Rapaport Weekly Market Comment July 10, 2015

Indian cutters reject rough import ban to support high price levels. Most want to maintain jobs and production at lower polished prices. De Beers expected to keep rough prices high after allowing sightholders to defer 25% of purchases at next week’s sight. 30s-40s very weak. Cutters shifting production to 1ct+. Far East luxury market declining as Chinese stocks drop 6% and trim wealth. Trade hopes investors will consider diamonds. Okavango 1H rough sales -23% to $213M. U.S. May polished imports -3% to $3B, exports -30% to $1.4B. Israel 1H polished exports -17% to $3B, rough imports -21% to $1.6B. Rapaport releases statement about diamond specifications and Rapaport Price List.

RapNet Data: July 9

Diamonds 1,347,428
Value $8,477,968,784
Carats 1,330,433
Average Discount -27.05%

www.rapnet.com

The RapNet Diamond Index (RAPI) has been revised to reflect the average price of the 10 best priced diamonds in each category.

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS
July 15-22 Wed-Wed

Rapaport Single Stone Auction & Buy Now Sale

New York & Israel
Over 1,500 Stones for Sale
View Details
July 15-22 Wed-Wed

Rapaport Melee Auction 

New York & Dubai

www.rapaportauctions.com
July 26-28 Sun-Tue

JA New York Summer Show 

Rapaport Booth: 2300

Visit Show Website

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QUOTE OF THE WEEK
The message is very clear that the industry has to practice self discipline. Each and every individual company has to be responsible enough and make sure that the business they run is profitable; and, at the same time, they need to monitor demand prevailing in the market and manufacture accordingly.

Vipul Shah | GJEPC

INDUSTRY 	  

Polished Prices Fall in June

Polished diamond prices fell in June with many categories trading at deep discounts to the Rapaport Price List. Markets were relatively quiet as demand in the U.S. after JCK Vegas was weaker than years past and the Far East remained cautious. Diamond manufacturers were under pressure and continued to lose money on their rough supply. The RapNet Diamond Index (RAPI™) for 1-carat laboratory-graded diamonds fell 0.9%, RAPI for 0.30-carat diamonds declined 2.5%, RAPI for 0.50-carat diamonds dropped 2.6% and RAPI for 3-carat diamonds decreased 1.7%. RAPI for 1-carat diamonds fell 1.6% during the second quarter of 2015 and on July 1, it was down 15.3% year on year.

There is a shortage of fine-quality diamonds; selective buyers are paying firm prices for these goods to fill existing orders; however, there is excess inventory of lower-quality diamonds on the market and flexible inventory buyers are getting good deals. Rough producers prefer to reduce supply to save prices in the current weak market as prices remained relatively stable in the second quarter after slipping an average of 5% to 7% in the first three months. Manufacturers are expected to further reduce rough purchases in an effort to shrink existing inventory and raise liquidity levels.

De Beers Allows July Deferrals

De Beers will allow sightholders to defer as much as 25% of their total allocation, excluding whole boxes of ex-plan, at next week’s sight due to quiet market conditions. De Beers allowed a similar deferral in the first quarter, preferring to reduce supply and maintain their rough prices. Rapaport estimates that De Beers rough sales fell 28% to $2.5 billion during the first six months of the year. Sightholders are expecting to reject a large volume of goods since manufacturing sentiment is weak and they believe De Beers will continued to hold prices steady. Nonetheless, concern about future sights linger as deferrals must be taken later, but manufacturing profitability remains tight.

Rapaport Implements Latest RapSpec

The latest Rapaport Diamond Specifications (RapSpec) were implemented across all Rapaport and RapNet products and services. The Rapaport Price List, Rapaport price indices and RapNet TradeScreen are all based on RapSpec A3 or better (A1, A2, A3).

View details.

Martin Rapaport, the chairman of the Rapaport Group, said that polished prices have declined this year "and many categories are now trading at discounts greater than 35% below the Rapaport Price List. The diamond trade must prioritize the purchase of polished diamonds over rough diamonds. It makes no sense to buy rough that is more expensive than existing polished. Buying polished instead of rough supports polished prices while reducing the amount of new polished entering the market; it dries out the market, creating shortages that support polished prices."

Rapaport added that stability and renewed trading confidence will come once bid price levels are established and communicated. He said, "Rapaport will be communicating firm bid price levels and considering them when establishing price levels on the Rapaport Price List. At this time, given current market conditions and adjustments to the Rapaport Price List, we are particularly interested in firm COD bids for RapSpec A3 or better diamonds that are at or better than 35% below the Rapaport Price List. Buyers willing to buy at these price levels are encouraged to contact us at prices@diamonds.net."

RETAIL & WHOLESALE 	  

Chow Tai Fooks Same-Store Sales -15%

Chow Tai Fook Jewellery Groups same-store sales declined 15% year on year during the first quarter that ended on June 30, according to unaudited results. Declining comparable-store sales across the group were attributed to weaker consumer demand in Hong Kong and Macau, where same-store sales fell 24%. In Mainland China, same-store sales dropped 7%. In Hong Kong and Macau, gem set jewelry same-store sales dropped 16%, while gold product comparable-store sales fell 25%. Gold product sales outperformed gem-set jewelry slightly in Mainland China, where they fell only 2% compared with a 4% drop for gem-set jewelry.

Indias Leaders Call for Discipline

Indias industry leaders deferred a rough diamond import ban, for now, and urged self discipline at manufacturing businesses that import and purchase rough stones. In a meeting conducted by the Gem & Jewellery Export Promotion Council (GJEPC), the Bharat Diamond Bourse (BDB) and Mumbai Diamond Merchant Association (MDMA), leaders discussed the way forward given a sluggish outlook for diamond demand, severe lack of liquidity and profitability at the manufacturing level and the misalignment of rough prices against polished prices. While rough imports would continue -- however restrained it might be -- business owners must make their workforce the first priority, according to the leaders.

The three groups, along with the Surat Diamond Association (SDA), will create a committee of 10 to 15 business owners to bring pressing issues forward, while a delegation will meet diamond miners, bankers and governmental agencies to review possible solutions. The group also stated it would push promotional efforts with diamond miners and other segments of the industry to increase consumer diamond and jewelry demand. The situation will be monitored and a follow up meeting will be held in one or two months to discuss the outcome of these actions.

Panelists Discuss Diamond Grading Issues

In this video presentation, watch now, panelists discuss grading reports and standards as well as share opinions on best practices for the industry moving forward. Susan Jacques, the CEO of the Gemological Institute of America (GIA), opens the discussion with a comprehensive overview of the organization and its grading process. Panelists share differing views on what grading reports communicate (or not) to consumers, offer insight into what is legally acceptable and engage in a lively discussion on clarity grade.

Jacques was joined on the panel by Mahiar Borhanjoo of Venus Jewel International; Jerry Ehrenwald of the International Gemological Institute; Cecilia Gardner of the Jewelers Vigilance Committee; Mark Gershburg of the Gemological Science International; Dries Holvoet of HRD Antwerp; David Lasher of the Diamond Dealers Club of New York and Peter Yantzer and Jason Quick of the American Gem Society Laboratory.

Gems One Introduces Epic 101 Cut

Gems One launched the Epic 101, a new branded special-cut diamond that features 101 facets and employs what the company identified as a faceting architecture designed to provide maximum light performance. The company is marketing the Epic 101 to authorized dealers to gain a competitive advantage in the bridal category. The company is also allowing new dealers to submit stones for recutting into an Epic 101. Anuj Jain, the president of Gems One, said he sees a special opportunity with the Epic 101 to expand a retailers market share and increase margins in the loose diamond category. "The specialty cut category is clearly expanding in the independent space and with our broad national distribution, we expect to be able to create an optimized dealer network with this brand fairly quickly.”

Galtié Joins Tiffany & Co.

Tiffany & Co. appointed Philippe Galtié to the position of senior vice president of the retailers international division with an effective date of August 17. Most recently, Galtié, 54, was the international retail director for Cartier. He has held senior positions at Moët-Hennessy, Mars Inc., Eridania Beghin Say and the Nestlé Group. Frédéric Cumenal, Tiffany & Co.s CEO, confirmed that Galtié brings a seasoned understanding of the global retail landscape to the retailer. "This knowledge will have a significant impact on the oversight and management of our store design and strategic planning teams," he said.

Alibaba Invests in Mei.com, SingPost

Ecommerce giant Alibaba Group invested in luxury goods "flash sales" website Mei.com to enhance supply chain services by integrating its business-to-consumer (B2C) platform, Tmall.com, into Mei.com. The groups investment will expand the user and brand base and improve logistic and IT infrastructure services for both properties. Alibaba did not disclose financial details; however, TechCrunch valued the investment at $100 million, citing insiders. Mei.com hosts sales events daily, beginning at 9 a.m., in cooperation with 2,400 top brands, including Tiffany & Co., Armani, Zegna, Michael Kors, Trussardi, Roger Vivier, Longchamp, Tumi and Guerlain.

With ecommerce expansion and improved efficiency in mind for its numerous online retail properties, Alibaba Group invested in Quantium Solutions, a subsidiary of SingPost, and signed a joint venture agreement to establish an end-to-end ecommerce logistics platform. The deal was valued at $207 million, consisting of cash and purchases of SingPost shares.

GENERAL 	  

AGTA Updates Code of Ethics

American Gem Trade Association (AGTA) updated its code of ethics and fair business practices, which every member must agree and commitment to in order to protect and ensure the integrity of products at all levels of the supply chain. AGTA requires members to reaffirm their commitment annually to these practices. Membership to the organization requires the commitment to disclose treatments and origin; comply with all U.S. laws and those laws in countries where a gem originates as well as to industry standards; and members may not support or participate in illegal activities, including terrorism, smuggling or theft. View ethics page.

AIGS Appoints Kuzi

Joseph Kuzi, the founder and managing director of Diamond Services Ltd., was appointed to the advisory board of the Asian Institute of Gemological Sciences (AIGS) and will oversee expansion of the organizations colored gemstone report and laboratory services in Hong Kong and Mainland China. Kuzi said that the colored gemstone trade in Hong Kong and China is "on a steep trajectory, which, to a large degree, relies upon the provision of professional laboratory services that defend its integrity and protect consumer confidence." Diamond Services began operating a drop-off window on AIGS behalf at its Hong Kong headquarters in January.

EGL to Enforce New Standards

European Gemological Laboratory (EGL) said that operations outside of North America will adopt a unified grading standard. Labs will undergo a franchise re-certification to ensure consistency in color and clarity standards based on what was developed by Guy Margel, EGLs founder. New standards also comply with what the World Federation of Diamond Bourses (WFDB) determined to be industry standard, according to Menahem Sevdermish, EGLs global manager.

All gemologists from labs seeking re-accreditation will attend a two-week refresher course in Israel. In the meantime, master stone sets used for color grading are being sent to Israel to ensure that they are calibrated to the original standard set by Margel. EGL representatives will also visit EGL labs following their re-accreditation to ensure operating procedures meet EGL standards. Sevdermish said EGL certificates provide added value to the diamond trade by using both a D to Z color scale and a numerical system that reflected the old European method of color grading that was commonplace until the 1970s. EGL certificates will also retain a clarity grade of SI3 for stones below SI2 but in the top-end of the broad range of stones that the GIA considers I1.

Zimbabwe Eyes KP Chairmanship

Zimbabwes Mines and Minerals Development Minister, Walter Chidhakwa, said the country was carefully considering a bid to become the chair of the Kimberley Process (KP). "We also must look at who is chairing because we are a producer country. If there is a producer, then it is improper for us to put a bid. We want to do it at an appropriate time. But definitely before 2018, we will submit a bid," Chidhakwa told the state-run Herald newspaper.

He added that Zimbabwe has contributed greatly to the KP with structural support and through participation in sub-committees and review missions. Chidhakwa claimed that during the mid-year KP intercessional meeting in Angola, Western countries plotted "to sneak in a controversial report" accusing Zimbabwe of money laundering and funding terrorism by selling diamonds in Dubai.

MINING 	  

Okavango Diamonds Sales -23%

Okavango Diamond Company’s rough diamond sales fell 23% year on year to $231 million in the first half of 2015, with the average price down 2% to $178 per carat. The company offered significant high-value stones during the year; still, sales volume dropped 21% to 1.296 million carats and the company sold 745 of the 794 lots on offer. ODC was established in late 2013 as Botswana’s vehicle to sell local production independently of De Beers. It is entitled to 14% of diamond production recovered by Debswana, but the share will increase to 15% in 2016 through 2020.

Firestone Sells Botswana Operations

Firestone Diamonds will sell its Botswana operations, which includes BK11, to Tango Mining for $8 million in cash in order to focus solely on the Liqhobong diamond mine in Lesotho. Proceeds will be used for general working capital as Firestone continues with the construction and development of Liqhobong. Firestone incurred a loss of $700,000 from the Botswana assets in the fiscal year that ended on June 30. Tango is a Canadian company that holds an interest in Oena, an alluvial diamond property in the Northern Cape Province of South Africa, and it mines for gold and coal.

Gahcho Kué Completion at 62%

Mountain Province Diamonds said it completed 62% of the Gahcho Kué diamond mine by the end of May, a time frame that was on schedule and within budget. The projects focus now is dewatering, to expose the kimberlites, and placing concrete foundations and erecting steel superstructures for the facilities. Mountain Province is also working toward ensuring that the processing plant is enclosed by October. Gahcho Kué anticipates producing diamonds in the second half of 2016. Mountain Province Diamonds is a 49% participant to De Beers 51% stake in Gahcho Kué, located in Canadas Northwest Territories.

DiamondCorp Raises $8M

DiamondCorp plc raised $8.2 million (GBP 5.27 million) through an open offer and a placement of shares that began on June 17. Certain company directors subscribed and details of their updated shareholdings will be announced in due course. DiamondCorp now has 376,096,741 ordinary shares in issue, all of which have voting rights. Euan Worthington, DiamondCorps chairman, stated that the board was very pleased with such a high level of over-subscription on the open offering and that the majority of shareholders have been able to participate on the same terms as the placement with institutions.

Pangolin Appoints Daniels as CEO

Pangolin Diamonds Corp. appointed Leon Daniels as its president and CEO, effective immediately, following the resignation of Rick Bonner. Pangolin also announced it intends to raise up to $500,000 through a non-brokered private placement. Daniels, who already has a significant investment in Pangolin, along with his family, intends to subscribe for 25% of the offering, based on the issue of 10 million units. The offering is subject to acceptance of the Toronto Stock Exchange and a four-month hold period. Pangolin also appointed Patrick Aloysius Harford to the board as a non-executive director.

STATS 	  

Israel

1H $Mil. %Chng.
Polished exports $2,975 -17%
Polished imports $1,793 -21%
Net exports $1,182 -16%

Rough imports $1,623 -21%
Rough exports $1,361 -22%
Net imports $262 -15%

Net diamond account $920 -17%

USA

May $Mil. %Chng. YTD $Mil. %Chng.
Polished imports $3,016 -3% $10,535 -1%
Polished exports $1,380 -30% $7,489 -12%
Net imports $1,636 44% $3,049 49%

Rough imports $20 -67% $96 -79%
Rough exports $18 -62% $62 -74%
Net imports $2 -86% $34 -64%

Net diamond account $1,638 43% $3,083 44%

ECONWATCH

Diamond Industry Stock Report

A second consecutive week of widespread declines across the sector, especially for big names: Movado (-6%), Signet (-5%), Chow Sang Sang (-8%), Chow Tai Fook (-5%), Vaibhav (-7%), Dominion (-6%), Anglo (-6%), Gemfields (-8%). The bright spots were Goldiam (+11%), ALROSA (+11%) and Peregrine (+14%). View the detailed industry stock report.
July 9 July 2 Chng.
$1 = Euro 0.907 0.903 0.004
$1 = Rupee 63.39 63.39 0.0
$1 = Israel Shekel 3.78 3.77 0.01
$1 = Rand 12.51 12.23 0.28
$1 = Canadian Dollar 1.27 1.26 0.01

Precious Metals
Gold $1,160.70 $1,166.00 -$5.30
Platinum $1,024.00 $1,084.00 -$60.00

Stock Indexes Chng.
BSE 27,573.66 27,945.80 -372.14 -1.3%
Dow Jones 17,548.62 17,730.11 -181.49 -1.0%
FTSE 6,581.63 6,630.47 -48.84 -0.7%
Hang Seng 24,392.79 26,282.32 -1,889.53 -7.2%
S&P 500 2,051.31 2,076.78 -25.47 -1.2%
Yahoo! Jewelry 1,226.53 1,242.72 -16.19 -1.3%

Rapaport Weekly Market Comment July 17, 2015

Cutters under pressure as De Beers maintains unsustainable high rough prices. Reports have sightholders refusing 35%-50% at July sight which may be as low as $200M. Sightholders buying polished at reduced prices rather than expensive rough. Polished prices low, inventory high with steady demand for U.S. goods that will be in tight supply as new production plummets. De Beers 1H rough sales -26% to 14M cts., average price +7% to $206/ct., production -3% to 15.6M cts. Rio Tinto’s 2Q diamond production +23% to 4.7M cts. Luk Fook’s 1Q same-store sales -20%. Belgium’s June polished exports +2% to $1.4B, rough imports -19% to $1.1B. Russia’s finance minister appointed ALROSA chairman.

