Rapaport Weekly Market Comment May 26, 2016

Vegas expectations mixed amid weak consumer demand. Polished markets slow with some traders very selectively building stock for JCK. Rough markets weak with oversupply concerns following De Beers $630M of sales in cycle 4 (May). India April polished exports +9% to $1.8B, rough imports +37% to $1.9B. Dominion 1Q sales -5% to $178M, Ekati production +34% to 1M cts. Signet 1Q sales +3% to $1.6B, profit +24% to $147M. Tiffany 1Q Sales -7% to $891M, profit -17% to $87.5M. ALROSA’s Andrey Polyakov named president of World Diamond Council.

RapNet Data: May 26

Diamonds 1,157,847
Value $7,948,739,908
Carats 1,248,673
Average Discount -28.70%

www.rapnet.com

The RapNet Diamond Index (RAPI™) is the average asking price in hundred $/ct. of the 10 percent best priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet - Rapaport Diamond Trading Network.

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS
June 2-5 Thu-Sun

Las Vegas Antique Jewelry & Watch Show

Las Vegas, NV, USA

Booth: 1500 View Details

June 3-6 Fri-Mon
JCK Las Vegas

Las Vegas, NV, USA

Booth: B55051

View Details
June 8-15 Wed-Wed

Rapaport Single Stone Auction

New York & Israel

View Details
June 14-22 Tue-Wed

Rapaport Melee Auction New York & Dubai

View Details

QUOTE OF THE WEEK
We attribute the overall lower sales to softness in domestic customer spending in many U.S. markets, as well as lower spending by foreign tourists of many nationalities in New York and other high-tourism markets.

Mark Aaron, VP for investor relations at Tiffany & Co., on the jeweler’s 7% decline in revenue in the first quarter

MARKETS 	  

United States: Market quiet, demand weak but stable. 3 ct. and larger soft, except SI category. All eyes on JCK Las Vegas (June 3-6) but expectations mixed as consumer demand low…

Belgium: Market stable with good demand for 1-2 ct. and weak demand for 3 ct. + sizes. Faint fluorescent hard to sell with buyers seeking 3X, non-fluorescent diamonds…

Israel: Trading very slow with low expectations for Vegas. Weak sentiment on trading floor as reports point to latest diamond bankruptcy with debts to trade…

India: Market slow with many manufacturers closed for school vacation or working at reduced production levels. Seasonal lull expected to last till mid-June…

Hong Kong: Market slow with weak demand from China. Disappointing sales from May Golden Week and Mother’s Day. Reports of companies reducing costs. 3-5 cts. slow, 1-1.30 cts. moving better...

Click here for deeper analysis

INDUSTRY 	  

De Beers Sales Drop to $630M

De Beers reported rough sales declined to $630 million in its fourth sales cycle of the year.

Revenue fell 5.4% in the May cycle from a revised $666 million in April, the first drop in five months. This follows successive revenue increases in the four sales cycles from December to April, after a slump in the second half of 2015 to an estimated low of $178 million in November. Sales in the fourth cycle compare with an estimated $506 million recorded a year ago, according to Rapaport News records.

ALROSA Exec Steps Up to WDC President

Andrey Polyakov, the vice-president of ALROSA, has taken over as president of the World Diamond Council (WDC).

Polyakov has been vice-president of the WDC since 2015 and assumed the presidency on May 22, succeeding Edward Asscher. Asscher’s two-year term concluded the same day. Polyakov was elected vice-president of the council in October.

India’s Polished Exports +9% in April

India’s polished diamond exports jumped 8.8% year on year to $1.78 billion in April, according to provisional data provided by the Gem & Jewellery Export Promotion Council. By volume, polished exports increased 3.1% to 2.6 million carats. Polished imports declined 8.6% to $223.1 million, leaving net polished exports 12% higher at $1.56 billion.

Rough diamond imports surged 37% to $1.88 billion and rough exports slumped 23% to $86.1 million, leaving net imports 43% higher at $1.79 billion. India’s net diamond account, the difference between net polished exports and net rough imports, swung to negative $237.6 million from positive $132.5 million a year earlier.

Asian Star’s Profit Slides

Asian Star, a Mumbai-based diamond manufacturer, reported profit dropped in the past fiscal year while revenue rose.

Net profit declined 11% to $10.7 million (INR 725.5 million) even as sales edged up 2.5% to $488.7 million in the 12 months to March 31, the company, which is a De Beers sightholder, said. Revenue from its diamond segment increased 3.8% to $445.9 million.

RETAIL & WHOLESALE 	  

Bridal Sales Drive Stronger 1Q for Signet

Signet Jewelers reported sales increased in the first fiscal quarter mainly driven by a stronger performance in select branded bridal and diamond fashion jewelry.

Revenue jumped 3.2% to $1.58 billion in the three months that ended April 30, the retail jeweler said. Same-store sales increased 2.4%. Total sales at Kay increased 6.4% and in the Zale division rose 3%. Profit surged 24% to $146.8 million.

Tiffany Cuts Forecast as 1Q Sales Fall

Tiffany & Co. reported a drop in quarterly revenue and profit due to a decline in spending by U.S. customers and foreign tourists.

Sales fell 7.4% to $891.3 million and profit slumped 17% to $87.5 million in the first fiscal quarter that ended April 30. The company narrowed its outlook for 2016, predicting a mid-single-digit percentage drop in full-year earnings per diluted share. It had previously issued a forecast that ranged from unchanged to a mid-single-digit percentage drop.

Record Blue to Lead Christie’s Auction

The largest fancy intense blue diamond ever offered at auction is to go under the hammer at Christie’s New York next month.

