefitted from the sale of retailer Harry Winston Inc., which was completed on March 26 for $746 million and resulted in a net gain of $497.6 million. Dominion Diamond also purchased the Ekati diamond mine for $553 million on April 10 and the mine held cash on hand of about $65 million. The company recorded first quarter profit attributable to shareholders of $500.2 million or $5.89 per share, compared with $11.6 million or 14 cents per share one year ago.
Consolidated rough diamond sales during the first quarter included $88.9 million worth of rough stones from the Diavik mine, reflecting an average price of $114 per carat. Dominion Diamond sold $19.9 million worth of high-quality rough diamonds from the Ekati mine for $1,620 per carat during a 10 day period following the acquisition on April 10.
Trans Hex Profit Plunges
Trans Hexs revenue was flat at $76.9 million (ZAR 751.3 million) for the year that ended on March 31, as the cost of selling rough diamonds rose 7% to $61.2 million (ZAR 605.2 million). The companys profit fell 69% to $8.7 million (ZAR 85.4 million). The companys South African production fell 20% year on year to 67,115 carats, with an average price per carat sold at $1,334.
164ct. Rough Sells for $9M
Gem Diamonds sold a 164-carat, D, type IIa rough diamond that it recovered from the Letšeng mine in April for $9 million, or $54,911 per carat. The stone was sold in a profit sharing agreement with an unnamed buyer whereby Letšeng will benefit from a share of the sale of the resulting polished diamonds.
Rio Tinto Edges Closer to Diamond Unit Flotation
Rio Tinto is in the process of developing plans with its advisers at Morgan Stanley to raise up to $380.8 million through a separate listing of the companys diamond division on the London Stock Exchange (LSE), according to insiders. Unnamed sources told Sky News that a flotation of the miners diamond business seemed increasingly likely after efforts to obtain a compelling offer from an outside buyer were unsuccessful. Rio Tinto would not comment to Rapaport News. The diamond unit listing, code named Project Aurora, according to the Sky News report, could take place as soon as the third quarter and will involve raising funds through the sale of new shares in the business. However, the share flotation could be abandoned if the company is able to secure a sufficient, high offer from a bidder.
Peregrine Arranges Private Placement
Peregrine Diamonds is arranging a private placement of up to 10 million common shares at a price of 35 cents each for gross proceeds of up to $3.5 million. The placement will be made to accredited and other eligible investors. Closing is anticipated to occur on or about June 20. Net proceeds will be used for exploration and development of Peregrines projects in Canada.
Residents, Anjin Disagree on Relocation Terms
Almost 500 families in the Marange area of Zimbabwe were relocated to Arda Transau by diamond miner Anjin Investments, but the residents now allege the company failed to supply food rations, clean water, schools and health facilities as initially promised in the relocation agreement, according to the Zimbabwe Standard. Anjin is a joint venture between a Chinese investors and Zimbabwes military. The newspaper stated that villagers say that life has become unbearable at the settlement and claim that the government has sold them out in order to mine diamonds on what was once their private land. Anjin denies the allegations and claimed it has fulfilled its contractual obligations.
India, Zimbabwe Draw Up Agreement
India is set to sign a pact with Zimbabwe later this month to develop four reserves in the country containing gold, diamond, iron ore, coal and chrome ore. A delegation from Zimbabwe is scheduled to sign a memorandum of understanding in New Delhi with the Steel Ministry to develop the reserves. The agreement will see the countries form a joint venture company where the state-owned mining major NMDC and the Zimbabwe government would have a 50-50 partnership
STATS
U.S. A
April $Mil. %Chng. YTD $Mil. %Chng.
Polished imports $1,710 19% $6,839 9.5%
Polished exports $1,609 40% $6,073 11.6%
Net imports $101 -64% $767 -4.5%
Rough imports $33 22% $139 -5.4%
Rough exports $26 73% $95 -24%
Net imports $7 $43
Net diamond account $108 -63% $810 -1.80
ECONWATCH
Diamond Industry Stock Report
Stocks were mainly lower, or flat, except for Blue Nile (+2%), JPC (+3%), Sothebys (+1%), Zale (+7%), Vaibhav (+4%), Lucara (+4%), Shore (+13%) and Gemfields (+1%). View the extended stock report.
June 6 May 30 Chng.
$1 = Euro 0.755 0.766 -0.011
$1 = Rupee 56.84 56.39 0.5
$1 = Israel Shekel 3.62 3.68 -0.06
$1 = Rand 9.89 10.03 -0.14
$1 = Canadian Dollar 1.03 1.03 0.00
Precious Metals
Gold $1,413.00 $1,414.20 -$1.20
Platinum $1,527.00 $1,481.00 $46.00
Stock Indexes Chng.
BSE 19,519.49 20,125.40 -605.91 -3.0%
Dow Jones 15,040.39 15,388.05 -347.66 -2.3%
FTSE 6,336.11 6,656.99 -320.88 -4.8%
Hang Seng 21,838.43 22,484.30 -645.87 -2.9%
S&P 500 1,622.48 1,660.08 -37.60 -2.3%
Yahoo! Jewelry 974.88 1,023.62 -48.74 -4.8%
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