RapNet Data: July 17

Diamonds 1,383,959
Value $8,561,625,103
Carats 1,349,221
Average Discount -25.65%

www.rapnet.com

The RapNet Diamond Index (RAPI) has been revised to reflect the average price of the 10 best priced diamonds in each category.
Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS
July 16-22 Thu-Wed

Rapaport Special Buy Now Sale

New York & Israel
Over 500 Stones for Sale
View Details

July 15-22 Wed-Wed

Rapaport Melee Auction 

New York & Dubai

www.rapaportauctions.com
July 26-28 Sun-Tue

JA New York Summer Show 

Rapaport Booth: 2300

Visit Show Website

QUOTE OF THE WEEK
The fact that lab grown diamonds now also occur in an octahedral shape merely affects the rough trade as, once the diamonds are polished, dedicated equipment still provides a solution for identifying lab grown diamonds in our lab.

Katrien De Corte | HRD Antwerp

INDUSTRY 	  

De Beers 1H Production -3%

De Beers rough diamond sales volume dropped 26% year on year to 14 million carats in the first six months of 2015, reflecting low levels of restocking by diamond manufacturers and dealers, partially offset by higher selling prices, which rose 7% to $206 per carat. De Beers rough price index was, on average, 4% lower for the first six months of 2015 compared with 2014.

Production fell 3% to 15.63 million carats in the first half, with Debswanas production dropping 6% to 5.913 million carats, Namdeb Holdings production contracting 15% to 431,000 carats, production from South Africa operations declining 5% to 1.117 million carats and De Beers Canada recording a drop in production of 11% to 502,000 carats. De Beers lowered its production outlook about 6% for 2015 to between 30 million and 32 million carats. Anglo American is scheduled to publish its interim financial report on July 24. Rapaport News estimates that De Beers rough sales fell 28% percent year on year to $2.5 billion in the first half.

While Rapaport News will publish a July sight report in the coming days, initial sightholder feedback suggested that De Beers maintained relatively stable prices, about half of the $500 million in goods offered were taken and that market sentiment remains very weak in the diamond manufacturing sector.

Rio Tintos 1H Production +18%

Rio Tinto’s rough diamond production increased 18% year on year to 8.851 million carats in the first six months of 2015. Production from the Argyle underground mine jumped 34% to 6.591 million carats; however, the companys 60% share of output from Diavik dropped 9% to 2.183 million carats. Production at Murowa fell 50% to 77,000 carats.

In the second quarter, Rio Tinto’s rough diamond production jumped 23% year on year to 4.696 million carats, with the increase being attributed to the Argyle underground mine where production rose 37% to 3.374 million carats. Diaviks production was flat at 1.285 million carats and Murowas fell 56% to 37,000 carats. Rio Tinto has now divested from Murowa. Rio Tintos management said it expected to increase diamond production by 45% year on year to 20 million carats in 2015.

RETAIL & WHOLESALE 	  

U.S. Jewelry Store Sales -4%

U.S. specialty jewelry store sales fell 4.4% year on year to $2.703 billion in May, according to the latest government calculations. The decline was noticeable considering that preliminary sales of jewelry and watches across all channels during the month was basically flat at $7.1 billion. Specialty jewelry store sales in the first five months of the year have fallen 4.6% to $11.201 billion. However, jewelry and watch sales across all channels have declined only 0.6% year on year to $28.7 billion, according to preliminary Rapaport News estimates.

Advanced sales estimates at U.S. department stores, meanwhile, fell 3% year on year to $12.6 billion in June. Total retail sales, excluding motor vehicle and parts, rose 1.1% to $349.3 billion. Retail trade sales rose 0.6% and nonstore retail sales increased 7% to $37.3 billion.

Luk Fooks Comps Decline

Luk Fook Holdings reported that comparable-store sales dropped 18% year on year in the first quarter that ended June 30. The company did not provide sales figures, but attributed the decline to weak consumer sentiment. Gem-set jewelry same-store sales dropped 18%, with Hong Kong and Macau down 19%; however, they were 23% higher in Mainland China. Comparable-store sales of gold jewelry fell 7% in Mainland China and plunged 20% for Hong Kong and Macau. Luk Fook operates 1,397 points-of-sale, including 1,253 franchise stores.

Swatch Groups Profit -19%

Swatch Groups sales rose 2.2% year on year to $4.4 billion (CHF 4.192 billion) during the first half of 2015. Profit fell 19.4% $572 million. In the companys watches and jewelry segment, including production, sales growth registered an increase of 2% at current rates and 3.4% at constant-exchange-rates. Electronic systems sales rose 7.6%. Group sales were reduced by 1.4 percentage points due to the "massively overvalued Swiss franc," Swatch stated. Management anticipates a positive outlook for the second half of the year, despite "the Swiss franc dilemma." Growth will be supported by a high level of marketing investment, an expanded retail network and through many new product launches in all segments, the group stated.

Zalemark Anticipates Strong Sales Growth

Specialty diamond and gemstone jewelry sales are flourishing for Zalemark Holding Company Inc. as it anticipates annual revenue will surge 1,856% year on year. Without citing hard totals, during the second quarter, Zalemarks chief financial officer, Caren Currier, said sales growth surpassed 650%. "It is an exciting time for the Zalemark team, as everyone has worked so hard and put in a lot of sweat-equity to move Zalemark to the level of success its shareholders deserve," she said.

Zalemark designs, produces and distributes jewelry brands Demeter, Divas Choice, Dog Boxer, "The Harmony Collection" by Engelbert Humperdinck and Crayola Fine Jewelry and it operates stevenzale.com, Luxury Brands Group and Compralux Hispanic Shopping Network.

Online Retail Sales to Approach $2T

Juniper Research predicted that online retail sales will grow 17% this year to $1.7 trillion, driven by a combination of factors such as public Wi-Fi deployments, 4G rollout and stronger social media sales platforms. The report stated that Twitter, Facebook, Pinterest and Instagram had launched "buy" buttons on mobile apps, which empowers strategic retailer partnerships, with Twitter now enabling users to link their accounts with Amazon. Juniper advised retailers to deliver a consistent message, brand and shopping experience across all channels and integrate store and online systems to maximize customer personalization capability to drive sales. In addition, retailers must ensure a smooth mobile ecommerce experience as smartphones increasingly account for a larger share of ecommerce, the group noted.

Panelists Discuss Responsible Sourcing

In this video, diamond and jewelry industry leaders discuss how to improve responsible sourcing. Watch Now. The roundtable discussion, hosted by Martin Rapaport, the chairman of the Rapaport Group, addressed practical ways to ensure the legitimacy of products and the role international trade organizations can play in protecting the integrity of the diamond and jewelry industry.

Panelists included Edward Asscher, representing the WDC, David Bouffard of Signet, Eric Braunwart of Columbia Gemhouse, James Courage of the RJC, Cecilia Gardner of the JVC, Dorothee Gizenga of the Diamond Development Initiative, Mark Hanna of Richline Group, Douglas Hucker of AGTA, Erik Jens of ABN Amro, Stephen Lussier of Forevermark, Alex Popov, representing the WFDB, Kenneth Porter of Alliance for Responsible Mining and Ronnie VanderLinden, representing the DMIA.

HRD Notes Octahedral Lab Grown Stones

HRD Antwerp recently discovered near-colorless lab grown rough diamonds with octahedral and other “natural” shapes, making it more difficult for less experienced rough traders to make a visual identification of these goods. The rough melee examined by HRD Antwerp varied in size from 0.01 carat to 0.04 carat and were produced by Taidiam, a Chinese company offering both HPHT and CVD lab-grown diamonds. Katrien De Corte, the chief education officer at HRD, stated that a microscopic view revealed remnants of a seed crystal used to position the precipitated carbon atoms and that an infrared spectroscopy analysis demonstrated that these stones were type IIa or type IIb.

In other news, HRD Antwerp accredited GEMACYT Gemmological Laboratory of Madrid, Spain as a partner following jewelry certification training. Beginning in September, GEMACYT will be authorized to certify diamond jewelry and issue Diamond Jewellery Reports on behalf of HRD. The two companies have fostered a working relationship for more than 20 years. Peter Macken, HRDs CEO, said, he was "fully confident the HRD Antwerp Jewellery Reports issued by GEMACYT adhere to the same high-quality standard as the Jewellery Reports issued by the Diamond Lab in Antwerp.”

Business Lessons From Social Media

Ulrik Bo Larsen, the CEO of Falcon Social, said businesses must evolve their social media strategy as the medium changes. Unlike in the past, influencers alone no longer expand audience reach, so retailers must create compelling messages that resonate with consumers, triggering the inspiration to share and spread the word. Pushing "more content" online no longer generates reach; instead brands must consider the distribution channel as an integral part of content creation. In his practice, Larsen said many B2B firms disregard social media, but this misses an opportunity. Businesses employ people -- most, if not all, of whom are active on social media and can become a brand champion.

When using "big data" for benchmarks, the way it is perceived and presented can be "wildly misrepresented." Instead, retailers should first determine what to track and what insights they need before harvesting the numbers. Larsen advised businesses to incorporate "digital literacy" for all when building strategy, rather than assume one generation (millennials) magically navigate channels. And contrary to what advertisers say, people are not interacting with brands in a way that pays off; therefore, engagement metrics must not become the bedrock of performance. Think about comparing "social customer care metrics" to non-social metrics and justify savings. Citing McKinsey’s findings, a typical inbound customer service call costs a company between $6 and $8; however, that same interaction on social media costs less than $1. "Clearly knowing what you hope to achieve with social will help you identify the metrics that make sense to your business," he sai

Vaibhav Adopts Hybris Mobile Response

Vaibhav Global Ltd. updated the website of its Liquidation Channel, its jewelry and lifestyle product shopping subsidiary, to the Hybris platform and launched a new mobile response system. The company stated that now any mobile device can access the shopping experience through liquidationchannel.com and customers can access live programming to buy jewelry or search for an item on the go.

GJSCI Debuts E-Learning Platform

The Gems and Jewellery Skill Council of India (GJSCI) established an e-learning platform that is intended to provide career training for jewelry retail sales associates across India. Binit Bhatt, the chief operations manager for GJSCI, said the initiative will help bridge skill gaps across 117 job roles and be especially useful for professionals who operate in remote locations. After each chapter of course study is completed, students proceed to an online exam. GJSCI has certified over 56,000 candidates in various parts of India, with the help of 55 training partners and 11 assessment agencies.

Talisman High Jewelry Debuts in Paris

De Beers Diamond Jewellers first introduced rough diamonds in its jewelry with the Talisman collection 10 years ago and this past week debuted the De Beers Talisman unique high jewelry creations at Paris Haute Couture. The new jewels will be available at De Beers stores beginning in September. The centerpiece of the new offerings in Paris, "The Wondrous Sphere," features a striking white gold articulated sphere that symbolizes "the genesis of talisman." The necklace highlights a central 13-carat olive green rough diamond, surrounded by a three-dimensional sequence of diamonds, and is designed to embody correlation with the fusion of light and colors. Motion and movement are reflected by mobile circles, representing mans quest for discovery.

Pittsburgh Honors Donna Distefano

Pittsburgh proclaimed July 21st “Donna Distefano Day” in recognition of the jewelry artists participation in the Carnegie Museum exhibit "Out of This World! Jewelry in the Space Age" with her ring "The Love That Moves The Sun And The Other Stars." Distefano was commended for combining poetry, history and literature with a commitment to socially and environmentally responsible jewelry making. Distefano said she loves "that Pittsburgh is a metalworking city. I understand the connection between metal, economy, art and dreams. To be exhibited at the Carnegie Museum is an honor.” Distefano’s ring was featured in The Forbes Galleries in Manhattan before it was requested by curator Elyse Karlin to join the exhibit in Pittsburgh.

Kering Appoints Boucherons CEO

The Kering Group appointed Hélène Poulit-Duquesne as the CEO of Boucheron, effective September 28. She will report to Albert Bensoussan, the CEO of Kerings luxury, watches and jewelry division, and pursue the development of the brand on an international scale, reinforcing its position among the most prestigious high-end jewelry houses worldwide, according to the retailer. Poulit-Duquesne was previously the international business and client development director at Cartier, a promotion she secured 13 months ago, and has been a member of Cartiers executive committee since 2010.

Singapore Gem Fair Begins Oct. 22

The Singapore Jewellery & Gem Fair is scheduled for October 22 to 25 at the Sands Expo and Convention Centre. The event is endorsed by the Singapore Jewellers Association and the Diamond Exchange of Singapore, according to UBM Asia, the event organizers. During the previous edition, the Singapore Jewellery & Gem Fair attracted 161 international exhibitors from 21 countries and hosted 9,615 visitors, representing a 10% year-on-year increase.

MINING

Rockwells Loss Jumps

Rockwell Diamonds revenue fell 39% year on year to $9.2 million in the first quarter that ended on May 31. Rough diamond sales dropped 14% to $8.3 million and benefication revenue fell 83% to about $900,000. However, the average price of diamonds sold rose 9% to $1,432 per carat. The company recorded a loss attributable to owners of the parent company of $65.1 million, up from a loss of only $345,000 one year earlier.

The company characterized the quarter as a slow time for rough diamond purchases, but concluded that polished prices stabilized largely due to the lower volume traded. Polished diamond dealers continued an attempt to reduce inventory and improve liquidity, according to Rockwell. Looking forward, Rockwell anticipates a continued reduction in rough supplies and lower prices "could sustain polished prices and stabilize the disparity between rough and polished prices."

Peregrine Completes Botswana Acquisition

Peregrine Diamonds Ltd. completed the acquisition of shares in Diamexstrat Botswana Ltd. from Diamond Exploration Strategies Ltd. The deal included eight diamond prospecting licenses, representing 5,746 square kilometers. Peregrine anticipates drill testing of four priority kimberlite targets between July and November. Tom Peregoodoff, Peregrines CEO, said the company put into place a focused exploration program, using its extensive and proprietary database to identify high-priority targets across what is mature diamond-producing terrain.

Dominion Appoints Bell as CEO

Dominion Diamond Corporation said Brendan Bell, who has been serving as acting CEO since November 2014, will officially assume the role, effective July 31. Robert Gannicott has returned from medical leave to resume duties as chairman of the board and as a non-executive director. Gannicott will also serve as a consultant to Dominion in several business areas, including on the development of the Jay kimberlite pipe for production at the Ekati mine.

STATS 	Belgium 

June $Mil. %Chng. YTD $Mil. %Chng.
Polished exports $1,386 2% $7,296 -4%
Polished imports $1,399 -7% $7,135 -4%
Net exports ($13) $161 -4%

Rough imports $1,066 18% $6,353 -19%
Rough exports $1,142 -14% $6,395 -15%
Net imports $75 ($42)

Net diamond account $62 $203 -55%

ECONWATCH 	  

Diamond Industry Stock Report

Industry stocks were mostly positive with all U.S. retailers higher, led by Macys (+10%), while Swatch (+11%) led gains in Europe. Jewelers in the Far East and India were mixed with noteworthy movers Chow Tai Fook (+2%), Rajesh Exports (+11%) and Goenka (+8%). In mining stocks, Kennady (-10%) and Shore Gold (-10%) were under pressure, but Anglo (+3%) and ALROSA (+3%) were higher. View the detailed industry stock report.
July 16 July 9 Chng.
$1 = Euro 0.920 0.907 0.013
$1 = Rupee 63.52 63.39 0.1
$1 = Israel Shekel 3.79 3.78 0.01
$1 = Rand 12.39 12.51 -0.12
$1 = Canadian Dollar 1.30 1.27 0.03

Precious Metals
Gold $1,145.00 $1,160.70 -$15.70
Platinum $1,009.00 $1,024.00 -$15.00

Stock Indexes Chng.
BSE 28,446.12 27,573.66 872.46 3.2%
Dow Jones 18,120.25 17,548.62 571.63 3.3%
FTSE 6,796.45 6,581.63 214.82 3.3%
Hang Seng 25,162.78 24,392.79 769.99 3.2%
S&P 500 2,124.29 2,051.31 72.98 3.6%
Yahoo! Jewelry 990.90 1,226.53 -235.63 -19.2%

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Rapaport Weekly Market Comment July 31, 2015

Rough sales and diamond manufacturing activity plummeting. Shortages holding up prices for large stones but some very good deals available. Sizes below one carat under severe pressure. “New York Jewelry Week” weak. Low expectations for upcoming India and HK shows as Chinese stock market bubble bursts. Rough prices unsustainable and likely to fall significantly. De Beers allows sightholders to defer 75% of their August purchases, 1H rough sales -21% to $2.7B, price index -8%, earnings -23% to $360M. Petra Diamonds FY revenue -10% to $425M. Letšeng 1H sales -28% to $106M, average price -18% to $2,264/ct. LVMH 1H watch & jewelry sales +23% to $1.7B, operating profit +91% to $227M.