The auctioneer expects the cut-cornered rectangular mixed-cut, 24.18-carat, VS2 gem named the ‘Cullinan Dream’ to fetch $23 million to $29 million, or up to $1.2 million per carat, at the sale at the Rockefeller Center on June 9.

The polished diamond comes from a 122.52-carat blue rough stone discovered by Petra Diamonds, which retains a 15% share in the polished sale proceeds.

Jewelry Demand Propels Richemont to Growth

Richemont’s jewelry sales in the past fiscal year jumped after strong demand outweighed a decline in appetite for watches. Revenue from the Geneva-based luxury group’s jewelry “maisons” increased 7% to $6.79 billion (EUR 6.05 billion) in the fiscal year that ended March 31.

The maisons – Cartier, Van Cleef & Arpels and Giampiero Bodino – saw “good” demand for their jewelry collections but watches were negatively affected by a challenging environment in Asia Pacific and the Americas.

Warren Buffett’s Jewelry Unit Acquires Nordt

Richline Group, a jewelry company owned by Warren Buffett’s Berkshire Hathaway, made a second acquisition in less than a month with the purchase of a precious-metals company, John C. Nordt.

Nordt, a manufacturer for and supplier to the jewelry industry, operates out of Roanoke, Virginia. The deal, effective June 1, comes hot on the heels of Richline’s purchase of online jewelry seller Gemvara.

Tse Sui Luen’s Profit Dives 40%

Tse Sui Luen, a Hong Kong-based jeweler, reported revenue declined and profit plummeted in the past fiscal year as fewer tourists from mainland China dampened retail activity.

Sales dropped 8.6% to $455.6 million (HKD 3.54 billion) and profit nosedived 40% to $3.1 million in the 12 months to February 29. Hong Kong and Macau revenue slumped 24% to $218.3 million, outweighing a 13% jump in mainland China sales to $231.2 million.

Graff Diamonds’ Profit Slumps

Graff Diamonds Limited, the U.K. subsidiary of Graff Diamonds Holdings, reported sales slid 32% to $500.2 million and profit nosedived 74% to $32.1 million in 2015.

Revenue from countries outside the U.K. fell 34% to $464.1 million, outweighing an 11% jump in domestic sales to $36.1 million. “Emoluments” for the company’s highest-paid director dived 31% to $6 million. Revenue for Graff Diamonds Holdings, which includes the group’s international businesses, was $723 million.

Graff declined to comment over and above a company report and statement in which chairman Laurence Graff (pictured, left) claimed the results were "robust."

MINING 	  

Russia Eyes $898M from ALROSA Sale

Russia expects it will get more than $898.4 million (RUB 60 billion) from a sale of shares in ALROSA, Economic Development Minister Alexey Ulyukayev was cited as saying in a television interview.

The government is planning to sell a 10.9% stake in the diamond miner this year.

“Today on the market it is a little more than RUB 60 billion,” Ulyukayev said. “I do not rule out that by the time the transaction is closed the market conditions will improve further.”

Dominion’s Sales Decline 5% in 1Q

Dominion Diamond Corporation reported sales fell 5% to $178.3 million in the first fiscal quarter that ended April 30.

Even though the company lowered its prices by 5% in its January sale, in line with the market, the prices recovered “quickly.” Prices ended the quarter about 8% higher on average than the level at which they started the fiscal year, Dominion said.

Separately, production at the Ekati mine in Canada increased 34% in the quarter to 1.1 million carats.

ALROSA Finds Largest Diamond in Zarnitsas History

ALROSA discovered a 207.29-carat rough diamond at its Zarnitsa mine in the Russian republic of Yakutia.

The gem-quality diamond measuring 38 х 37 х 18 millimeters is the largest found since open-pit mining started at the Zarnitsa pipe in 1999. As yet unnamed, the stone has a “transparent transitional crystal form” and slightly grooved surface.

Dominion Project Jumps Hurdle

Dominion Diamond Corporation received environmental approval for its Jay project that could extend the lifespan of the Ekati mine in Canada by more than a decade.

The miner said the Northwest Territories’ Minister of Lands, Robert McLeod, accepted the recommendations of the Mackenzie Valley Environmental Impact Review Board to approve the program, subject to certain measures.

Jay is the most significant undeveloped deposit at Ekati and has the potential to extend the mine’s life from a projected closure in 2020 to at least 2030, Dominion said.

De Beers to Invest in Canada Exploration

De Beers said it will spend up to $15.6 million (CAD 20.4 million) on hunting for diamonds in an underexplored part of the Canadian province of Saskatchewan.

The miner entered into an agreement with CanAlaska, a company that has staked claims to kimberlite-style targets in the Northwestern Athabasca basin. The claims have been “optioned” to De Beers. There is currently little exploration work in this area of the basin, the companies said.

Strong Emerald Auction for Gemfields

Gemfields announced a new record average price for its lower-quality gemstones sold at an auction of rough emeralds in India last week.

The miner said it sold 2.78 million carats of gems extracted from its Kagem mine in Zambia for $14.3 million, implying an average price per carat of $5.15. The auction was held in the north Indian city of Jaipur from May 17 to 20.

GENERAL 	  

India Tax Changes to Have Mixed Impact

The Indian government reversed a decision to broaden the application of a 1% tax on jewelry.

The tax collected at source will now only apply to jewelry purchases of $7,422 (INR 500,000) or more. The All India Gems & Jewellery Trade Federation campaigned against a government move to impose the duty on all jewelry sales of $2,969 (INR 200,000) or more.

However, new laws requiring customers to present their permanent account number (PAN) card when making a jewelry purchase of $2,969 or more will remain in place despite protests.