RapNet Data: July 30

Diamonds 1,362,320
Value $8,282,699,804
Carats 1,362,909
Average Discount -26.76%

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The RapNet Diamond Index (RAPI) has been revised to reflect the average price of the 10 best priced diamonds in each category.

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August 6-10 Thu-Mon

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QUOTE OF THE WEEK
Consumers are clearly losing confidence in a more robust outlook for the U.S. economy amid growing concerns over stagnant business conditions, fewer jobs, and declining income.

Lindsey Piegza | Stifel Financial

INDUSTRY 	  

De Beers Lowers Production Guidance

De Beers revised its full-year production guidance downward to between 29 million carats and 31 million carats from its previous forecast of 30 million to 32 million carats, as its first-half underlying earnings fell 23 percent year on year to $360 million, according to parent company Anglo American. Bruce Cleaver, head of strategic development, told Rapaport News that the decrease would probably be implemented across the group’s operations, whereas first-half production was primarily reduced at De Beers tailings operations.

Cleaver added that if consumer demand remains stable, De Beers expects some improvement in polished demand in the second half, ahead of Christmas. Sightholders rejected up to 65 percent of the goods offered at the company’s July sight, which closed with an estimated value of $200 million. De Beers rough diamond price index has declined by 8 percent since the beginning of the year, although the average price achieved increased 7 percent year on year to $206 per carat.

Cleaver declined to comment on the company’s supply and price considerations for future sights.

ALROSA Set for Production Boost

ALROSA has shifted mining operations at the iconic Udachnaya mine from open-pit to underground to eventually yield 5 million carats a year. The company said it completed open-pit mining at the Udachnaya pipe earlier this month, having recovered 2.67 million carats of rough diamonds in the first half. The underground operation, commissioned in June 2014, is expected to produce approximately 780,000 carats in 2015 and 5 million carats by 2019.

The Udachny division, one of five mining units at ALROSA, saw production increase 30 percent year on year to 2.8 million carats during the first half, with the bulk coming from the Udachnaya open pit. The mine is central to ALROSA’s goal of reaching annual production of 41 million carats.

Russia Could Set Up Diamond Exchange

Russia could establish its own rough diamond exchange in the city of Vladivostok in the Far East Federal District, Yury Trutnev, Deputy Prime Minister and presidential envoy in Russias Far East Federal District, told TASS.

“We will be able to talk about a real project when I receive the economic data and know who potential market players are,” he said. “We need to find the people who understand this market. This is a rather narrow circle of people. There are few centers of global sales of diamonds; what if we tell them that we want to sell diamonds in Vladivostok?”

He also said that it is important to develop the diamond-cutting business in Russia.

Swiss Watch Exports Rise to $2B

Swiss watch exports increased 3 percent year on year in June to $2.02 billion (CHF 1.93 billion), according to the Federation of the Swiss Watch Industry. Exports of precious metal wristwatches grew 6 percent to $738.9 million (CHF 711.3 million), despite a 6 percent drop in volume to 43,700 units. Exports of wristwatches made from other metals increased 24 percent to $113.4 million (CHF 109.2 million) and rose 11 percent by volume to 286,500 units.

The increase in wristwatch exports occurred at both ends of the price spectrum. Exports for watches priced higher than $3,144 rose 5 percent by value during the month, despite the volume of units exported declining by 1 percent. Meanwhile, exports of watches priced under $210 rose 1 percent by value and 8 percent by volume.

IndusInd Bank Acquires Diamond Loan Portfolio Held By RBS

IndusInd Bank announced Monday that it had completed its acquisition of the diamond and jewelry financing business of Royal Bank of Scotland (RBS) in India. RBS managed a diamond and jewelry business loan portfolio valued at $640 million (INR 41 billion).

As of June 30, 2015 IndusInd Bank had 811 branches across India and representative offices in London, Dubai and Abu Dhabi.

The deal was originally announced on April 10 this year.

The RBS diamond and jewelry financing business in India was originally part of diamond lending bank ABN AMRO, which was acquired by a consortium of banks led by RBS in 2007. ABN AMRO’s India operation were rebranded under the RBS name in 2010.

Rajesh Exports Acquires Precious Metals Refiner Valcambi For $400M

Rajesh Exports, an India-based jewelry manufacturer, acquired Valcambi, the world’s largest precious metal refining company for $400 million in cash. Rajesh Exports purchased the Swiss-based refiner from gold and copper mining giant Newmont Mining Corp. and a group of Swiss investors.

Valcambi processed on average 945 tons of gold and 325 tons of silver per year over the past three years, Rajesh Exports noted in a statement announcing the deal.

“On a theoretical basis, Valcambi is capable of supplying the entire gold requirement of India,” said Rajesh Mehta, the chairman of Rajesh Exports. “This acquisition will add significantly to the revenues and profitability of the Rajesh Exports group during the coming years.”

Michael Mesaric, the CEO of Valcambi, and his entire senior management team have agreed to join Rajesh Exports as part of the acquisition to ensure a smooth transition in ownership and the success of future expansion plans, the company said.

Diamond Industry Figures Signal Weak India Trading in July: Quick Take

Indian diamond industry leaders are predicting weak diamond trade figures for July this year, The Economic Times reported on Tuesday.

Indias diamond exports will likely decline between 40 percent and 50 percent of average during July, Vipul Shah, the chairman of the Gem & Jewellery Export Promotion Council, told the newspaper.

Imports of rough diamonds to India have fallen 20 percent in July, estimated Ashok Gajera, the managing director of diamond manufacturer and exporter Laxmi Diamond.

RETAIL & WHOLESALE 	  

Kering Group 1H Sales +17%, But Luxury Sales Flat

Luxury retailer Kering reported that sales increased 17 percent year on year to $6.1 billion (EUR 5.5 billion) during the first six months of 2015. The group said sales were boosted by a weaker euro,and solid growth in Western Europe and Japan. Sales in emerging markets were stable. The company noted that sales grew 4 percent during the period on a comparable-store basis, excluding for changes in group structure, store count and foreign currency exchange rates.

Kering’s brands include Gucci, Yves Saint Laurent and Boucheron. Despite increased sales, recurring operating income within the luxury segment, which includes jewelry sales, was flat at $892 million.

The group’s share of net income more than doubled to $468.2 million . However, net income from recurring items fell 13 percent to $541.3 million.

Carl F. Bucherer Unveils Patravi TravelTec II Timepiece

Carl F. Bucherer, a Swiss watchmaker and retailer, unveiled its Patravi TravelTec II timepiece, which combines a triple-time zone display and chronograph in a compact case.The second edition watch features a stainless-steel case with a side-mounted sapphire glass window, which allows the TravelTec II to simultaneously display three time zones alongside a chronograph.

Adorning the case back is a time-zone sun, which displays the hour differences of 24 cities, with Lucerne – the home base of Carl F. Bucherer – accentuated as a black engraving.

Founded in 1888, the Bucherer Group is still a family-run business, managed by the owner and chairman of the board, Jörg G. Bucherer. The group manufacturers its watches in its workshops in Switzerland and maintains a worldwide chain of stores.

Chow Tai Fook To Bring High Rollers to Brisbane Casino: Quick Take

Chow Tai Fook Jewellery Group will promote a new casino resort being built in downtown Brisbane, Australia, to members of its customer loyalty program, Bloomberg reported on Monday.

Sister company Chow Tai Took Enterprises is partnering with with property developer Far East Consortium International Echo and Entertainment Group to build a 1,110 room hotel and casino along the shores of the Brisbane river by 2022.

Chow Tai Fook Jewellery Group maintains a loyalty program for customers who spend more than $129,000 (HKD 1 million) per year at its stores. The program offers members entry to special events like yacht cruises, launches for new luxury car models and luxury food tastings.

The casino developers are trying ensure a steady supply of high-roller gamblers from China to visit the resort when it opens.

Matt Bekier, Echo’s CEO, told Bloomberg that these “very, very serious VIPs” are people who bet more than $2,000 per hour in high-stakes games of baccarat. He estimated the total number of such people who gamble regularly as between 1,500 and 2,000 players.

U.S. Consumer Confidence Declines

The Conference Board Consumer Confidence Index, which had improved to 99.8 in June, declined in July. The Index now stands at 90.9 (1985=100), the lowest reading to be posted since September 2014.

Consumers’ optimism about the short-term outlook decreased sharply in July. The percentage of consumers expecting business conditions to improve over the next six months declined from 17.9 percent to 14.7 percent, while those expecting business conditions to worsen rose slightly from 10.2 percent to 10.7 percent.

As consumers lose confidence, they are more likely to tighten their purse strings, further restraining household spending, said Lindsey M. Piegza, chief economist at investment house Stifel.

Jewelers of America Elects Berg Chairman

Jewelers of America (JA) has elected Ryan Berg, the market president of Lee Michaels Fine Jewelry in San Antonio, as JA’s new board chairman, succeeding Bill Farmer Jr., a partner in Farmer’s Jewelry.

As chairman, Berg will lead an executive committee comprised of the following elected officers: chair-elect John Henne of Henne Jewelers; vice chair Mark Light of Sterling Jewelers; vice chair Holly Wesche of Wesche Jewelers; treasurer Coleman Clark of B.C. Clark Jewelers; and secretary Cathy Tivol of Tivol, Inc.

Tiffany & Co. Outlines Sustainability Efforts

Tiffany & Co. released its fifth annual Sustainability Report, now available online at Tiffany.com/sustainability, which outlines Tiffanys sustainability initiatives.

The report provides an overview of the companys efforts in 2014 around its most important environmental and social challenges, with a focus on responsible mining and sourcing of raw materials, ranging from diamonds and gold to packaging
Vaibhav Globals 1Q Revenue -8%, Profit -67%

Vaibhav Global Ltd., the parent company of The Liquidation Channel in the U.S. and Canada and The Jewellery Channel in the U.K., reported that total revenue fell 8.4 percent year on year to $43.8 million (Rs. 281 crore) for the first quarter that ended on June 30. Retail sales declined 8.3 percent to $43.1 million (Rs. 276 crore).The companys expenses fell 3.7 percent to $42 million (Rs. 269 crore) and profit plummeted 66.5 percent to $1.1 million (Rs. 7 crore), due in part to weaker revenue coupled with higher taxes and depreciation costs.

The company said the volume of units sold on TV shopping channels rose 5 percent to 2.1 million units. The average selling price per item sold on TV fell to $22 compared with $25 one year earlier, while the average price was stable for ecommerce sales at $14 per unit.

At the close of the quarter, the company recorded it was debt free. Sunil Agrawal, the chairman of Vaibhav Global, said the company is continuing to strengthen the customer experience, having recently launched the Hybris (by SAP) platform for mobile ecommerce.

"The diversification into home and other lifestyle products has drawn a positive response from customers. We believe these substantial initiatives undertaken by the company, and several other in the pipeline, would allow us to regain volume momentum and deepen shopper engagement with our base of 1.7 million TV and web customers," he said.

LVMHs Jewelry Division Operating Profit +91% to $227M

LVMH reported that revenue rose 19 percent year on year to $18.5 billion (EUR 16.71 billion) in the first half of 2015. However, organic growth, using a comparable-structure and constant-exchange-rates, rose only 6 percent, meaning the exchange-rate impact added 13 percent to the total.Group profit improved 5 percent to $1.8 billion (EUR 1.58 billion).

Organic growth across the luxury goods retailers various divisions was strongest for its watches and jewelry segment, rising 10 percent year on year. In total, revenue from the division rose 23 percent to $1.7 billion (EUR 1.6 billion). Operating profit from watches and jewelry division jumped 91 percent to $227 million (EUR 205 million).

LVMH stated that there was strong growth from jewelry retailers but cautious purchasing behavior at multi-brand watch retailers. Bulgaris results were driven by the success of jewelry lines and a new watch for women, the Lvcea. Hublot experienced improved sales, while TAG Heuer continued to refocus on its core offering, according to the company. LVMH has partnered with Google and Intel for a TAG Heuersmartwatch.

Bernard Arnault, the chairman and CEO of LVMH, said,“The excellent results of the first half are witness to the efficiency of our strategy, which relies upon the strength of our brands and a very entrepreneurial style of management. Building on the first half performances, we face the second half of the year with confidence and count on the quality of our products and the talent of our teams to further strengthen our leadership in the world of high-quality products.”

Signet Promotes Sterling Jewelers Veterans

Signet Jewelers has named Ed Hrabak as its chief operating officer and George Murray as its chief marketing and merchandising officer.

Hrabak previously served as president of Signets Sterling Jewelers division. He joined Sterling Jewelers in 1978 as a merchandise buyer.

Murray was president of Signets Zale division following Signets acquisition of Zale Corporation in May 2014. He has held a number of management positions at Sterling Jewelers since joining the company in 1992.

GENERAL 	  

U.K. Bans Three Directors

The Insolvency Service (TIS) of the U.K. disqualified the directors of Cohen Stones Ltd., Imperial Assets Solutions Ltd. and Tudor Global Ltd. from holding any "director" position at any firm for more than a decade, after investigators determined that the men misled diamond investors and then filed voluntary insolvency.

The TIS said that the three directors operated in a similar fashion: selling diamonds to customers with an extraordinary markup, claiming the stones would increase in value annually and recording a profit before filing for bankruptcy. Each of the firms were said to have stored the diamonds in a free trade zone, which required their clients to pay a 20 percent value-added tax on the purchase price to have the stones released. TIS estimated that the customers, many of whom were elderly, lost more than $5.4 million (GBP 3.5 million).

Indian Diamond Labs Receive Customs-Duty Exemption

Cut and polished diamonds sent to three diamond grading labs in India will no longer be subject to customs duty, following a decision published by India’s Central Board of Excise and Customs this week, The Hindu reported on Wednesday

The decision applies to all diamonds sent to the Gemological Institute of America (GIA) location in Mumbai, the Indian Diamond Institute in Surat and the International Institute of Diamond Grading and Research India in Surat. The exemption is expected to make these labs competitive locations for certifying polished diamonds manufactured or traded in other countries.

To qualify for a customs duty exemption, polished diamonds shipped from abroad will have to be certified and re-exported from India within three months.

India Mobile Lab to Verify Diamonds

Indian jewelry retailer Kirtilals has opened a portable, in-store laboratory to enable clients to check their diamonds’ cut, properties and value, The Hindu newspaper reported.

Equipment for the laboratory, set up at a cost of $93,600 (INR 6 million), was sourced from De Beers, according to the report. The portable lab has an optical microscope, a Diamond Analyzer to check whether the stones are authentic or lab-grown, a Sarine machine to identify defects in the diamond cutting and symmetry, and fluorescence to test the stone’s light.

Unique Volcano Diamonds Found in Russia

Russian scientists have discovered a new type of diamond in the frozen lava of the Tolbachik volcano in Russia’s Kamchatka Peninsula, according to a statement from the Russian Science Ministry.

The diamonds were formed by volcanic gases under tremendous pressure and were crystallized under the influence of electrical current discharged by lightning, RT News reported, citing the ministry’s statement.

The Russia-based news outlet also reported that while the gems look similar to synthetically produced diamonds, they differ with respect to certain geological and mineralogical characteristics.

Jewelers Mutual Insurance Company named to 2015 Ward’s 50

Jewelers Mutual Insurance Company has been named to the 2015 list of Wards 50 top performing insurance companies for the fifth consecutive year.

The Wards 50® award recognizes outstanding financial results in the areas of safety, consistency and performance over a five-year period from 2010 to 2014. To develop its annual list of the top 50 performing insurance companies, Ward Group analyzes the financial performance of nearly 3,000 property-casualty insurance companies and 800 life-health insurance companies domiciled in the U.S. and identifies the top performers in each segment based on objective data and subjective quality measures. Each company has passed all safety and consistency screens and achieved superior performance over the five years analyzed.

"Wards 50 is an incredible industry benchmark and its a tremendous achievement for Jewelers Mutual to be named to this highly competitive list for five consecutive years," said Scott Murphy, the president and CEO of Jewelers Mutual.

The list of Wards 50® top performing insurance companies was released last week by Ward Group, an Aon Hewitt company and the leading provider of operational and compensation benchmarking and best practices services for insurance companies. Aon Hewitt is the global talent, retirement and health solutions business of Aon plc.