ECONWATCH 	  

Diamond Industry Stock Report

Anglo American (+13%) led U.K.-based mining stocks this past week on news of strong sales at the fourth De Beers sight of the year. In the U.S., retail stocks were generally higher, headed by Walmart (+12%), with Tiffany (-0.1%) only dipping slightly on disappointing 1Q sales figures. Indian and European industry stocks were mixed while Far East share prices mostly increased.

View the detailed industry stock report.

May 26 (10:07 GMT) May 19 (11:01 GMT) Chng.
$1 = Euro 0.89 0.89 0.00
$1 = Rupee 67.19 67.36 -0.17
$1 = Israel Shekel 3.84 3.86 -0.02
$1 = Rand 15.55 15.85 -0.30
$1 = Canadian Dollar 1.30 1.31 -0.01

Precious Metals Chng.
Gold $1,227.50 $1,254.12 -$26.62 -2.1%
Platinum $1,003.58 $1,018.35 -$14.77 -1.5%
Silver $16.43 $16.66 -$0.23 -1.4%

Stock Indexes Chng.
BSE 26,366.68 25,399.72 966.96 3.8%
Dow Jones 17,851.51 17,526.62 324.89 1.9%
FTSE 6,270.01 6,082.35 187.66 3.1%
Hang Seng 20,397.11 19,694.33 702.78 3.6%
S&P 500 2,090.54 2,047.63 42.91 2.1%
Yahoo! Jewelry 1,042.35 1,053.05 -10.70 -1.0%

Rapaport Weekly Market Comment June 2, 2016

Industry focused on Vegas shows. U.S. demand supporting the market but dealers cautious as May consumer confidence index slips 2%. ALROSA expects short-term rough market stability as 1Q sales +37% to $1.6B, profit +125% to $758M, inventory reduced from 22M to 18M cts. Christie’s Hong Kong sells $61.7M (72% by lot) with rectangular, 5.03 ct., fancy vivid ‘Aurora Green’, VS2 diamond sold to Chow Tai Fook for $16.8M ($3.3M/ct.). Gitanjali Gems FY sales +22% to $2B, profit +51% to $20M. Bruce Cleaver appointed De Beers CEO as of July 1.

RapNet Data: June 2

Diamonds 1,190,336
Value $8,027,502,376
Carats 1,280,962
Average Discount -28.62%

www.rapnet.com

The RapNet Diamond Index (RAPI™) is the average asking price in hundred $/ct. of the 10 percent best priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet - Rapaport Diamond Trading Network.

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS
June 2-5 Thu-Sun

Las Vegas Antique Jewelry & Watch Show

Las Vegas, NV, USA

Booth: 1500

View Details
June 3-6 Fri-Mon

JCK Las Vegas

Las Vegas, NV, USA
Booth: B55051View Details
June 8-15 Wed-Wed

Rapaport Single Stone Auction

New York & Israel

View Details

QUOTE OF THE WEEK
Diamonds are as relevant to today’s consumers, all over the world, as they were to their parents and their parents before them. Diamonds have also made positive contributions to a host of countries that have used their revenues wisely, to communities and to all who have been touched by their mystique and the practical benefits of responsible mining and ethical sourcing.

Bruce Cleaver, Anglo Americans group director of strategy and business development, after his appointment as CEO of De Beers

MARKETS 	  

United States: Trading slowed slightly after Memorial Day weekend with many dealers waiting for the JCK Las Vegas show to source goods…

Belgium: Trading slowed as many Antwerp dealers traveled to Las Vegas shows. Local buyers focused on finding bargains but suppliers holding firm, at least until Vegas…

Israel: Slow polished trading. High hopes but low expectations for JCK Las Vegas show with more than 60 Israeli companies participating. Steady demand for 0.30 ct. to 1.99 ct., H-J, VS2-I2 diamonds…

India: Trading sluggish due to ongoing summer holidays. Dealers waiting for Las Vegas shows hoping steady U.S. demand will stimulate global trading in the coming months…

Hong Kong: Activity stable with dealers eyeing trends and price movements at JCK Las Vegas. Relatively weak local demand with concern about difficult retail environment...

Click here for deeper analysis

INSIGHTS 	 

Three Things the Diamond Trade’s Survival Depends On

The diamond industry is waking up to a new reality. Not only are the banks insisting on stricter compliance standards and pipeline integrity, but the largest mining companies and jewelry retailers are rapidly following suit. This is forcing the industry to rethink the way it conducts business so that ‘transparency, responsibility and sustainability’ are engrained in the ethos of the trade...

Click here to continue reading

INDUSTRY 	  

Mellier Resigns as De Beers CEO

Philippe Mellier (pictured) stepped down as chief executive officer of De Beers after five years, with Bruce Cleaver appointed to replace him on July 1.

Cleaver has been group director of strategy and business development for De Beers parent company Anglo American since last year. Before then he was executive director at De Beers, responsible for strategy and commercial relationships, and served as the diamond miner’s co-acting CEO for a year prior to Mellier’s appointment in 2011.

De Beers to Bring Auction Viewings to New York

De Beers will hold auction viewings in the U.S. for the first time with a showing of exceptional and special stones in New York later this month.

The viewings are scheduled for June 28 to 30 at the premises of the International Institute of Diamond Valuation before an auction on July 20. The miner plans to include a wider range of products in future viewings, said Neil Ventura, De Beers executive vice-president of auction sales (pictured).

GIA to Test Melee for Synthetics

The Gemological Institute of America (GIA) is piloting a service to separate natural and untreated diamonds from simulants and potentially synthetic or treated gems.

The GIA Melee Analysis Service will analyze and sort stones measuring 1.1 millimeters to 3.8 millimeters in diameter with D to Z color. The fully-automated system will process about 1,800 stones per hour and cost between $0.08 and $0.30 per stone based on diameter.