This is the 25th consecutive year Ward Group has conducted the analysis. The Ward Group noted in its release that the Wards 50 property-casualty group of insurance companies produced a 11 percent statutory return on average equity from 2010 to 2014 compared to 8 percent for the property-casualty industry overal

MINING 	  

Lucapa Raises $3M for Lulo Mine

Lucapa Diamond Company, explorer and developer of the Lulo diamond mine in Angola, announced that it had raised $2.9 million (AUD 4 million) to fund modifications to the alluvial mine plant. The company raised the funds via the placement of 22.2 million ordinary shares at an issue price of 13 cents (AUD 0.18) per share. The issue was led by mining company financier Far East Capital Limited, according to a statement filed with the Australian Stock Exchange (ASX).

Management noted that Lucapa achieved its first positive net operating cash flow for the quarter that ended on June 30, despite the company’s decision to postpone the fifth sale of Lulo diamonds, which had been scheduled for June, due to weak rough diamond trading conditions.

Lucapa said that it currently holds 1,600 carats of rough diamonds in inventory and planned to conduct its fifth rough sale of the year in late August or early September.

Petra Diamonds’ Revenue -10%

Petra Diamonds revenue declined 10 percent year on year to $425 million for the fiscal year that ended on June 30. Rough diamond sales increased 1 percent by volume to 3.169 million carats during the year. The average price of diamonds sold declined 10 percent on a like-for-like basis.

The miner reported that its rough diamond production rose 2 percent to 3.2 million carats during the fiscal year.

Management anticipates that production will reach between 3.3 million and 3.4 million carats in fiscal 2016, which represents an increase of between 3 percent and 4 percent against the previous year and keeps it on track to achieve its goal of producing 5 million carats per year by the end of its fiscal 2019.

Gem Diamonds 1H Revenue Falls 28%

Gem Diamonds’ revenue declined 28 percent year on year to $106.3 million in the first half that ended June 30 2015, hurt by reduced production and lower prices received for commercial quality rough diamonds. The average price received for diamonds sold declined 18 percent year on year to $2,264 per carat.

The amount of rough diamonds sold from Letšeng declined 13 percent to 46,961 carats during the half. Similarly, production at Letšeng declined 9 percent to 50,019 carats, which the company attributed to processing less ore from the mine’s higher grade Satellite pipe and a 19-day shutdown to complete a plant upgrade. The company noted that construction of a coarse recovery plant at the mine was completed on schedule and within a budget of US$ 11.7 million by the end of the second quarter.

Zimbabwe to Consolidate Marange Mining Companies

The seven diamond-mining companies operating in Zimababwes Marange diamond fields will be consolidated into a single government-owned entity by the end of the year, Walter Chidhakwa, Zimbabwes Minister of Mines and Mining Development, told New Zimbabwe.

The seven companies, Mbada Diamonds, Anjin, Marange Resources, Gye Nyame, Kusena, Jinan and the Diamond Mining Company, will be merged into a new entity called the Zimbabwe Consolidated Diamond Company that will be 50 percent state-owned.

Chidhakwa said that extraordinary general meetings (EGMs) will be held with each company during the first two weeks of August. At the meetings, the companies will be asked to provide audited financial statements and a formal response to the governments call for consolidation. He added that companies that choose to decline to participate in the governmental consolidation plan will be told it is time to "bid farewell."

ECONWATCH 	  

Diamond Industry Stock Report

Industry stocks mostly fell this week, led by Birks Group (-15%) and Charles & Colvard (-5.8%) in New York, and Luk Fook (-5%) and Sarine (-14%) in Asia. Birks has lost more than 50% of its value this year. Mining stocks were generally lower, notably Stellar Diamonds
(-13%) and Kennady (-12%). View the detailed industry stock report.

July 30 July 23 Chng.
$1 = Euro 0.91 0.910 0.003
$1 = Rupee 64.11 63.84 0.3
$1 = Israel Shekel 3.78 3.82 -0.04
$1 = Rand 12.71 12.46 0.25
$1 = Canadian Dollar 1.30 1.30 0.00

Precious Metals
Gold $1,096.85 $1,089.30 $7.55
Platinum $986.35 $974.00 $12.35

Stock Indexes Chng.
BSE 27,705.35 28,370.84 -665.49 -2.3%
Dow Jones 17,751.39 17,731.95 19.44 0.1%
FTSE 6,687.94 6,655.01 32.93 0.5%
Hang Seng 24,497.98 25,398.85 -900.87 -3.5%
S&P 500 2,108.57 2,102.15 6.42 0.3%
Yahoo! Jewelry 1,027.17 990.24 36.93 3.7%

ti tomu ale davaji na prdel....tem babam co jsou ovesene vicerokaratovymi diamanty bych vrazil do ruky lopaty a poslal je to uklidit....👿

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Rapaport Weekly Market Comment August 7, 2015

Large attendance at IIJS show. 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. U.S. stable, rest of world very, very slow (VVS). Trading cautious with dealers in Belgium and Israel on vacation. July RAPI for 0.30ct. -6.3%, 0.50ct. -4.7%, 1ct. -2.5% and 3ct. -1.7%. Rio Tinto 1H diamond revenue -23% to $331M, EBITDA -8% to $144M. Titan 1Q sales -6% to $420M, profit -15% to $24M. U.S. June polished imports +6% to $1.7B, exports -9% to $2.7B. GIA bars Cristy Gems for fraudulent report inscriptions.

RapNet Data: August 6

Diamonds 1,393,210
Value $8,643,585,331
Carats 1,416,194
Average Discount -26.36%

www.rapnet.com

The RapNet Diamond Index (RAPI) has been revised to reflect the average price of the 10 best priced diamonds in each category.

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS

August 6-10 Thu-Mon

India International Jewellery Show (IIJS)

Rapaport Booth: Hall 5 - AL026-032

Visit Show Website
August 19-26 Wed-Wed
Rapaport Melee Auction

New York & Dubai

View Details
Aug-Sep 26-2 Wed-Wed

Rapaport Single Stone Auction 

New York & Israel

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QUOTE OF THE WEEK
This has occurred on a number of occasions, indicating a pattern of intentional conduct. (Referring to labs banned for submitting diamonds inscribed with pre-existing GIA report numbers that were not issued for those stones.)

Tom Moses | GIA vice president and chief lab research officer

MARKETS 	  

United States: Trading is starting to pick up again after many dealers took vacation in July.

Belgium: The market is quiet with many companies closed for the vacation period which is expected to continue through to mid-August.

Hong Kong: Polished trading is quiet with many dealers away on their annual summer vacations.

India: Polished trading is slow and dealers have low expectations for the IIJS show taking place this weekend.

Israel: Some dealers have traveled to the IIJS show to look for goods, sensing that Indian suppliers might be selling 0.30-carat to 0.40-carat at steeper discounts to raise liquidity.
Complete Markets Report available here.

INDUSTRY 	  

U.S. Polished Exports Rise 6% in June

U.S. polished diamond imports rose 6 percent year on year to $1.7 billion in June, government data showed. By volume, polished imports fell 5 percent to 737,302 carats and the average price increased 11 percent to $2,319 per carat.

Polished exports decreased 9 percent to $2.7 billion and the volume of exports fell 7 percent to 2.021 million carats. As a result, the average price declined 2 percent to $1,322 per carat. June is traditionally a month with a large amount of exports from the U.S. as a lot of goods are returned to trading centers after the JCK Las Vegas show, which ended on June 2 this year.

U.S. net polished imports, indicating the amount of goods that stayed in the country for consumption, improved by 27 percent to a deficit of $962 million, as polished exports still exceeded imports during the month.

Rough imports fell 42 percent to $21 million and rough exports dropped 14 percent to $12 million. Net rough imports, representing imports minus exports, declined 59 percent to $9 million.

The U.S. June net diamond account, which is total imports of polished and rough minus total diamond exports, improved 28 percent to a deficit of $971 million.

During the first half of 2015, U.S. polished imports were flat at $12.25 billion, while polished exports fell 12 percent to $10.2 billion. Net polished imports almost tripled to $2.1 billion.

Rough imports declined 68 percent to $117 million, while rough exports dropped 70 percent to $74 million. Net rough imports fell 68 percent to $43 million. The U.S. net diamond account more than tripled to $2 billion during the six month period.

Silver Jewelry Imports Up

Imports of silver jewelry to the U.S. increased by 11% between January and May 2015, according to the Silver Institute, a non-profit silver industry association. At the same time, India recorded a sharp surge in silver jewelry exports during the quarter that ended on June 30. Silver exports from the country rose 55% year on year to $523.1 million during the period, according to data gathered by India’s Gem & Jewellery Export Promotion Council.

In contrast, exports of gold jewelry from India declined 23% to $1.15 billion during the same quarter.

Mumbai Bourse Bans VSM Diamonds

The Bharat Diamond Bourse in Mumbai suspended the membership of VSM Diamonds Private Limited and a number of individuals connected to the firm after determining that they had traded synthetic diamonds without offering the proper disclosures. Consequently, the individuals affiliated with this company, and anyone representing their interests, are now banned from entering the bourse and trading in it.

The BDB’s announcement followed an advisory warning issued July 3 informing its members that local members of the diamond trade were selling diamonds with unrelated grading reports. The bourse said that the diamantaires, which it did not name, had taken reports from reputable diamond labs and used them with different diamonds, after having the report number inscribed on the inferior diamonds.

GIA Bans Cristy Gems

The Gemological Institute of America (GIA) will no longer accept diamonds submitted for grading by Cristy Gems, a Surat-based diamond manufacturer. The lab explained that it suspects that the company and four partner businesses repeatedly submitted diamonds inscribed with pre-existing GIA report numbers that were not issued for those stones.

“This has occurred on a number of occasions, indicating a pattern of intentional conduct,” Tom Moses, GIA’s vice president and chief lab research officer, said in a letter to Cristy Gems.

He added that the GIA is closing the accounts of all companies associated with Cristy Gems and will no longer accept any items for servicing from the company. All stones currently in process will be returned ungraded.

The companies in question include Cristy Gems, Yogesh Kalsaria, Kalsaria Diamonds Pvt. Ltd., M/S Cristy Gems, Tusharbhai and Chhaganbhai Kalsariya. The latter two companies submitted their diamonds to the GIA via Rapaport India.

DDC Prepares for India Diamond Week

The Diamond Dealers Club (DDC) is preparing for the third edition of India Diamond Week, which will take place in New York from August 24 to August 27. Exhibitors from India and New York, including major diamond manufacturers and trading companies, will be buying and selling a wide range of goods on the DDCs trading floor. For information on displaying goods at the event, contact leora@nyddc.com.

Zimbabwe Police Catch Illegal Diamond Dealers

Three diamond dealers were recently arrested in Zimbabwe by police detectives while trying to illegally sell gems valued at $20,000 at a local lodge. Richmore Machena, 30, Shawn Mapa, 35, and Augustine Mwashita, 29, appeared before a Mutare magistrate on charges of possessing 20.51 carats of diamonds without a license.

Prosecutor Sherperd Chavarika told the court that sometime in May this year, police detectives from Minerals Unit and Border Control received a tip that there was a diamond syndicate in the city looking for potential foreign buyers.

RETAIL & WHOLESALE

Rideau Buys ‘Birks Business’

Birks Group sold its Corporate Sales Division, also known as “Birks Business,” to Rideau Recognition Solutions for approximately $4.3 million (CAD 5.6 million). The Corporate Sales Division provides business customers unique items for business gifts, recognition programs and service awards.

Rideau will continue to employ the division’s staff members, while Birks will supply Rideau with its inventory of Birks-branded jewelry and watches.

Hong Kong Retail Sales Fall

Retail sales in Hong Kong fell for the fourth consecutive month as the number of tourists visiting the city in June dropped to 4.36 million, a 2.9% decline compared with the same month last year, according to the Hong Kong Tourism Board.

The number of tourists from the Mainland – the largest source of visitors – slipped 1.8% from 3.4 million last June to 3.3 million in June 2015. The value of retail sales fell 0.4% year on year to $4.8 billion (HK 37 billion) during the month.

Jewelers Mutual to Provide Insurance for Smart Wearables

Jewelers Mutual Insurance Company will provide insurance coverage for smart jewelry with the same worldwide personal jewelry protection it offers owners of traditional jewelry. Smart wearables that will be covered include not only smart watches but high-end fitness trackers. The insurance will cover theft, damage, loss and mysterious disappearance anywhere in the world.

Jewelers Mutual covers various brands of smart jewelry, including products by Apple, Bulgari, Cuff, Fredrique Constant, MICA (by Intel), Ringly, Swarovski, and TAG Heuer.

Titan’s Sales Slide

Titan Company, a Mumbai-based jewelry retailer, reported that total sales fell 6% year on year to $419.9 million (INR 26.87 billion) in the first quarter that ended June 30, 2015, while its profit after taxes slumped 15% to $23.6 million (INR 1.51 billion).

Jewelry sales fell 11% to $323.8 million (INR 20.72 billion) during the quarter and watch sales rose 9% to $75.7 million (INR 4.85 billion). Revenue at Tanishq, Titan’s flagship jewelry brand, fell 10%, while studded jewelry accounted for 29% of the company’s total sales, compared to 23% a year earlier. Titan added 22 stores during the year, bringing the companys total number to 1,223.

Former Tiffany CEO Passes Away

Henry B. Platt, the 91-year-old former chairman and CEO of Tiffany & Co., died on July 22 at his home in Palm Beach, Florida, The New York Times reported. Platt was the last descendant of founder Louis Comfort Tiffany to manage the company. Platt was known for playing a key role in popularizing the colored gemstones tanzanite and tsavorite in the U.S. He also encouraged the development of talented jewelry designers, including Elsa Peretti, Paloma Picasso and Angela Cummings.

U.S. Grants Industry Trademarks to A. Dalumi, Maiden Lane Jewelry

The U.S. Patent & Trademark Office (USPTO) assigned the following trademarks:
• “Golden Diamonds By Dalumi” to A. Dalumi Diamonds Ltd. for polished diamonds and jewelry made with polished diamonds.
• Whiteflash Inc. for “A Cut Above the Rest” for retail diamond and jewelry services.
• Maiden Lane Jewelry for the trademark C5 for use with diamond jewelry.
• Enamorata for “S Enamorata by Surita” and “Enamorata”, trademarks for use with jewelry, including gemstone jewelry.
• Rochester (New York) Diamonds and Gold, Inc. for “Simple Solutions.” The trademark is protected for use in the wholesale trade of loose diamonds and mounted diamond jewelry.
• The Electronic Commodities Exchange LP received protected trademark status for “The True Measure of Sparkle.” Its use is protected in the distribution, wholesale and retail of jewelry made with precious metals or gemstones and the provision of scientific and technological services related to jewelry.
• Trademark “Three Keys Jewelry” to Chinese citizen and Canadian resident Ying Li for use in a wide variety of jewelry.

Bhawana G Jewels, Lalit Gems Co. Receive Trademarks

India’s Office of The Trade Marks Registry approved the trademark “A Classique Heritage” for the Mumbai-based Bhawana G Jewels. The trademark refers to precious metals and alloys, goods coated with precious metal alloys, jewelry, and jewelry made with precious stones or diamonds.

Lalit Gems Co., a Mumbai-based diamond jewelry importer and exporter, received approval from the government registry for the trademark “The Lalit Gems Co.,” a trademark that refers to diamond jewelry.

Surat-based Roseate Jewels received a trademark from the registry for “Roseate Jewels,” pertaining to the manufacture and trade of precious metals and their alloys and goods, diamonds, precious and semi-precious gemstones, gems and jewelry, and watches.

GENERAL 	  

GIA Launches New Digital Report

The Gemological Institute of America (GIA) began offering the GIA Diamond Focus Report,™ a new digital report for natural, round, brilliant-cut diamonds ranging between 0.15 and 0.29 carats on the D-Z color scale.

The new reports will provide information on carat weight, color, clarity and cut grades, as well as polish and symmetry grades with a fluorescence description and a laser inscription of the GIA report number. Results will be provided in a Diamond Focus Report available through GIA’s online Report Check.

The report costs $20 for diamonds between 0.15 and 0.22 carats and $22 for diamonds between 0.23 and 0.29 carats. GIA’s laboratories in Bangkok, Carlsbad, Hong Kong, Mumbai, New York and Tokyo all now offer the service.

Oprah Winfrey Rejects Leviev Protesters

Executives at O, The Oprah Magazine refused to receive a small group of activists accusing Israeli diamantaire Lev Leviev of involvement in human rights abuses in Angola and the Palestinian territories.

Representatives of Adalah-NY sought to meet O executives at the magazines headquarters at the Hearst Corporation in Manhattan. The non-profit group said that it chose to focus on Winfrey after she wore Levievs diamonds on the cover of the magazine’s 15-year anniversary issue in May.

MINING 	  

Angola’s Rough Sales Rise

Sales of rough diamonds from Angola rose 35% year on year to $573 million in the first half, the newspaper Jornal de Angola reported, citing the countrys General Tax Administration. By volume, rough sales grew 2% to 4.2 million carats.

Diamondcorps Lace Mine Behind Schedule, Over Budget

DiamondCorp said that underground development at its Lace diamond mine in South Africa was four weeks behind schedule and over budget due to safety concerns. Development costs during the quarter that ended on June 30, 2015 exceeded the company’s budget by 19% at $3,483 (ZAR 44,193) per meter, as the pace of construction slowed.

Management is trying to bring development closer to schedule, but said its options for speeding up work without increasing safety risks were limited.

Gem International Seeks Stake in Angola Concession

Gem International Resources Inc. said it was negotiating to purchase a stake in the diamond-bearing Dala concession, located in Angola.

The 3,000-square-kilometer concession is situated in a highly prospective diamond region 25 kilometers south of the major diamond mine Catoca. Dala is an early-stage mine project with potential for the discovery of both alluvial and kimberlite diamonds deposits.

The company, which is publicly traded on Canadas TSX Venture Exchange, is negotiating with the project vendor, a privately owned South African company with extensive experience in mining alluvial diamond deposits in Angola.

USA

Jun. $Mil. %Chng. YTD $Mil. %Chng.
Polished imports $1,710 6% $12,245 0%
Polished exports $2,672 -9% $10,161 -12%
Net imports $-962 27% $2,084 189%

Rough imports $21 -42% $117 -68%
Rough exports $12 -14% $74 -70%
Net imports $9 -59% $43 -63%

Net diamond account $-971 28% $2,041 237%

ECONWATCH

Diamond Industry Stock Report

Industry stocks rebounded this week, led by Charles & Colvard (+14.5%) in the U.S., and in Europe by Swatch Group (+5.5%) and in Asia by Luk Fook (+5.9%). India share gains were led by Lypsa Gems (+22.3%) and Classic Diamonds (+7.1%). Mining stocks were mixed, with a gain by Alrosa (+9.4%) and decline for Anglo American (-5%). View the detailed industry stock report.

August 6	July 30	Chng.

$1 = Euro 0.92 0.91 0.004
$1 = Rupee 63.73 64.11 -0.4
$1 = Israel Shekel 3.81 3.78 0.03
$1 = Rand 12.76 12.71 0.04
$1 = Canadian Dollar 1.32 1.30 0.02

Precious Metals
Gold $1,088.02 $1,096.85 -$8.83
Platinum $947.50 $986.35 -$38.85

Stock Indexes Chng.
BSE 28,298.13 27,705.35 592.78 2.1%
Dow Jones 17,472.06 17,751.39 -279.33 -1.6%
FTSE 6,740.12 6,687.94 52.18 0.8%
Hang Seng 24,375.28 24,497.98 -122.70 -0.5%
S&P 500 2,091.84 2,108.57 -16.73 -0.8%
Yahoo! Jewelry 1,040.87 1,027.17 13.70 1.3%

Rapaport Weekly Market Comment August 14, 2015

India IIJS show good for gold, not good for diamonds. Low expectations for Sept. HK show as Chinese demand continues to drop along with their currency and stock market. NY market waking up as cash buyers seek good deals and picky buyers forced to pay full market prices. Rough markets under extreme pressure as ALROSA, DeBeers allow clients to reduce, refuse purchases. Lucara 2Q sales -46% to $38M. Sarine 2Q sales -42% to $14M, profit -69% to $3M. Asian Star 1Q sales -3% to $128M, profit -6% to $3M. Shrenuj 1Q sales +6% to $219M, profit +2% to $3M. Blue Nile 2Q sales +7% to $114M. U.S. June jewelry sales -1.3% to $4.6B. HK 1H polished imports -4% to $9.3B, exports -2% to $6.6B.

RapNet Data: August 13

Diamonds 1,372,945
Value $8,569,303,696
Carats 1,390,482
Average Discount -26.21%

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The RapNet Diamond Index (RAPI) has been revised to reflect the average price of the 10 best priced diamonds in each category.

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS
August 19-26 Wed-Wed
Rapaport Melee Auction

New York & Dubai

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Aug-Sep 26-2 Wed-Wed

Rapaport Single Stone Auction 

New York & Israel

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Aug-Sep 30-3 Sun-Thu

International Diamond Week

Israel Diamond Exchange

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QUOTE OF THE WEEK
Buying of diamond jewelery at the retail level, which is ultimately the only true source of value in the industry, will, we estimate, at worst be flat (in 2015) on the level of $81 billion seen in 2014.

Paul Rowley | Executive Vice President, Global Sightholder Sales, De Beers | from his prepared remarks to IIJS in Mumbai, August 6, 2015

MARKETS

United States: Wholesalers have returned from their summer vacations with improved sentiment and rising expectations for the holiday season

Belgium: Trading activity is very slow with most dealers still on vacation. Those still around were focused on the rough market during this week’s ALROSA sale.

Hong Kong: The polished market is stable but quiet. Expectations for the September Hong Kong Jewellery and Gem Fair are low given the prevailing slow trading activity.

India: Sentiment improved slightly as lower gold prices are fueling high expectations for domestic jewelry sales during the Diwali festival and subsequent wedding season.

Israel: Trading is still quiet in Ramat Gan as many dealers remain on vacation. Buyers are looking for bargain deals and are pushing for lower discounts.

INSIGHTS 	  

It’s Demand, Not Credit, That Eludes the Industry

We got a sense this week that liquidity has improved in India’s diamond sector. It’s not that credit taps are flowing once again; they aren’t. Instead, having drastically chopped their purchases of rough, slashed other costs, and collected pending payments on polished invoices, diamond manufacturers are simply less worried about cash flow than they are about demand and profit margin.

INDUSTRY 	  

Hong Kong’s Exports, Imports Decline

Hong Kongs polished diamond imports decreased by 4% year on year to $9.3 billion during the first half of 2015, according to the Diamond Federation of Hong Kong, China Ltd. By volume, polished imports dropped 9% to 9.635 million carats.

Polished exports and re-exports fell 2% to $6.6 billion during the first six months of the year. As a result, net polished imports declined 7% to $2.7 billion. Rough diamond imports to Hong Kong slid 20% to $917.3 million during the half. By volume, rough imports fell 32% to 5.318 million carats.

Rough diamond exports dropped 22% to $946 million, leaving net imports at a deficit of $28.7 million, compared with a deficit of $64.4 million one year ago.

Sarine’s Revenue Plummets

Sarine Technologies Ltd., a diamond-manufacturing equipment maker, reported a 42% plunge in its second-quarter revenue. The company’s sales plummeted to $14.4 million during the quarter that ended on June 30, dragging the company’s net profit to $2.7 million, a 69% drop year on year.

Sales from India, Sarine’s largest market, fell 48% to $10.6 million, with sales dropping sharply in Israel and Africa, as well. In contrast, sales jumped 94% to $557,000 in North America and surged 128% to $717,000 in Europe, two regions known for polishing almost exclusively large-size diamonds.

Sarine noted in its outlook that polished demand in Japan, the Middle East and Russia remained subdued and that overall, excess polished inventory combined with relatively high rough prices and lower polished prices dampened sentiment among diamond manufacturers.

World Diamond Council Meeting Set for Moscow

The World Diamond Council (WDC) will hold its annual general meeting in Moscow, Russia this year from October 12 to October 14. Among the issues to be discussed are challenges to the Kimberley Process and the WDCs response, as well as the councils first strategic organizational plan.

Israel Sees International Diamond Week Sign-Up Surge

The Israel Diamond Exchange (IDE) announced more than 350 buyers from 15 countries have registered to attend the summer edition of the International Diamond Week in Israel (IDWI). Approximately, 350 buyers attended the IDWI held in April last year when there was healthier demand in the global diamond market.

The IDWI will be held at the trading floor of the IDE in Ramat Gan from August 30 to September 3. Delegations of diamond dealers from Belgium, New York, Mumbai and Istanbul will attend the event, the IDE said on Tuesday.

Pure Grown Names Lowrey Brand Director

Synthetic diamond manufacturer Pure Grown Diamonds appointed Curtis Lowrey as its national director of brand training.

Lowrey is a co-founder of Independent Gemological Laboratories. The lab will continue to operate under new management following Lowrey’s departure.

RETAIL & WHOLESALE 	  

Hearts On Fire Launches Major Brand Awareness Campaign

Hearts On Fire, a high-end diamond brand, has started a global marketing campaign to target millennials who are entering the nuptial age. Starting in September, the Ignite Something campaign will feature in fashion and bridal magazines as well as television channels, digital outlets and social media channels, according to a company statement released on Tuesday. TV and video components of the campaign are expected to launch on Hearts On Fire’s Facebook and Instagram accounts in late August.

“Today’s young couples are part of a generation that has a different relationship with tradition – they are doing things the way that they want to,” said Kristin Suppelsa, vice president of marketing a Hearts On Fire. “As a brand, Hearts On Fire is well-known for its passion and creativity, and this new platform further increases our ability to speak directly to all generations, and welcome the new traditions that they are forging for themselves.”

Hearts On Fire was set up in the U.S. in 1996. Following its acquisition last year by Chow Tai Fook, a major retail jeweler based in Hong Kong, the brand has begun a series of initiatives to increase consumer awareness of its products around the globe.

Pandora 2Q Profit Jumps 41% on Concept Stores

Pandora reported a 41 percent surge in revenue in the second quarter as an expansion of concept stores and favorable foreign-exchange rates lifted sales in all geographic markets.

Group revenue jumped to $531.8 million (DKK $3.6 billion) in the three months that ended June 30, taking net profit for the period t to $134.5million (DKK 910 million), a 37 percent advance from a year ago.

Sales volume increased 16 percent as concept stores generated 59 percent of Pandora’s total revenue during the quarter, the company said in a statement released on Tuesday. It plans to add in 2015 more than 375 new concept stores, compared with an original target of 325 new concept stores. Products introduced in the past 12 months accounted for almost 50 percent of the growth in company sales.

Revenue in the Americas climbed 44 percent to $234.2 million (DKK 1.6 billion). In Europe, sales jumped 38 percent to $217.8 (DKK 1.5 billion). Asia-Pacific was also up, growing 44 percent to $81.9 million (DKK 552 million) in the period under review.

Blue Nile’s Sales Increase

Blue Nile Inc., an online diamond and fine jewelry retailer, reported that its net sales grew 6.7% to $113.7 million during the second quarter that ended on July 5, 2015, versus $106.6 million in the second quarter of 2014.

The retailer’s U.S. engagement net sales increased 7.5% to $65.5 million during the quarter, while its U.S. non-engagement net sales were up 3.5% to $28.7 million.

Younger Urban Indian Women Favor Colored Gemstones

Close to 19% of Indian women age 18 to 64 own jewelry made with natural colored gemstones, according to a survey of eight key urban markets in India that was conducted by Drshti Strategic Research Services and sponsored by colored gemstone miner Gemfields.

The survey found that nearly 12% of respondents had acquired gemstone jewelry within the past 12 months and of this group, 62 % lived in the Delhi or Hyderabad regions. Drshti also found that smaller pieces dominated the colored gemstone jewelry market, with rings comprising 52% of such jewelry items and earrings constituting 14%. By value, the survey estimated that 50% of the gemstone jewelry market is comprised of small items.

MINING 	  

Lesotho Approves Paragons Mothae Acquisition

Lesotho approved Paragon Diamonds Limiteds acquisition of a majority stake in the Mothae mining project from Lucara Diamond Corporation. Paragon agreed to pay Lucara $8.5 million for its 75% stake in Mothae.

Lucara will receive 5% of the profits derived from the sale of polished diamonds from Mothae and 5% of the profits achieved from the sale of rough diamonds that are not selected for polishing.

Mothae is still 25% owned by the government of Lesotho. The mining project is located in the same cluster of diamond-bearing kimberlites as Paragon’s Lemphane mine project and Gem Diamonds’ Letšeng mine.

Lucara Cuts Production Plan as 2Q Revenue, Profit Drop

Lucara Diamond Corp. reduced its full-year production outlook between 350,000 carats and 400,000 carats for this year compared with its original guidance of between 400,000 carats and 420,000 carats, according to a company announcement yesterday.

The cut comes as the southern Africa miner reported that revenue fell 46 percent year on year to $38.1 million in the second quarter that ended on June 30. The drop was attributed to reduced production, a weaker diamond market and a lack of large diamond sales. The average price for rough diamonds sold during the period plummeted 51 percent to $412 per carat. As a result, Lucaras profit dropped 45 percent to $8.6 million.

The full-year production outlook was trimmed as the company plans to process less diamond ore in the second half while it works to optimize its dense medium separation circuit’s recovery of smaller, lower value diamonds. Lucara reduced its revenue guidance for the year to between $200 million and $220 million from its previous forecast of between $230 million and $240 million, citing a lower planned volume of production and weak diamond market. Deferring diamond production will enable the company to sell it at a later date into a potentially stronger rough diamond market, the company said.

A total of 146 diamonds larger than 10.8 carats were recovered during the three months that ended June 30, compared with 153 large diamonds recovered during the first quarter. Nevertheless, the average size of large diamonds recovered rose 23 percent quarter on quarter to 31.16 carats. The largest diamond recovered during the quarter was a 342 carat stone that was sold after the reporting period for $20.6 million.

GENERAL 	  

George Kaplan of LKI Passes Away

George Kaplan, the former vice chairman of Lazare Kaplan Inc. (LKI) and former chairman of the Gemological Institute of America (GIA), died on July 12 at the age of 97.

Kaplan, born in Brooklyn in 1918, was the son and brother of company founders Lazare and Leo Kaplan. During World War II, the U.S. government faced a shortage of chronometers for planes and ships due to the difficulty of trading with Switzerland. Kaplan helped resolve the issue by developing the diamond technology needed to produce a frictionless balance wheel for chronometers in the U.S.

He later co-invented the laser inscription technology that is now used by all diamond laboratories to mark graded diamonds. Kaplan served as a GIA board member from 1958 to 1992 and as its chairman from 1981 to 1983.

STATS 	  

Hong Kong

1H 2015 $Mil. %Chng.
Polished imports $9,348 -4%
Polished exports $6,633 -2%
Net imports ($2,715) -8%

Rough imports $917 -20%
Rough exports $946 -22%
Net imports ($29) -55%

Net diamond account $2,686 -7%

ECONWATCH 	  

Diamond Industry Stock Report

Industry stocks mainly declined this week, in-line with most major markets. Charles & Colvard (-16.9%) led losers in the U.S. while in Europe, LVMH fell (-8.9%). Sarine (-7.6%) led declines in Asia. In India diamond manufacturer stocks were mixed, with gainers led by C. Mahendra (+16.3%) and Goldiam International (+10.5%). Mining stocks were mixed, with slight gains for Alrosa (-0.6%) and Anglo American (0.9%). View the detailed industry stock report.

August 13	August 6	Chng.

$1 = Euro 0.92 0.92 0.004
$1 = Rupee 63.73 64.11 -0.4
$1 = Israel Shekel 3.81 3.78 0.03
$1 = Rand 12.76 12.71 0.04
$1 = Canadian Dollar 1.32 1.30 0.02

Precious Metals
Gold $1,088.02 $1,096.85 -$8.83
Platinum $947.50 $986.35 -$38.85

Stock Indexes Chng.
BSE 28,298.13 27,705.35 592.78 2.1%
Dow Jones 17,472.06 17,751.39 -279.33 -1.6%
FTSE 6,740.12 6,687.94 52.18 0.8%
Hang Seng 24,375.28 24,497.98 -122.70 -0.5%
S&P 500 2,091.84 2,108.57 -16.73 -0.8%
Yahoo! Jewelry 1,040.87 1,027.17 13.70 1.3%

Rapaport Weekly Market Comment August 21, 2015

U.S. demand supporting the market with great opportunities for cash buyers. Chinese consumer diamond demand plunges as Shanghai stock market drops 8% this week. Low expectations for September Hong Kong show. Indian domestic market cautious as the rupee falls below 65/$1. De Beers sightholders hoping for sharp rough price cut. Gem Diamonds 1H sales -21% to $118M, profit -24% to $26M. Belgium’s July polished exports -13% to $1.2B, rough imports -36% to $779M. Swiss watch exports -9% to $2B with exports to Hong Kong -29% to $278M. Reuven Kaufman re-elected NY DDC president.

RapNet Data: August 20

Diamonds 1,329,598
Value $8,282,138,107
Carats 1,361,544
Average Discount -26.44%

www.rapnet.com

The RapNet Diamond Index (RAPI) has been revised to reflect the average price of the 10 best priced diamonds in each category.

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS
August 19-26 Wed-Wed

Rapaport Melee Auction

New York & Dubai

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Aug-Sep 26-2 Wed-Wed

Rapaport Single Stone Auction 

New York & Israel

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Aug-Sep 30-3 Sun-Thu

International Diamond Week

Israel Diamond Exchange

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QUOTE OF THE WEEK
They (investors) want assets that show their true value and are stable, which diamonds provide. So I believe they will turn to diamonds in the long run.