The pilot, which launches in June at the GIA’s laboratory in New York, will be offered at all GIA locations and is scheduled to be rolled out in the third quarter.

EU Eyes 2018 Kimberley Process Chairmanship

The European Union (EU) is bidding for the role of Kimberley Process (KP) vice chair in 2017, meaning it would assume chairmanship of the organization the following year.

In a joint proposal made at the KP intersessional meeting in Dubai in May, India would serve as vice chair under the EU in 2018 and take on the role of chairman in 2019, India’s Ministry of Commerce & Industry said. The position is currently held by the United Arab Emirates (UAE) with Australia its vice chair and next year’s chair.

Kimberley Process to Readmit CAR, Venezuela

The Central African Republic (CAR) and Venezuela are edging closer to a return to the Kimberley Process (KP) following the organization’s intersessional meeting in Dubai last week.

The monitoring team assessing the CAR has “by and large” completed its verification and due diligence on the first shipment of rough diamonds from the country’s Berberati compliant zone, reported Ahmed Bin Sulayem, the United Arab Emirates-based chair of the KP for 2016 (pictured).

Venezuela is also on the verge of being admitted after it suspended itself from the KP in 2008, Sulayem said.

IDE Mandates Disclosure of Inclusion Mapping

Rough sellers at the Israel Diamond Exchange (IDE) will be required to disclose that a stone has undergone inclusion mapping under a memorandum of understanding between the bourse and Sarine Technologies.

Sarine stores information on all unmarked stones scanned by its Galaxy machines and will provide this information to the IDE on request, said Uzi Levami, Sarine’s executive director and chief executive officer (pictured, right).

Yoram Dvash (left), president of the IDE, proposed at the World Diamond Congress in Dubai in May that the requirement be adopted by the World Federation of Diamond Bourses.

RETAIL & WHOLESALE 	  

Green Diamond Breaks Auction Records

Christie’s sold the ‘Aurora Green’ diamond to Chow Tai Fook for $16.8 million (HKD 130 million) at its Hong Kong auction Tuesday, achieving $3.3 million per carat.

The rectangular-cut, 5.03-carat, fancy vivid green, VS2 diamond is the world’s largest natural fancy vivid green diamond, Christie’s said. The selling price and the price per carat set world auction records for a green diamond.

Christie’s garnered $60.7 million at the sale, with 72% sold by lot and 73% sold by value.

U.S. Jewelry Store Sales Rise in March

U.S. specialty jewelry store sales increased 3% year on year to $2.12 billion in March, according to the latest data from the U.S. Census Bureau. The growth at specialty stores was slower than for the sector as a whole, as jewelry and watch sales across all channels advanced 4.2% to $4.65 billion during the month.

Specialty jewelry store sales in the first quarter of 2016 increased 1.4% to $6.53 million. Total U.S. jewelry and watch sales in the first quarter advanced 4.9% to $15.47 billion, according to preliminary Rapaport News estimates.

Gitanjali Profit +51% as Jewelry Outpaces Diamonds

Gitanjali Gems, one of India’s largest jewelry retailers, said revenue and profit surged in the past fiscal year driven by a strong performance in its jewelry division while its diamond revenue slid.

Group sales jumped 22% to $2.08 billion (INR 139.84 billion) and profit soared 51% to $20.1 million in the 12 months to March 31, the Mumbai-based company reported. Jewelry sales surged 43% to $1.67 billion, outperforming the diamond segment, where revenue fell 24% to $475.4 million.

Monthly Swiss Watch Exports Decline

Swiss watch exports fell in April with significantly fewer higher-end and precious-metal timepieces shipped out of the country.

Total shipments slid 11% year on year to $1.63 billion (CHF 1.62 billion) during the month, according to data provided by the Federation of the Swiss Watch Industry.

Shipments of watches with an export price of more than $3,016 (CHF 3,000) slumped 13%, driving the overall downturn, the federation said. Exports of timepieces made from precious metal fell 14% and gold-steel watch shipments slid 13%.

MINING 
  

ALROSA Sees Stronger Sales, Lower Inventory in 1Q

ALROSA reported revenue and profit surged in the first quarter as the rough diamond market improved from last year’s slump.

Revenue jumped 37% to $1.56 billion (RUB 102.34 billion) in the three months to March 31 and profit more than doubled to $758.8 million. Diamond inventories in rubles declined 18% to $718.1 million. This comes after the miner’s stockpile increased by more than 8 million carats through 2015 to 22 million carats at the end of December following reduced demand.

Dominion Defers Jay Project

Dominion Diamond Corporation has postponed a project by about two years that is expected to add a decade to the lifespan of its Ekati mine in Canada.

Mining and processing of kimberlite from the Jay project in the Northwest Territories will not take place until late 2022 compared with an original plan of 2020. Dominion revised the schedule because it determined that it could keep a continuous ore supply from the existing Ekati mine for longer than expected, giving it more time to work on developing Jay.

Petra Appoints CFO and COO

Petra Diamonds has appointed Jacques Breytenbach as its chief financial officer and Koos Visser as chief operating officer effective June 30. Both have been promoted from within the company.

The appointments follow a decision by David Abery (pictured) to step down as finance director “to pursue other opportunities” after 13 years in the role.

Stellar Gets ‘Verbal’ Go-Ahead for Tongo Project

Stellar Diamonds said it was “verbally informed” that its application for a license to mine at its Tongo project in Sierra Leone was approved by the Minerals Advisory Board.

The licensing process is still subject to written confirmation from the National Minerals Agency and approval of a licensing agreement by the Minister of Mines. Stellar and the Government of Sierra Leone will then negotiate fiscal terms. The resulting mining concession agreement will require ratification through the country’s Parliament.

GENERAL 	  

‘Young Diamantaires’ Aim to Nurture Next Generation

The World Federation of Diamond Bourses (WFDB) set up an international program to develop the future generation of diamond dealers.

The ‘Young Diamantaires’ initiative was introduced at the 37th World Diamond Congress in Dubai in May and will be led by Rami Baron, who was elected chairman of the WFDBs promotion committee at the summit. It aims to encourage communication among younger members of the diamond trade.

New Fair Hits Antwerp Calendar

Antwerp will get a new exhibition targeting the trade, with a “single-minded” focus on diamond and diamond jewelry products.

The fair, known as CARAT+, will be aimed at the entire industry from miners to retailers, according to its organizer, Easyfairs, the events division of Brussels-based Artexis Easyfairs.The first edition is scheduled to run from February 5 to 8, 2017, at the company’s Antwerp Expo.

Panama Diamond Exchange Gets New Name

The Panama Diamond Exchange has been renamed the World Jewelry & Diamond Hub, Panama, to reflect a broader range of goods being traded in the bourse.

Management also wanted a name that underlined the connection between the exchange and the World Jewelry Hub (WJH), which hosts it.

Sarine Buys Diamond App Maker

Sarine Technologies acquired DiaMining, a developer of apps that produce digital imagery of diamonds, gemstones and jewelry.

The deal was valued at $1.2 million and encompasses DiaMining’s technology and assets.

Ramat Gan-based DiaMining offers point-of-sale products that display still and video imagery which integrates with inventory management systems, enabling sellers to showcase their inventory in a store, in the back office or while still at a supplier.

ECONWATCH 	  

Diamond Industry Stock Report

Industry stocks rose in the Far East, led by Luk Fook (+8.2%), during a week in which government data showed a slower decline in April Hong Kong retail sales than last month. Movado (-14%) headed the U.S. retail declines on disappointing quarterly results. Mining stocks were mixed, with Peregrine Diamonds (+20%) the standout leader.

View the detailed industry stock report.

Jun 2 (11:33 GMT) May 26 (10:07 GMT) Chng.
$1 = Euro 0.89 0.89 0.00
$1 = Rupee 67.29 67.19 0.10
$1 = Israel Shekel 3.86 3.84 0.02
$1 = Rand 15.58 15.55 0.03
$1 = Canadian Dollar 1.31 1.30 0.01

Precious Metals Chng.
Gold $1,215.35 $1,227.50 -$12.15 -1.0%
Platinum $972.40 $1,003.58 -$31.18 -3.1%
Silver $15.96 $16.43 -$0.47 -2.9%

Stock Indexes Chng.
BSE 26,843.14 26,366.68 476.46 1.8%
Dow Jones 17,789.67 17,851.51 -61.84 -0.3%
FTSE 6,215.09 6,270.01 -54.92 -0.9%
Hang Seng 20,859.22 20,397.11 462.11 2.3%
S&P 500 2,099.33 2,090.54 8.79 0.4%
Yahoo! Jewelry 1,014.80 1,042.35 -27.55 -2.6%

Rapaport Weekly Market Comment June 9, 2016

JCK Las Vegas show traffic slower than previous years but meets conservative expectations. Exhibitors concerned about sluggish demand, synthetics, marketing to millennials, and U.S. election uncertainty. Upbeat Antique show signals improving demand for branded estate jewelry. May 1 ct. RAPI flat, 0.30 ct. -1.1%. Signet shares plunge 20% as Kay Jewelers defends ‘diamond swapping’ claims. Chow Tai Fook FY revenue -12% to $7.3B, profit -46% to $384M. U.S. April polished imports +3% to $1.9B. Belgium May polished exports +5% to $1.1B, rough imports +18% to $1.3B. Stuller joins Int’l Grown Diamond Association. DPA unveils marketing slogan: ‘Real is Rare. Real is a Diamond.’

RapNet Data: June 9

Diamonds 1,190,337
Value $8,123,979,876
Carats 1,281,014
Average Discount -28.61%

www.rapnet.com

The RapNet Diamond Index (RAPI™) is the average asking price in hundred $/ct. of the 10 percent best priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet - Rapaport Diamond Trading Network.

QUOTE OF THE WEEK
Our aim is to make millennials as passionate about diamonds as the baby boomers.

Stephen Lussier, chairman of the Diamond Producers Association, on a new slogan for diamonds

MARKETS 	   	 

United States: Mixed sentiment at Las Vegas shows. Buyers looking for specific items and not purchasing for inventory. Suppliers with the right stock and who were willing to compromise a bit on price made sales…

Belgium: Polished trading slowly improving after quiet May. Fewer Antwerp-based exhibitors at JCK Las Vegas than previous years…

Israel: Trading in the bourse quiet with many dealers at Las Vegas shows. Sentiment relatively positive even as JCK show fell short of expectations. Inventory levels rising…

India: Activity back to normal after May summer break with foreign buyers looking for goods in Mumbai. Dealers at Las Vegas shows note stable U.S. demand but concerned about consumer sentiment…

Hong Kong: Diamond trading quiet with dealers interested in Las Vegas. Suppliers preparing for June Hong Kong show (June 23 to 26), the smallest of the three annual Hong Kong fairs...

Click here for deeper analysis

INDUSTRY 	 

Diamond Prices Soften in May

Polished diamond prices declined in May with buyers waiting for the Las Vegas shows. U.S. demand was steady and the country remains the best market for dealers. However, weaker economic trends in a contentious election year is impacting sentiment in the diamond and jewelry trade.