Michael Huang | Managing Director of Hong Kongs Diamond Index Group | discussing impact of recent yuan devaluation on diamond prices.

MARKETS 	  

United States: Polished trading is stable. Buyers are looking for opportunities as suppliers’ inventory levels remain high. There are shortages of certain categories.

Belgium: Antwerp’s diamond district remains very quiet and likely to continue so until operations resume on Monday, August 24 after the summer break. Rough dealers are eyeing next week’s De Beers sight with cautious sentiment on the rough secondary market.

Hong Kong: Sentiment is weak in the Far East with China’s recent stock market and currency declines weighing on dealer and consumer confidence.

India: The polished market is quiet with steady U.S. demand compensating for weak Far East and domestic trading. The depreciation of the rupee to above INR 65 per U.S. dollar has added caution to the local diamond market.

Israel: Activity in the bourse is relatively quiet and there’s still a feeling that dealers took extended vacations while the market is slow. Some expect more buyers in Ramat Gan from next week or at least during the International Diamond Week which starts on August 30.

INSIGHTS 	  

Is Diamond Demand Determined in Beijing and Washington?

Don’t be surprised if diamantaires are suddenly talking about Zhou Xiaochuan and Janet Yellen. The actions of the two – who respectively lead the People’s Bank of China and the U.S. Federal Reserve -- may put additional pressure on diamond demand and ultimately polished prices.

Simply put, the sudden depreciation of China’s yuan and a looming U.S. interest rate hike couldn’t come at a worse time for the diamond market.

INDUSTRY 	  

UAE Gold-Buying Rush

Shoppers in the United Arab Emirates have purchased an estimated 13 tons of 22-carat gold and jewelry in the three weeks since July 20 as the yellow metal’s price fell by an average of $34 (Dh 125) a gram, according to Gulf News. Gold dropped to a five-year low of $1,080 per ounce on July 20.

Based on these estimates, sales reached $408 million (Dh 1.5 billion) during what is historically a lean period for the local gold trade.

"Local spending on gold during the three weeks remained consistently high on all days, except for the one day when China devalued its currency and consequently, gold prices had a spike," said Abdul Salam K.P., a treasurer at the Dubai Gold and Jewellery Group and a director at Malabar Gold & Diamonds.

Belgium’s July Polished Trade Slides on Weak Far East Demand

Belgium’s polished exports fell 13 percent year on year to $1.2 billion as data published by the Antwerp World Diamond Centre (AWDC) indicated steady U.S. but lagging Far East demand.

Polished exports to the U.S. rose 2 percent to $436 million and to Switzerland by 36 percent to $88 million, but fell to all other destinations. Belgium’s polished exports to Israel slumped 20 percent to $121.8 million, while exports to India slid 31 percent to $52.7 million. Belgium’s polished exports to Hong Kong decreased 22 percent to $213 million.

Total polished imports declined 1 percent to $1.01 billion during the month, with imports from India down 23 percent to $124.7 million and from Israel contracting by 20 percent to $101.3 million. Belgium’s July net diamond account, representing total polished and rough exports minus tough imports, fell 54 percent to $429 million.

Shrenuj’s Revenue, Profit Grow

Shrenuj & Company Ltd., a polished diamond and jewelry manufacturer based in India, reported to the Bombay Stock Exchange that its revenue rose 6% year on year to $218 million (INR 14.2 billion) during the second quarter that ended on June 30. The companys profit increased 2% to $3.2 million (INR 208.1 million).

By segment, loose diamond revenue increased 6% to $192.4 million (INR 12.5 billion), while sales of studded jewelry rose 8% to $31.4 million (INR 2 billion) during the period. Intersegment sales jumped 62% to $5.9 million (INR 382.8 million).

Asian Star’s Revenue Slips

Asian Star Company Limited reported to the Bombay Stock Exchange that its revenue dropped 2% year on year to $127.8 million (INR 8.3 billion) during the second quarter, with all of the India-based manufacturer’s group segments reporting declines. Asian Star’s net profit was down 6% to $2.8 million (INR 184.3 million).

Group sales of loose diamonds fell 2% to $117.2 million (INR 7.6 billion), while sales from the company’s diamond jewelry division decreased by 15% to $15.2 million (INR 990.9 million).

Despite the decline in the group’s loose diamond sales, the company outperformed the general diamond market. As of July 1, the RapNet Diamond Index (RAPI) showed that average prices in size ranges up to 3 carats had plunged 12% since last year to 26%, with Asian Star’s loose diamond operation specializing in the production of polished diamonds between 0.01 carat and 2 carats.

GSI Surat Offers Melee, Star Batch Testing

Gemological Science International (GSI) announced it has become the first and only laboratory in India to begin batch testing for star and melee-sized diamonds using state-of-the-art technology.

In response to increased demand for Fourier Transform Infrared Spectrometry (FTIR) services, GSI said it will offer cost-effective testing with a mid-IR spectrometer used for both routine and advanced laboratory analysis.

Richline Website Focuses on Wearables

Richline Group, a jewelry marketer and manufacturer, has created a new website called “Wearable Style News” featuring articles and interviews on wearables.

The website highlights leading designers, technologists and manufacturers, and includes interviews with Uri Keren, CEO and co-founder of Hermes Innovation, Scott Amyx of the smart wearables consultancy Amyx+McKinsey and Amanda Parkes, chief of technology and research at Manufacture NY.

Richline Group is a subsidiary of Warren Buffett’s Berkshire Hathaway Inc.

RETAIL & WHOLESALE 	  

Swiss Watch Exports Sharply Lower in July

July was not a good month for the Swiss watch industry with exports 9.3% lower than in July 2014 at CHF1.9 billion ($1.95 billion), according to the Federation of the Swiss Watch Industry. Asian markets all reported sluggish sales and weighed heavily on this result. Overall, sales in Asia were down by 21.4%.

All the price segments were down in July. Watches costing 200-500 francs were the worst affected (-14.5%). Above 500 francs, the value fell by 8.0% overall and the number of pieces by 10%. The leading Asian markets were all down, some very steeply. The fall in China was particularly strong (-39.6%), along with the United Arab Emirates (-29.8%) and South Korea (-19.7%). Sales to the U.S. were stable. Exports to Europe showed some improvement.

Emma Hill to Chair Michael Hill

The founder and namesake of jewelry chain Michael Hill International will retire following the company’s annual shareholders meeting, to be held on November 4. He will be replaced as chairperson by his daughter, Emma Hill.

The younger Hill began working for the chain as a teenager and currently serves as deputy chairman of the company. She is credited with establishing the company’s Canadian subsidiary, Michael Hill Canada, in 2002 and served as its general manager until 2007.

Michael Hill will remain on the company’s board as a non-executive director and retain his stake as majority owner.

Titanium Rings Tough to Cut in Emergencies

British medical journal The Emergency Medical Journal reported that titanium wedding rings are causing problems in hospital emergency rooms because the metal is too tough to cut off.

While other metals, such as gold and silver, are easy to cut, doctors from the U.K.’s Sheffield Teaching Hospital told the journal that special equipment, such as dental saws, drills and diamond-tipped saws, is required to remove a titanium ring from a patient’s finger if it has become dangerously swollen.

AGS Introduces Gamification App

The American Gem Society (AGS) released its first gamification application to raise awareness about jewelry and increase customer engagement.

Gamification is the process of applying game mechanics, such as levels and timing, in non-game contexts, like websites. The new AGS app features five quizzes comprised of timed, multiple-choice questions designed to be fun yet challenging, with topics including jewelry facts, celebrity jewelry, jewelry in music and movies, and royal jewelry.

Sharjah Jewelry Show Set to Expand

The 39th MidEast Watch & Jewellery Show, to be held October 6 to 10, will be 50% larger this year as the current decline in gold and diamond prices is expected to invigorate demand, according to the Khaleej Times.

The show will occupy all six halls at the 30,000-square-meter exhibition center this year, versus its 20,000-square-meter span in the previous year. Expo Centre Sharjah is organizing the event, which will showcase gold and diamond jewelry, diamonds, precious stones, pearls and watches from Brazil, China, India, Italy, Japan, Thailand, Turkey, the U.K. and the U.S.

India Awards Jewelry Trademarks

India’s Trade Marks Registry approved the trademark “RL Jewels” for use in the company’s sale of jewelry made with metal, precious stones or imitation jewelry.

Tara Jewels received approval for the trademark “Tara Jewellers” for use in the sale of diamonds, diamond jewelry and jewelry made with precious metals or gemstones.

The registry also approved the trademark “Vishal Diamonds Necklace and Necklace and Solitaire” for use in the sale of jewelry of all kinds, timepieces and goods made or coated with precious metals.

Ivy Jewellery received approval for the trademark “FIDDA” for use in the sale of diamonds and other precious gemstones and jewelry made from these materials.

Swastik Jewels was approved to use the trademark “Swastik” in the sale of diamond, gold and silver jewelry.

Chintamani Jewellers India received approval for the trademark “Chintamani Jewellers” for the sale of precious metals and gemstones, including diamonds.

The trademark registry also approved the trademark “Desire” for use in the sale of precious metal jewelry and jewelry made with diamonds and other gemstones.

MINING 	  

Gem Diamonds’ Revenue Drops

Gem Diamonds reported that its sales totaled $118 million in the first half versus $148.9 million a year earlier, according to its filing with the London Stock Exchange.

The company recovered 50,019 carats from the Letšeng mine at an average value of $2,264 per carat during the period, as well as 35,283 carats from the Ghaghoo mine.

Commenting on the results, CEO Clifford Elphick said, “Letšeng continues to consistently produce the large, exceptional-quality diamonds. Prices for these goods have remained firm, despite the current challenging conditions in the diamond market.”

Botswana Diamond Producers Cut 1,000 Jobs

Botswana’s diamond manufacturers have laid off almost 1,000 cutters and polishers in the past 12 months as higher rough prices, combined with relatively lower polished prices, have negatively impacted profitability, according to Mmegi BusinessWeek. At their peak, the producers employed about 3,700 workers.

The latest manufacturer to let staff go was Diacore, part of Botswana’s Steinmetz Diamond Group, which slashed 50 jobs at its Gaborone factory, Mmegi reported.

Companies that have scaled back their workforce in the past year include Moti Ganz Botswana, Leo Schachter & Company, Eurostar Botswana, Shrenuj & Co, Safdico Botswana, Zebra Diamonds, A. Dalumi Diamonds and Laurelton Diamonds, a subsidiary of Tiffany & Co.

Polishing outfits Teemane Manufacturing Co. and Diamond Manufacturing Botswana have also closed shop.

Zimbabwe’s Diamond Reserves Decline

Diamond production in Zimbabwe is expected to fall to 3.5 million carats this year from the 5.9 million carats mined last year due to a significant decline in alluvial diamond reserves in the Marange diamond fields, according to Bernama, the government’s official news agency.

In a mid-term fiscal policy review presented to Parliament last month, Finance Minister Patrick Chinamasa said output for this year would not meet initial projections.

"Diamond output for the first half of 2015 is estimated at 1.44 million carats, compared with 1.447 million carats recorded for the same period in 2014," he stated. "Diamond output for the entire 2015 is projected at 3.5 million carats, down from the initial projection of 6.5 million carats."

Chinamasa also said the country needs to expedite its consolidation of diamond-mining operations. The consolidation process will make the government the major shareholder with a 50% stake, while private firms with existing ventures will share the remaining 50% stake.

NDTC Pays $4.6M Dividend to State

Namibia Diamond Trading Company (NDTC) paid the Windhoek government $4.6 million (NAD 60 million) in dividends, Agence Africaine de Presse reported.

Namibia Diamond Trading Company (NDTC) was established in 2007 to sort, value and sell diamonds produced by Namdeb, a joint venture between the Namibian government and the Diamond Trading Company, owned by De Beers. The collaboration also aims to make rough diamonds available to the local manufacturing sector as part of the governments efforts to create jobs.

“The ministry would like to guarantee our partners in the diamond industry of the governments commitment to promote and continuously lobby for the sustainable growth, stability and viability of the diamond industry through an increased supply of rough diamonds to the factories,” said Mines and Energy Minister Obeth Kandjoze.

GENERAL 	  

Gold Jewelry Demand Drops

Global demand for gold jewelry sank 20% year on year to $19.7 billion during the second quarter, according to the World Gold Council (WGC), magnifying the impact of a 7% decline in the average price of gold to $1,192 per ounce. By volume, gold jewelry demand dropped 14% to 513.5 tons.

In its Gold Demand Trends report, the WGC attributed the decrease primarily to plummeting consumer demand in India, as well as lower consumer demand from China – the world’s largest gold market.

In contrast, jewelry demand increased in the U.S. and Western Europe. By volume, U.S. demand rose 2% to 25.5 tons, while demand from Western Europe grew 1% to 14.6 tons.

Total gold demand, including jewelry, investment, industrial and central bank demand, slid 18% by value to $35.1 billion during the quarter and fell 12% by volume to 914.9 tons.

U.S. Jewelers Secure Trademarks

The U.S. Patent & Trademark Office (USPTO) assigned the trademark “Get Your Sexy On” to the Florida-based company I Do Diamond Ring Boutique.

Robert “Zelig” Sharfe received the trademark “Zelig Diamond Co,” which was approved for use with diamond jewelry.

The USPTO issued the trademark “SWH” to Texas resident Stephen W. Hale. The trademark is approved for use with nearly all types of jewelry and watches, from inexpensive bead jewelry to jewelry containing diamonds and precious metals.

STATS 	  

Belgium

July 2015 $Mil.	% Chng.	YTD 2015 $Mil	% Chng.

Polished exports $1,195 -13% $8,491 -5%
Polished imports $1,012 -1% $8,146 -3%
Net polished exports $183 -48% $345 -34%

Rough imports $779 -36% $7,133 -21%
Rough exports $1,025 -43% $7,420 -25%
Net rough imports $(246) 57% $(288) 66%

Net diamond account $429 -54% $633 -54%

ECONWATCH 	  

Diamond Industry Stock Report

Industry stocks were mixed this week. U.S. advancers included Blue Nile (6%) and Signet (5.6%), while decliners were led by retailers Kohls (-11%) and Walmart (-5.5%). Asian stocks followed a drop in the Hang Seng index (-6.6%), led by Chow Sang Sang (-3.2%). Indian jewelry-related shares were mainly up, pulled by Goldiam Intl (21.7%) and Renaissance Jewelry (9.3%). View the detailed industry stock report.
Aug. 20 Aug. 13 Chng.
$1 = Euro 0.8942 0.92 -0.026
$1 = Rupee 65.5904 63.73 1.9
$1 = Israel Shekel 3.883 3.81 0.07
$1 = Rand 12.9394 12.76 0.18
$1 = Canadian Dollar 1.3132 1.32 -0.01

Precious Metals
Gold $1,141.01 $1,088.02 $52.99
Platinum $1,018.00 $947.50 $70.50
Silver $15.47 $15.44 $0.03

Stock Indexes Chng.
BSE 27,607.82 28,298.13 -690.31 -2.4%
Dow Jones 17,348.73 17,472.06 -123.33 -0.7%
FTSE 6373.06 6,740.12 -367.06 -5.4%
Hang Seng 22757.47 24,375.28 -1,617.81 -6.6%
S&P 500 2079.61 2,091.84 -12.23 -0.6%
Yahoo! Jewelry 1005.35 1,040.87 -35.52 -3.4%

Rapaport Weekly Market Comment August 28, 2015

Polished trading cautious as financial markets tumble. De Beers restarts generic marketing spend to restore U.S., China holiday sales growth, drops prices 8-10% at $250M Aug. sight. Cutters hope cheaper rough will enable profitable 4Q season but trading is still restrained. Signet 2Q sales +15% to $1.4B, profit +7% to 62M. Tiffany 2Q sales flat at $991M, profit -16% to 105M. Chow Sang Sang 1H sales -1% to $1.2B, profit +39% to $94M. India’s July polished exports -18% to $1.5B, rough imports -43% to $1.1B. Global 2014 rough production +4% to $14.5B, volume -4% to 124.8M cts., average price +8% to $116/ct. Dominion 2Q sales -24% to $210M, Ekati production +15% to 924,000 cts.

RapNet Data: August 27

Diamonds 1,381,642
Value $8,820,898,969
Carats 1,428,033
Average Discount -26.00%

www.rapnet.com

The RapNet Diamond Index (RAPI) has been revised to reflect the average price of the 10 best priced diamonds in each category.
Get Current Price List | Subscribe to Rapaport | Join RapNet

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QUOTE OF THE WEEK
One can’t ignore what’s happened on the financial markets in the past few days and weeks but we also see our product doing quite well in these times.

Paul Rowley | Head of Global Sightholder Sales, De Beers

MARKETS

United States: Polished trading is stable amid some concern that quality goods are becoming harder to replace as manufacturing slowed in the last few months.

Belgium: While dealers slowly return from the summer break, they’re in no rush to enter the market. There’s some anticipation activity will pick up from September 1 as in previous years.

Hong Kong: Polished trading is slow, dampening expectations for the upcoming show. The local stock market plunge and the yuan depreciation have cast a pall over the region.

India: Manufacturers remain cautious despite reports that De Beers reduced its rough prices by up to 10 percent at this week’s sight. Rough demand improved slightly on news of the cuts but polished dealers aren’t yet seeing an effect on polished prices.

Israel: The mood in the Israel Diamond Exchange was muted by news of two significant local bankruptcies. More businesses are insisting on cash payments for goods, particularly from Far East.

Click here to continue reading
INDUSTRY

Sightholders React to Price Cuts at $250M Sight

De Beers sightholders had mixed reactions to the price cuts at this week’s sight, which had an estimate value of $250 million before any additional supply was offered. The company dropped its rough diamond prices by an average of 8 percent to 10 percent, which spurred demand for additional goods during the week. Sightholders at press time were waiting to hear whether their requests would be granted. Click here to continue reading

New Gem-A Trustees Gain Seats in Hotly Contested Election

Elections results are in for trustees at Gem A, the Gemmological Association of Great Britain, according to the Friends of Gem A Facebook page and confirmed by an association spokesperson. Voting was delayed this week reportedly due to technical issues.

Some 16 people were seeking to fill as many as nine slots on the board. New members are: Kathryn Bonanno, Justine Carmody, Paul Greer, Kerry Gregory, Alan Hart, Alan Hodgkinson, Jack Ogden, Richard Slater, and Chris Smith. Continuing as trustees are: Mary Burland, Nigel Israel, Miranda Wells. Israel is expected to continue to serve as acting chief executive officer of the group until the new board meets on a replacement for departed CEO James Riley.

Blue Diamonds Drive Color Index Higher

The Fancy Color Diamond Index (FCDI™) rose in the second quarter, driven mainly by the blue diamond categories, according to the Fancy Color Research Foundation. Fancy-color diamonds continued to show price strength amidst declines in their white diamond counterparts.

Based on a survey of more than 20 wholesale traders, the index revealed that the prices of fancy-color diamonds across the pink, yellow and blue categories edged up 1% over the April to July period. The strongest performers included 1-carat fancy blue and 1-carat fancy vivid yellow stones, which were both up 4%.

Fancy vivid blue diamonds in the 3- to 10-carat range jumped 4 to 6% while 8- to 10-carat pinks, both intense and vivid, were up 5 to 6%. In most categories, the price increase was the result of lower supply.

Price weakness among white diamonds continued during the period, as polished inventories accumulated across the supply chain. According to the RapNet Diamond Index (RAPI™), 1-carat diamonds prices slid 1.6% over the same period.

Tzoffeys First Rough Diamond Tender

Tzoffeys 1818, the Israeli-French auction house, will hold its first exclusive African rough diamond tender from August 30 to September 4 at the Israel Diamond Exchange complex in Ramat Gan.

The rough to be sold at the upcoming tender is from Africa and includes a run-of-mine production, a wide variety of 5 to 10.8 caraters and rough stones larger than 10.8 carats.

Viewing of the goods will take place between August 30 and September 3.

Portugal Joins Kimberley Process Certification Scheme

Portugal has joined the Kimberley Process Certification Scheme (KPCS), according to the Official Journal of the European Union. Other participating EU countries include Belgium, Bulgaria, Czech Republic, Germany, Romania and the United Kingdom.

Countries that participate must pass legislation to enforce the Kimberley Process. They must also set up control systems for the import and export of rough diamonds.

India Polished Diamond Imports Plummet

India’s polished diamond imports were nearly halved in July, falling 42.9% year on year, according to The Gem & Jewellery Export Promotion Council (GJEPC).

The impact of an industry slowdown was evident in the country’s import figures. Overall gross imports of gems and jewelry were down 29.8% to $2.27 billion compared to $3.24 billion in July of last year.

Gross exports totaled $2.898 billion during the month, a decline of just 0.94% from the $2.926 billion posted for the same period of 2014. Exports of cut and polished diamonds, however, dropped 18.3% to $1.51 billion in July 2015. In volume terms, the drop totaled 14.4%, with the country exporting 2.80 million carats versus 3.26 million carats a year earlier.

Surat Diamond Workers Attend Rally

Surat diamond industry workers will not report to work and diamantaires will voluntarily refrain from buying and purchasing diamonds on August 25, according to the Times of India.

Instead, workers will head to Ahmedabad to attend a rally advocating education improvements and jobs for members of the community. The diamond industry in the city employs over 450,000 diamond workers, per the newspaper.

Surat Diamond Association President Dinesh Navadia was quoted as saying, “It is a voluntary decision of the people in the diamond industry to keep their units and offices closed on August 25. They are going to Ahmedabad to attend the rally.”

IDI Enables Chinese Diamond Search for September Show

The Israel Diamond Institute has introduced a Chinese-language version of its “Find Your Diamond” search platform for the Hong Kong Jewellery & Gem Fair beginning September 10, according to an IDI announcement.

The application shows all goods offered by Israeli exhibitors at the show. There is a mobile version to complement dedicated terminals at the show. The Israel Diamond Pavilion in Hong Kong will feature 98 companies, with another 20 businesses exhibiting at other locations throughout the show. The pavilion will be located in Hall 7, 9 and 11 of the Asia World Expo.

RETAIL & WHOLESALE 	  

De Beers to Launch Holiday Campaign

De Beers will make what it described as “a major investment” in marketing to boost consumer demand in the U.S. and China during the year-end holiday season.

The company didn’t specify the amount it would spend on the campaign, which will run in addition to Forevermark’s “A Diamond is Forever” brand promotion. The new campaign will target men purchasing diamond jewelry as gifts for partners during the holiday season.

Tiffanys to Open Store in Auckland

Tiffany & Co. says it will bring a new level of luxury jewelry to Auckland when it opens a store there in late 2016, according to New Zealand’s Herald newspaper.

The 430-square-meter store will occupy the entire ground floor of the historic Australis House building, located at 36-38 Customs Street East.

Luxury Consigner RealReal Opens NY Valuation Office

RealReal, which provides authenticated luxury consignment sales, has opened a valuation office in New York City to provide sellers with free valuations of their fine jewelry and watches, according to a company announcement.

The midtown Manhattan office is staffed by RealReals graduate gemologists and watch experts who assess and provide a valuation document on the spot. The company said the new concept aligns with its mission to address the gap in the market for a reliable place to get accurate fine jewelry and watch valuations.

Chow Sang Sang’s Sales Drop

Chinese jewelry retailer Chow Sang Sang’s sales fell in the first half, dragged down by a 12% decline in same-store sales in Hong Kong and Macau, according to its filing with the Hong Kong Stock Exchange.

Overall company sales slipped 1% to $1.2 billion (HK$9.3 billion). Operating profit from the company’s retail jewelry group fell 12% to $72.3 million (HK$561 million).

The company said that while there may have been as much as a 5.9% year-on-year increase in Mainland Chinese tourists’ visits to Hong Kong, “actual spending by these visitors did not bring much cheer to the luxury retail sector.”

Ahead of the filing, Bloomberg Intelligence analyst Catherine Lim wrote that a sales decline could lead Chow Sang Sang to seek retail rent cuts and store closures. The company closed its store in Metroplaza, Kwai Chung during the first half of the year.

Fletcher’s Parent Files for Bankruptcy Protection

USA Discounters Ltd., the parent company of Fletcher’s Jewelers, filed for bankruptcy protection and plans to wind down its business, according to TheWall Street Journal.

The company closed its 24 USA Living stores before filing and is still considering options for its seven Fletcher’s locations, according to the report.

In court papers, the company stated that it had discontinued credit sales as of Monday, the date of its bankruptcy filing, and is selling jewelry for cash only.

WJA Plans 19-City Night Out

The Womens Jewelry Association (WJA) will host its third annual Jewelry Night Out in 19 U.S. cities on September 10.

Activities will be held in Atlanta; Bethesda, Maryland; Birmingham, Alabama; Boston; Chicago; Dallas; Denver; Ft. Lauderdale, Florida; Cincinnati; Las Vegas; Los Angeles; Madison, Wisconsin; Minneapolis; Nashville; New York City; Providence, Rhode Island; San Diego; San Francisco and Seattle.

Jewelry Night Outs lead sponsors are Signet Group’s Kay Jewelers and Jared The Galleria of Jewelry. Details on location, start times and registration are available at wjajewelrynightout.com.

MINING 	  

Russia Ranks as World’s Top Diamond Producer

Global diamond output grew 4% by value last year to $14.5 billion as the average price per carat jumped 8% to $116.17 and Russia displaced Botswana as the world’s largest producer, based on annual data published by the Kimberley Process Certification Scheme (KPCS). In volume terms, global production fell by 4% to 124.778 million carats.

Russia, which has traditionally placed second to Botswana, was the largest producer in terms of both value and volume last year. The average price of the nation’s total diamond crop, derived largely from ALROSA’s mining activity, surged 19% to $97.47 per carat as its value catapulted 20% to $3.73 billion and volume edged up 1% to 38.303 million carats.

The average price in Botswana, where De Beers mines are the predominant producers, slid 5% to $147.84 per carat as growth by value flat-lined at $3.65 billion.

Lesotho produced the world’s highest-priced diamonds, with their average price skyrocketing 69% to $990.18 per carat. In contrast, the mean price in second-place Namibia fell 25% to $602.57 per carat.

India, the world’s largest diamond manufacturing center, ranked as the largest importer of rough in 2014.

Dominion Diamond’s Sales Drop

Dominion Diamond Corp. reported that its fiscal-2016, second-quarter diamond sales totaled $209.7 million, versus $277.3 million in the comparable quarter of fiscal 2015. The results reflect the level of production achieved at the Diavik and Ekati diamond mines, according to the company.

During the quarter, Ekati recovered 900,000 carats from one million tons of the ore processed there.

Stellar Project to Produce 1M Carats

Stellar Diamonds announced that a preliminary economic assessment performed by Paradigm Project Management shows its Tongo kimberlite project in Sierra Leone can produce almost 1 million carats over the next 18 years.

The Tongo project has been assessed as having an 18-year mine life, based on both surface and underground mining, for a total yield of 955,930 carats. In the first four years, Stellar plans to produce 117,806 carats to generate early cash flow.

The company will utilize around $24.2 million to establish the project’s initial surface and underground mining operation.

De Beers Maintains Outlook

De Beers maintained its flat forecast for diamond jewelry sales in 2015, despite this week’s slump in financial markets, Paul Rowley, head of global sightholder sales, told Rapaport News.

“One can’t ignore what’s happened on the financial markets in the past few days and weeks, but we also see our product doing quite well in these times,” Rowley said. “We see diamonds in general bucking the trend a little. As much as consumer demand won’t meet our expectations from the beginning of the year, we still feel that it will be around flat on last year – which wasn’t a bad year.”

Rowley also pointed out that Chinese retailers aggressively purchased polished in response to the rapid store expansion that occurred in the first half of 2014.

“We saw a lot of those goods going to the Gemological Institute of America (GIA) for grading, but we subsequently didn’t see them fully turn into consumer demand,” he explained. “The opposite has happened in 2015, as there has been a contraction at a store level and flat growth in consumer sales. So, we have this overhang of polished.”

GENERAL 	  
U.S. Sanctions Belgian Diamond Trading Office 

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Belgium and Central African Republic (CAR)-based diamond companies Badica and Kardiam on August 21 for providing support to militia leaders responsible for violence threatening the peace, security and stability of the CAR through illicit trade.

Badica is one of the largest diamond companies in the CAR and Kardiam is Badica’s branch in Antwerp.

In May 2013, the Kimberley Process prohibited diamond exports from the CAR due to insurgents’ control over its diamond-mining areas. Badica buys rough diamonds from mines that are under insurgent control and smuggles them out of the country for exportation to Kardiam, OFAC stated.

IDE Mulls Creating Large Diamond Factory

The Israel Diamond Exchange (IDE) is considering opening a manufacturing plant for the polishing of large diamonds, according to information posted on its website. The IDEs Industry Committee has invited members of the bourse to a discussion of the facility on September 7.

Plans calls for converting 400 square meters of currently unused space into a factory. The operation will also offer 15 workrooms for rent. The factory is in the planning stages and will connected to the bourse’s Maccabi building by an internal passageway.

Birmingham Assay, London Diamond Bourse Partner

AnchorCert Gem Lab, part of the Assay Office Birmingham (AOB), and the London Diamond Bourse (LDB) are joining forces to provide bourse members with diamond and gemstone testing and reports, AOB announced.

The joint venture will offer LDB members trading from the Bourse floor in Hatton Garden dedicated, secure delivery of diamonds and gemstones for grading to the lab, based at AOB’s new Birmingham facility.

London Diamond Bourse COO Victoria McKay said the added value for bourse members is the lab’s U.K. location, which will reduce the lead times required for gemstone analysis and gradi

Doha Bank Imports Record Volume of Gold

Falling gold prices continue to fuel strong buying interest in gold and Doha Bank is building up its gold supply to satisfy this increased consumer appetite, CPI Financial reported.

The bank imported 23,818 ounces of gold in the first seven months of 2015 to keep up with sustained demand from jewelry manufacturers, jewelers, retailers and high-net-worth investors. Doha Bank is one of the few banks authorized to import gold in Qatar and offers gold bars and mint coins to its customers.

The bank has also signed a memorandum of understanding with a Swiss gold supplier and established agreements with several major global suppliers in the physical gold market, according to CPI Financial.

Gold prices fell below $1,100 in July, a five-year low, and continue to hover around that mark.

Colombia to Host International Emerald Symposium

Colombia will host its first International Emerald Symposium in Bogotá from October 13 to 15.

Fedesmeraldas, the Colombian Emerald Federation, will organize the conference, which will seek to address a number of issues and opportunities in resource management, manufacturing, certification, nomenclature, technology, consumer education and branding.

Delegations from the governments and private sectors of Zambia, Afghanistan and Brazil, as well as major international trade organizations, such as the International Colored Gemstone Association (ICA), American Gem Trade Association (AGTA) and CIBJO, the World Jewelry Confederation, will be participating in and supporting the eve

ECONWATCH 	  

Diamond Industry Stock Report

Industry stocks followed their broader indexes down around the world this week. The biggest declines in the U.S. were Birks Group (-10%) and Sothebys (-11%). Indian shares tracked a 5% drop in the Sensex index, led by Goenka Diamonds (-16%) and Rajesh Exports (-14%). Mining stocks losses were headed by Petra Diamonds (18%) and Shore Gold (19%). View the detailed industry stock report.
Aug. 27 Aug. 20 Chng.
$1 = Euro 0.8851 0.8942 -0.009
$1 = Rupee 65.875 65.5904 0.3
$1 = Israel Shekel 3.9382 3.883 0.06
$1 = Rand 13.0566 12.9394 0.12
$1 = Canadian Dollar 1.3217 1.3132 0.01

Precious Metals
Gold $1,128.63 $1,141.01 -$12.38
Platinum $996.20 $1,018.00 -$21.80
Silver $14.30 $15.47 -$1.17

Stock Indexes Chng.
BSE 26,251.40 27,607.82 -1,356.42 -4.9%
Dow Jones 16,285.51 17,348.73 -1,063.22 -6.1%
FTSE 6,119.36 6,373.06 -253.70 -4.0%
Hang Seng 21,838.54 22,757.47 -918.93 -4.0%
S&P 500 1,940.51 2,079.61 -139.10 -6.7%
Yahoo! Jewelry 978.15 1,005.35 -27.20 -2.7%

Rapaport Weekly Market Comment September 4, 2015

Indian dealer market illiquid with no one buying for inventory. Dealers with money waiting for lower prices. Some action in Israel during Diamond Week but ~$15M insolvencies creating concern. Dubai reports ~$136M retailer insolvency with similar failure expected in China. Low expectations for HK show. Fair to good NY demand for large stones but stock market plunge reducing U.S. consumer confidence. Aug. RAPI for 0.30ct. -1.7%, 1ct. -0.9%. Rough prices still too high with no profits for cutters. Rapaport estimates reasonable profitability would require an additional 20% rough price drop. Botswana budget pressured by falling rough sales. ALROSA 1H revenue +26% to $2B, profit +105% to $726M.

RapNet Data: September 3

Diamonds 1,385,102
Value $8,774,455,627
Carats 1,409,371
Average Discount -26.20%

www.rapnet.com

The RapNet Diamond Index (RAPI) has been revised to reflect the average price of the 10 best priced diamonds in each category.

Get Current Price List | Subscribe to Rapaport | Join RapNet

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QUOTE OF THE WEEK
We see risks for an even more pronounced deficit because of a prolonged downturn in world diamond demand, specifically tied to Chinas economic rebalancing and lower luxury spending.

Moodys Investors Service | in its recent analysis of Botswanas reduced 2015 GDP forecast.