The RapNet Diamond Index (RAPI™) for 1-carat, GIA-graded diamonds was flat in May. RAPI for 0.30-carat diamonds fell 1.1% and RAPI for 0.50-carat diamonds slid 0.3%. RAPI for 3-carat diamonds dropped 1.1%. During the first five months of the year, RAPI for 1-carat diamonds rose 1.2% but was 4.9% below its level from a year ago.

JCK Las Vegas Meets Low Expectations

Trading at the JCK Las Vegas show, which took place June 3 to 6, was relatively weak with traffic slower than previous years. Sentiment was mixed as dealers expressed confidence in the U.S. market despite the sluggish activity in Las Vegas.

Demand was specific and buyers shopped around for higher discounts. There was good demand for bread-and-butter American goods, particularly for off-size 1 ct., G-J, SI-I2 diamonds, while bridal remains the mainstay of the jewelry trade. Dealers were satisfied that the first half of 2016 was better than last year and expect continued stability in the second half.

DPA Unveils Campaign Slogan

The Diamond Producers Association (DPA) has tapped millennials’ desire for authenticity in its campaign slogan unveiled at the JCK Las Vegas show.

The DPA said the new slogan “Real is Rare, Real is a Diamond” urges millennials to think of diamonds as a symbol of a real connection rather than as a superfluous luxury product. The DPA’s research revealed millennials are skeptical about diamonds but also identify with the diamond story.

Sotheby’s Shares Ownership of ‘$72M’ Pink

Sotheby’s teamed up with Diacore and Mellen Inc. to collectively own the Pink Star diamond.

The oval mixed cut, 59.60-carat, fancy vivid pink, internally flawless stone was sold to diamond cutter Isaac Wolf in November 2013 for a world auction record of $83.2 million in Geneva. However, the gem was returned to Sotheby’s after Wolf defaulted. The auction house subsequently valued the diamond at about $72 million in its inventory where it is currently being held.

U.S. Polished Imports Rise in April

U.S. polished diamond imports rose 3% year on year to $1.85 billion in a seasonally quiet April. Diamond imports by volume edged up 0.6% to 793,939 carats and the average price grew 2.3% to $2,324 per carat.

Polished diamond exports, meanwhile, jumped 9.8% to $1.33 billion, driving net polished imports down 12% to $513 million. The U.S. April net diamond account dropped 13% to $507 million.

Belgium’s Polished Trading Jumps

Belgium’s polished diamond exports rose 4.5% year on year to $1.11 billion in May, the first increase since June last year. Spokespersons for the Antwerp World Diamond Centre maintained caution saying the data does not yet signal a turnaround.

Polished imports recorded their first advance since March last year, up 6.8% to $922.5 million. Net polished exports, representing exports minus imports, declined 5.6% to $186.1 million. Rough imports soared 18% to $1.3 billion and rough exports surged 21% to $1.28 billion.

RETAIL & WHOLESALE 	  

Signet Refutes Allegations of ‘Diamond Swapping’

Signet Jewelers denied allegations that its employees systematically switch more expensive diamonds for lower-quality gems following claims the jeweler repeatedly engaged in diamond “swapping.”

“We strongly object to recent allegations on social media, republished and grossly amplified, that our team members systematically mishandle customers’ jewelry repairs or engage in diamond swapping,” the company said. Signet shares plunged in the aftermath of the allegations.

De Beers Embraces Ever Us

Forevermark is adopting Signet’s ‘Ever Us’ two-stone ring concept for its 2016 holiday advertising campaign. The two companies will run separate campaigns aiming to create momentum for the two-stone ring concept following last year’s launch by Signet.

Forevermark will run its ‘Ever Us’ advertising on national television, digital and print media, featuring its own line of two-stone jewelry including rings, pendants and earrings. Forevermark will also continue ’The One’ theme from last year, featuring its ‘A Diamond is Forever’ tagline and will re-run the ‘Seize the Day’ campaign urging men to buy diamonds this Christmas.

U.S. Jewelry Sales Continue Growth Spurt

U.S. jewelry and watch revenue from all retail outlets recorded the biggest jump in three years in April as sales rose for a 12th consecutive month.

Revenue advanced 5.4% year on year to an estimated $5.53 billion, provisional government figures showed. This was the steepest growth since a 7.3% jump in April 2013, according to Rapaport News records. Jewelry sales increased 5.3% to $4.88 billion in April, while watch sales advanced 6.4% to an estimated $647 million.

Chow Tai Fook’s Profit Dives 46%

Chow Tai Fook’s profit tumbled in the past fiscal year as fewer tourists visited Hong Kong and consumer spending slowed in Greater China.

Profit slumped 46% to $383.6 million (HKD 2.98 billion) in the 12 months that ended March 31. Revenue slid 12% to $7.3 billion. Jewelry sales in mainland China dropped 11% and in Hong Kong and Macau they declined 15%.

Buffett’s Richline Acquires Viawear

Richline Group continued its recent string of acquisitions with the purchase of Viawear, a provider of wearable technology for jewelry brands.

Viawear has developed bracelets that filter mobile notifications so wearers receive important alerts without having to check if they missed something. Richline, a subsidiary of Warren Buffett’s Berkshire Hathaway, in April acquired jewelry website Gemvara and in June bought precious-metals company John C. Nordt.

MINING 	  

ALROSA Anticipates Stable Rough Prices

ALROSA expects to hold rough diamond prices steady for the rest of 2016 as the miner anticipates a stable year.

“Regarding our pricing outlook for 2016, we remain cautious, but do not expect any significant falls in pricing generally,” said Igor Kulichik, ALROSA’s chief financial officer (pictured).

The Russia-based miner’s revenue soared 37% in the first three months of the year helping reduce its rough inventory by 4 million carats through the quarter. Profit more than doubled.

Dominion Swings to 1Q Loss

Dominion Diamond Corporation announced a quarterly loss as a lower-value product mix from its Ekati mine in Canada resulted in a 62% decline in the average price of rough sold.

The miner reported a loss of $1 million in the first fiscal quarter that ended April 30 versus a profit of $12 million a year ago. Sales declined 5% to $178.3 million as rough prices fell year on year. The average price at Ekati fell to $68 per carat compared to $180 a carat a year earlier. Dominion also owns 40% of the Diavik mine in Canada.

Lukoil’s 1Q Diamond Sales Rise

Lukoil reported diamond sales increased fourfold in the first quarter as the company increased production from its Grib mine in Russia.

Sales jumped to $124 million (RUB 8 billion) in the three months that ended March 31 from $31 million a year ago. The Russia-based miner started production at Grib, its only diamond asset, in September 2014 and was expected to increase annual production to 4.5 million carats from a targeted 2 million carats in 2015.

GENERAL 	  

Stuller Joins Lab-Grown Diamond Body

Stuller, a U.S.-based jewelry manufacturer, has become the latest member of the International Grown Diamond Association (IGDA) after it started offering synthetic diamonds earlier this year.

IGDA was set up in February to represent synthetics producers. Its members include companies based in the U.S., China, Singapore, India, Philippines, Russia, Canada and Hong Kong.

KP and Civil Society Lock Horns

The Kimberley Process (KP) Civil Society Coalition hit back against comments by KP chair Ahmed Bin Sulayem criticizing the non-profit alliance for not engaging with the organization. The association last year boycotted the KP when the United Arab Emirates was appointed as its 2016 chairman.

Addressing the recent KP intersessional meeting in Dubai, Bin Sulayem (pictured) attacked Alan Martin, director of research at Partnership Africa Canada, for not taking part in mediation aimed at bringing the coalition back into the fold. The coalition argued that none of the industry reforms it had requested from the KP chair had been made.

Rio Tinto Unveils Highlights of Pink Tender

Rio Tinto revealed five lead gems of this year’s tender of polished colored diamonds from its Argyle mine as the company kicked off the sales process.

The centerpiece of the 2016 Argyle Pink Diamonds Tender is the ‘Argyle Violet,’ an oval, 2.83-carat violet diamond. The other highlights are the ‘Argyle Ultra,’ a pear-shaped, 1.11-carat violet diamond; the ‘Argyle Viva,’ a pear-shaped, 1.21-carat vivid purple-pink diamond; the ‘Argyle Thea,’ a radiant-cut, 2.24-carat vivid purplish pink diamond; and the ‘Argyle Aria,’ an oval, 1.09-carat fancy red diamond.

Antwerp Gears Up for Rough Diamond Days

Antwerp’s rough diamond bourse, the Antwerpsche Diamantkring, will host the summer edition of the Antwerp Rough Diamond Days later this month.

The fair will take place from June 21 to 22 in the Diamantkring’s trading hall. It is open to all members of exchanges affiliated to the World Federation of Diamond Bourses, the organization said.

ECONWATCH 	  

Diamond Industry Stock Report

Signet (-9.5%) fell on allegations in the media of "diamond swapping" at its stores. U.S. retail stocks were otherwise mainly stronger, led by JCPenney (+10%). Mining stocks mostly increased, led by Rockwell Diamonds (+18%) as it recovered from a decline last week. Chow Tai Fook (+3%) was up despite reporting a heavy profit slump.

View the detailed industry stock report.

Jun 9 (11:19 GMT) Jun 2 (11:33 GMT) Chng.
$1 = Euro 0.88 0.89 -0.01
$1 = Rupee 66.76 67.29 -0.53
$1 = Israel Shekel 3.85 3.86 -0.01
$1 = Rand 14.85 15.58 -0.73
$1 = Canadian Dollar 1.27 1.31 -0.04

Precious Metals Chng.
Gold $1,259.10 $1,215.35 $43.75 3.6%
Platinum $1,001.50 $972.40 $29.10 3.0%
Silver $17.06 $15.96 $1.10 6.9%

Stock Indexes Chng.
BSE 26,763.46 26,843.14 -79.68 -0.3%
Dow Jones 18,005.05 17,789.67 215.38 1.2%
FTSE 6,251.19 6,215.09 36.10 0.6%
Hang Seng 21,297.88 20,859.22 438.66 2.1%
S&P 500 2,119.12 2,099.33 19.79 0.9%
Yahoo! Jewelry 1,068.63 1,014.80 53.83 5.3%

Rapaport Weekly Market Comment June 16, 2016

Diamond markets slow as Las Vegas shows fail to stimulate stronger demand. Low expectations for next week’s June Hong Kong show with Chinese buyers cautious amid unsure market conditions. Stable rough prices with reduced supply expected at ALROSA sale and next week’s De Beers sight. Liquidity concerns deepen as Standard Chartered to exit “risky” diamond business and other banks tighten industry credit. Luk Fook warns FY profit -35%/-45%. Christie’s NY sells $42M (69% by lot) with rectangular, 24.18 ct. fancy intense blue, VS2 ‘Cullinan Dream’ selling for $25.4M ($1.04M/ct.). RJC elects Wilfried Hoerner as chairman.

RapNet Data: June 16

Diamonds 1,061,512
Value $7,911,405,249
Carats 1,196,450
Average Discount -27.74%

www.rapnet.com

The RapNet Diamond Index (RAPI™) is the average asking price in hundred $/ct. of the 10 percent best priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet - Rapaport Diamond Trading Network.

Get Current Price List | Subscribe to Rapaport | Join RapNet

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June 14-22 Tue-Wed

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June 23-26 Thu-Sun

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QUOTE OF THE WEEK
We take it personally. We take it seriously when someone is questioning our integrity.