MARKETS 	  

United States: New York trading is stable as the U.S. remains the best market for diamonds. Still, dealers are cautious as buyers are making offers at lower prices.

Belgium: Activity in Antwerp’s diamond district remains quiet with dealers waiting to see how the market evolves in the days leading up to the Hong Kong Gem and Jewellery Fair that begins on September 16.

Hong Kong: The diamond and jewelry market is very quiet with a reported slowdown in tourist arrivals affecting sentiment. Luxury retailers continue to post sales declines and some are reportedly closing or relocating as their turnover doesn’t justify the high rental costs in the city.

India: The market is slow and dealers are very cautious due to reports of bankruptcies in Israel, Dubai and China. Suppliers are insisting on cash deals as buyers are delaying payment.

Israel: The market received a much-needed lift during this week’s International Diamond Week at the bourse. Dealers noted that the event was more a strong networking opportunity with some sales taking place.

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INSIGHTS 	  

A Sustained Diamond Supply Surplus

Don’t be fooled by the pitch that touts shortage as a reason for investors to plough dollars into the diamond mining sector. In fact, like many other commodities in the world today, the diamond industry is also drowning in a supply glut. What’s worse, amid all the talk of weaker rough sales, is that global production actually grew in the first half and looks set to continue increasing for the rest of 2015.

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INDUSTRY 	  

Sotheby’s to Host Magnificent Jewels Sale

Sotheby’s will feature a selection of top-quality diamonds, natural colored gemstones and watches at its Magnificent Jewels and Jadeite sale, to be held on October 7 in Hong Kong.

Among the items to be offered are a 41.65-carat internally flawless fancy vivid yellow diamond priced at $1.9 million and a 10.62-carat unheated Burmese ruby “Panther” ring by Cartier.

The company’s October 6 sale of important watches will include a limited-edition Harry Winston white-gold wristwatch priced at $100,000.

Movado’s Sales Grow

Movado Group Inc. reported that its revenue increased by 1.4% year on year to $145.6 million in its second fiscal quarter of 2016, while its net sales grew 6.1%.

Movado attributed this gain to its channel and product mix, selective price increases and certain sourcing improvements.

The company is maintaining its current guidance for fiscal 2016, when it expects net sales to range between $590 million and $600 million.

GIA to Open Synthetic Research Center

GIA expects to open a diamond synthesis facility in New Jersey in January, Tom Moses, GIA’s executive vice president and chief laboratory and research officer, told participants at Israel’s International Diamond Week.

The site is planned to be a research facility for GIA gemologists to analyze synthetic diamonds and practices, Moses said. The group is also expanding its Israel operations in order to grade a larger volume of diamonds.

Telling event participants that synthetic, lab-grown diamonds are now a fact of life for the industry, Moses observed that there has been significant technological progress in CVD (chemical vapor deposition) in recent years. While he expects that CVD diamonds will be primarily commercial, he also predicted some products will reach the jewelry industry.

New Sightholder KGK Opens Botswana Factory

Indian diamond cutting and polishing firm KGK Diamonds has opened operations in Gaborone, Botswana. The unit is expected to employ as many as 150 staff and will cut and polish diamonds valued at an average $1.5 million each month, according to a company announcement.

The company is De Beers’ 22nd local sightholder, replacing Teemane, which closed early this year. At its peak, the local cutting and polishing industry employed about 3,700 workers.

KGK Group chairman, Navrattan Kothari said the company plans “to increase our staff complement from 90 to 150 in the next year. The current turmoil in the diamond industry is a temporary phase, which will pass soon." KGK is listed on De Beers’ website as a company operating in 14 countries over four continents, with over a century of experience in the diamond Industry.

IDE Launches International Diamond Week

The Israel Diamond Exchange (IDE) officially opened its fifth International Diamond Week, featuring more than 300 Israeli exhibitors and hundreds of buyers and exhibitors from 20 countries, including Belgium, India, Turkey, China, the U.S., Russia and Switzerland.

Attendees included participants from the Diamond Dealers Club (DDC) of New York, the Antwerp Diamond Bourse (ADB) and Mumbai’s Bharat Diamond Bourse.

Participating in the opening ceremony were IDE president Shmuel Schnitzer; Israel Diamond Manufacturers Association president Kobi Korn; David Lasher, director of the DDC of New York and Marcel Pruwer from the ADB.

Burgled Hatton Garden Firm to Close

The London safe deposit box company that was robbed over Easter weekend has gone into liquidation, the U.K.’s Sky News reported. Hatton Garden Safe Deposit issued a statement that it had gone into creditors voluntary liquidation on August 24, after trade slumped in the wake of the theft.

The burglars broke into the vault at the company’s office, located in the heart of Londons jewelry quarter, and ransacked 73 safety deposit boxes, stealing property believed to be worth millions.

The winding up of the firm will be led by accounting firm SPWs Stella Davis and Harold Sorsky.

Lazare Kaplan Postpones SEC Filing Again

Lazare Kaplan International has delayed filing its annual fiscal 2015 report with the U.S. Securities and Exchange Commission (SEC).

In its recent notice to the SEC, the New York-based diamond manufacturer again claimed it “has been unable to resolve a material uncertainty concerning a) the collectability and recovery of certain assets, and b) the company’s potential obligations under certain lines of credit and a guaranty.” Earlier this year, Lazare Kaplan reiterated its intention to file official quarterly and annual financial reports dating back to May 31, 2009.

Lazare Kaplan also denied that any amount was currently due or owed to Antwerp Diamond Bank (ADB) under a $45 million facility or that ADB had grounds for further action.

In the U.S. court system, Lazare Kaplan is seeking $500 million in damages from ADB and the bank’s parent company, KBC Bank, under the Racketeer Influenced and Corrupt Organizations Act (RICO) and state law. Lazare Kaplan alleges that the banks engaged in money laundering and the theft of over $135 million from the sale of diamonds belonging to the company and its affiliates.

HRD to Introduce Melee Screening at Hong Kong Show

HRD Antwerp announced that it will introduce an automated melee screening device, known as M-Screen, on September 17 at the Hong Kong Jewellery & Gem Fair.

The machine was developed in a joint venture with Belgium’s Scientific and Technical Research Center for Diamonds and is said to provide “a super-fast table-top automatic melee screener” for commercial use.

RETAIL & WHOLESALE

Signet’s Shares Rally

Shares of Signet Jewelers jumped more than 10% after the jewelry retailer surpassed expectations in its second-quarter earnings report. Signet reported that its sales grew 15% to $1.4 billion, driven by its acquisition of Zale Corporation, which took place halfway through the same quarter of last year.

“With the flurry of global market noise, we believe a market share leader in an e-commerce-protected operation, focusing on a U.S.-centric customer, is a very compelling proposition,” wrote Simeon Segal, an analyst at Nomura, reiterating his buy recommendation for the shares. “We continue to believe Signet remains one of the most compelling growth stories in retail and suggest accumulating at current levels.”

Mark Light, Signet’s CEO, explained that lower gold and platinum prices had a greater impact on lowering costs than recent reductions in diamond prices. He noted that the polished diamonds Signet sources have been less affected than VS-clarity and better diamonds, which are popular in Asian and Middle Eastern markets.

Tiffany’s Sales Flat as Profit Falls

Tiffany & Co. reported that its second-quarter sales were flat at $991 million year on year, while profit was down 16% to $105 million. The retailer’s comparable-store sales increased by 7%, beating analysts’ estimates of a 3.5% gain.

A strong dollar has trimmed the value of Tiffanys sales outside the U.S. and has discouraged foreign tourists from making purchases in its American stores.

“We entered this year expecting translation- and tourism-related pressures on sales and earnings from the exceptionally strong U.S. dollar, as well as challenging economic conditions in certain markets,” said CEO Frederic Cumenal. “While the adverse effects from the strong dollar have been even more significant than initially expected, we met our overall expectations in the first half of the year.”

Tiffany now expects its net earnings to fall between 2% and 5% for the full year, with business regaining momentum in the fourth quarter.

Australia’s Lovisa Plans Global Expansion

Jewelry retailer Lovisa said its overseas stores are becoming its top outlets and that it has plans for further global expansion, according to The Australian. Australia is its main market, but Lovisa has closed 20 local stores there this year, while expanding almost all of its offshore operations.

"The overseas markets generally enjoy lower costs of doing business and in fiscal year 2015, 11 of our top 20 stores ranked by store contribution were outside Australia," the company said. Stores will be opened in all of its markets, and research and negotiations are being undertaken in new countries.

Lovisa recorded a profit of $17.6 million for fiscal 2015, exceeding its own projections, and expects additional growth in 2016.

Dubai Jeweler Atlas Defaults on $136M in Loans

Atlas Jewellery, a Dubai-based gold and jewelry retailer, has defaulted on loans worth about $136.2 million (500 million dirhams).

The defaults are said to affect at least 15 banks, including two Indian lenders. The banks involved have met as a group and will meet again to consider joint action, Reuters reported.

Atlas, which bills itself as "trusted by millions," has more than 50 branches across the Gulf and in India.

India’s Flipkart, PC Jeweller Partner

E-commerce retailer Flipkart is joining forces with jewelry retailer PC Jeweller to create an online shopping platform, The Hindu reported.

The focus of the platform will be on replicating shoppers’ brick-and-mortar experience at a large-format PC Jeweller showroom.

Hong Kongs Plukka Offers $7M IPO

Hong Kong jeweler Plukka will list its shares in Australia as it strives to raise $7.1 million (AU 10 million) to expand into the U.S., according to CEO Joanne Ooi.

Plukka is set to be listed on the Australian Stock Exchange in October, Ooi told CNBC. Ooi founded Pukka in 2011, offering a catalogue of made-to-order lines. The brand transacted its business online for its first three years of operation, opening a single retail outlet in Hong Kong’s Landmark Atrium earlier this year.

Unlike many Hong Kong-based design and retail businesses, the company is targeting expansion in the west, rather than Mainland China, with Ooi describing U.S. expansion as “the most economically efficient mode of branding and marketing a global luxury brand.”

MINING 	  

ALROSA May Cut Diamond Prices

Russian diamond miner ALROSA may cut prices again in the second half of the year after already lowering them by 6% in the first half, chief financial officer Igor Kulichik said during a conference call with investors.

Customers cancelled half of the orders they placed at ALROSAs trading session in July and the company is considering another price cut due to the current low demand. During the conference call, Kulichik said the miner was stockpiling an increased quantity of rough diamonds, rather than curbing production.

“Cutting production leads to a (relative) rise in costs, so we better grow the stock,” Kulichik explained, adding that the higher-than-usual cancellation rate reflected a wider trend of falling diamond sales.

ALROSAs diamond inventory has grown from 14 million carats at the beginning of the year to 17 million carats.

ALROSA’s Sales Up

Russian miner ALROSA reported that its sales rose 20% to $875.8 million (RUB 57.3 billion) in the second quarter, versus the comparable period of last year.

For the first half of the year, the miner reported that its revenue increased by 26% to $2.02 billion (RUB 131.9 billion).

CEO Andrey Zharkov commented on the company’s website that “The FX market environment continues to have a positive impact on ALROSA’s financial results. The company notes a steady increase in demand for diamond jewelry in the U.S. The less active diamond jewelry market in Asia is a result of deterioration of the macroeconomic situation in the region. ALROSAs forecast for rough diamond demand is a conservative one, though the market is expected to pick up by year end 2015.”

Mwana Africa to Raise $5.6M for Klipspringer Mine

Miner Mwana Africa PLC said it is planning to raise $5.6 million (GBP 3.67 million) in an open offer to fund back work at the Klipspringer diamond mine in South Africa, Alliance News reported.

Mwana will issue 367.6 million shares at 1 pence per share in the open offer. Under the terms of the issuance, current shareholders will be able to buy 1 open-offer share for every 3,802 ordinary shares they already hold.

UN Highlights Cameroons Role in Illicit Diamond Trade

Illicit diamond trafficking from the Central African Republic (CAR) into neighboring Cameroon is helping to finance the continuation of a nearly three-year conflict, an expert panel that monitors UN sanctions revealed in a confidential report.

Diamond exports from CAR were banned in May 2013 by the Kimberley Process, which represents 81 countries, including the U.S., the European Union, Russia, China and all major diamond-producing nations.

In its interim report to the CAR sanctions committee, the UN Security Councils panel said the illicit diamond trade is still funding major players in the conflict and increasingly involves neighboring countries, such as Cameroon and Chad.

The report does not directly implicate Cameroon authorities in illicit activity, however.

GENERAL 	  

U.S.-Belgian Businessman Arrested for Role in ‘Blood Diamond’ Trade

American and Belgian citizen Michel Desaedeleer was arrested in Spain last week on a European arrest warrant for his alleged involvement in the international crimes of pillaging “blood diamonds” and enslaving civilians, according to Geneva-based NGO Civitas Maxima.

Several citizens of Sierra Leone who were victims of enslavement during the civil war filed a criminal complaint in Brussels in January 2011 against Desaedeleer, who lives in the U.S., according to Civitas Maxima, which has been working to document crimes and assist the victims.

During the civil war, the Revolutionary United Front (RUF) used civilians as slaves to mine diamond pits in Sierra Leone’s Kono district. The proceeds of their forced labor were brought to Charles Taylor in Monrovia, Liberia and then sold on the international market.

Desaedeleer’s arrest marks the first time a businessman has been arrested for his alleged involvement in these international crimes.

ALROSA Diamonds Go Missing at Gokhran

Severalmaz, ALROSA’s mining unit, said that some of the 150,000 carats of diamonds it entrusted to Gokhran, the Russia’s State Precious Metals and Gems Repository, for sorting were swapped with cheaper, inferior-quality diamonds, according to Kommersant, which cited unidentified individuals familiar with the situation. The missing lot reportedly includes four large, uncut diamonds.

The Russian Finance Ministry, together with Severalmaz and Gokhran, has set up a special panel to investigate the matter, according to the report.

Moodys Predicts Wider Botswana Deficit

Botswanas budget deficit for fiscal 2016 may be much wider than projected due to the slowdown in the diamond market, credit rating agency Moody’s said. Botswanas Finance Ministry previously forecasted a deficit of $393 million (4.03 billion pula), or 2.6% of its gross domestic product, for the fiscal year.

"We see risks for an even more pronounced deficit because of a prolonged downturn in world diamond demand, specifically tied to Chinas economic rebalancing and lower luxury spending," the rating agency explained.

Moodys also said that the lower diamond revenues would increase existing pressures on the government’s budget, such as drought relief expenditures and higher-than-budgeted outlays on public sector wages.

Diamonds account for almost 40% of Botswanas budgetary revenue and around 85% of its exports.

BDI: ISO’s New CVD Guidelines Fail to Uphold Standards

The International Organisation for Standardisations (ISO) new guidelines for lab-grown diamonds don’t meet the organization’s traditional standards or reflect best industry practices, according to the Better Diamond Initiative (BDI).

The new ISO standard, 18323:2015 Jewellery – Consumer confidence in the diamond industry, defines the nomenclature and terminologies that should be used for lab-grown diamonds, treated diamonds and earth-mined diamonds.

However, BDI’s founder, Vyom Shah, stated at BDI’s website that ISO “fails to follow its own guidelines in drafting the standard, as it undermines its objectives listed above, for both consumer and trade.

“For consumers, the restricted use of the term ‘synthetic’ to refer to lab-grown diamonds will spread confusion and deception, leading into believing that they are fake diamonds, like cubic zirconia, moissanite, etc., which is not true,” Shah’s statement continued. “Lab-grown diamonds have emerged as a new choice for ethical and conflict-free diamonds, but the perception that they are fake will eliminate them as a choice for consumers wanting to buy ethical diamonds.”

The ISO has not yet responded to the critique.

ECONWATCH 	  

Diamond Industry Stock Report

U.S. retailers saw strong gains in the past week, carried in part by positive second-quarter earnings results. Movado (+28%) and Signet (+14%) led the advancers. Far East shares continue to feel the effect of local market declines, with Chow Sang Sang and Chow Tai Fook both slipping more than 2% as local index falls 4%. View the detailed industry stock report.
(Prices as of 09:00 GMT) Sept. 3 Aug. 27 Chng.
$1 = Euro 0.8898 0.8851 0.005
$1 = Rupee 66.1905 65.875 0.3
$1 = Israel Shekel 3.9288 3.9382 -0.01
$1 = Rand 13.4936 13.0566 0.44
$1 = Canadian Dollar 1.3263 1.3217 0.00

Precious Metals
Gold $1,130.15 $1,128.63 $1.52
Platinum $1,013.05 $996.20 $16.85
Silver $14.71 $14.30 $0.41

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Dow Jones 16,351.38 16,285.51 65.87 0.4%
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Hang Seng 20,934.94 21,838.54 -903.60 -4.1%
S&P 500 1,948.86 1,940.51 8.35 0.4%
Yahoo! Jewelry 1,009.15 978.15 31.00 3.2%