Mark Light, CEO of Signet Jewelers, defends allegations of diamond swapping at Kay Jewelers in an interview with The Wall Street Journal

MARKETS 	  
 

United States: Las Vegas shows just okay. U.S. Jewelry market stable but diamond demand slow. New York dealers filling orders and sending goods out on memo…

Belgium: Polished trading slow and sentiment weak. Dealers returned from Las Vegas with low expectations met. Buyers picky. Dossiers and 1-carat slowing…

Israel: Dealers back from Las Vegas with mixed reviews about the show. Demand was very specific with buyers looking to fill existing orders with narrow specifications. Good demand for SI’s in all categories…

India: Market slow. U.S. demand steady despite relatively weak Las Vegas shows. Large manufacturers satisfied with demand from large jewelry chains. Smaller suppliers had a mixed show. Indian domestic demand cautious…

Hong Kong: Low expectations for next week’s show. Chinese buyers traveling to the show to assess market conditions rather than buy goods. Chinese demand slowing with jewelers discounting to attract customers...

Click here for deeper analysis

INSIGHTS 	  

Vegas Shows Reveal Stable, Fast-Changing Market

As a bellwether for the U.S. jewelry market and global diamond industry, this year’s Las Vegas shows met the trade’s conservative expectations. While foot traffic and diamond trading were slightly slower than previous years, jewelry sales were resilient...

Click here to continue reading

FIVE-MINUTE INTERVIEW 	  

Antwerp’s Pain, Dubai’s Gain

Davy Blommaert, head of diamond lending at Dubai-based National Bank of Fujairah and a former executive of Antwerp Diamond Bank, took time out recently to speak to Rapaport News...

Click here to read the interview

INDUSTRY 	  

Standard Chartered Exits Diamond Business

Standard Chartered terminated lending to the midstream diamond and jewelry industry having curbed its exposure to businesses that fail to meet its “new risk profile.”

The decision comes after the bank tightened its terms of lending to clients in the diamond sector, requiring manufacturers to secure payment insurance or provide 100% collateral. Standard Chartered has about $2 billion credit outstanding to the industry, Bloomberg reported.

‘Cullinan Dream’ Fetches Record $25M

The ‘Cullinan Dream’ sold for $25.4 million, or $1.04 million per carat, at Christie’s Magnificent Jewels auction in New York. The rectangular, 24.18-carat, fancy intense blue, VS2 diamond fetched a record auction price for its color category, Christie’s said.

The Cullinan Dream is one of four polished diamonds cut from the 122.52-carat rough recovered in 2014 at Petra Diamonds’ Cullinan mine in South Africa. Petra sold the rough into a cutting and polishing partnership for $23.5 million and will receive a 15% share in the Christie’s sales proceeds.

The Christies auction had a total value of $42.2 million and was 69% sold by lot.

Trump Ring Under the Hammer

An engagement ring given by Donald Trump to actress and singer Marla Maples will be auctioned in New York for an estimated $300,000. The emerald-cut, 7.45-carat, Harry Winston diamond ring will go under the hammer at the Lotte Palace Hotel on June 29.

Trump, the presumptive Republican Party candidate in the U.S. presidential elections this November, proposed to Maples with the ring in 1991. Following their divorce in 1999, Maples sold it for $110,000 in June 2000 through an auction by Joseph DuMouchelle. The same private buyer is returning to the auctioneer for the resale.

RJC Elects Chairman

The Responsible Jewellery Council (RJC) voted in Wilfried Hoerner, of Switzerland-based precious metals company Argor-Heraeus, as its new chairman. Hoerner replaces interim chair Charles Chaussepied, who held the position since last July.

Mark Jenkins of Signet Jewelers was re-appointed RJC’s honorary secretary at the organization’s annual general meeting in Las Vegas earlier this month. New board members include Michael Steinmetz of Leo Schachter Diamonds; Ankur Goyal of MMTC-PAMP India Pvt Ltd; Jean-Baptiste Dembreville of Baume & Mercier; Bernard Malek of Cartier; and Harriet Kelsall of Harriet Kelsall Jewellery Design.

RETAIL & WHOLESALE 	  

Luk Fook Warns on Profit

Luk Fook warned profit likely slumped 35% to 45% in the fiscal year that ended March 31. Tourists visiting Hong Kong from mainland China spent less because of a stronger Hong Kong dollar relative to the Renminbi, the jewelry retailer said. China’s economic slowdown and an increase in the popularity of other tourist destinations for luxury purchases also contributed to the slide.

U.S. Jewelry Store Sales Rise in April

U.S. specialty jewelry store sales increased 3.6% year on year to $2.29 billion in April, government data showed. Growth matched the upward trend in U.S. jewelry stores this year which saw revenue from all outlets advance an estimated 5.4% in April, the sharpest rise in three years. Jewelry store sales rose 2.1% to $8.83 billion in the first four months of the year.

Signet Under Spotlight Over ‘Swapping’ Allegations

Signet Jewelers is facing potential class action suits initiated by at least three law firms which allege the retailer may be in violation of federal securities laws. Signet’s share price plummeted more than 20% in the past two weeks since allegations surfaced that staff at its subsidiary Kay Jewelers engaged in “diamond swapping.”

Questions were also raised about its use of credit to boost sales. Signet said there was “no merit” to the lawyers’ allegations. Short sellers launched a “targeted attack” to amplify the controversy, Mark Light, Signet’s chief executive officer, was cited by Bloomberg as saying.

MINING 	  

RBC Downgrades Dominion

RBC Capital Markets downgraded Dominion Diamond Corporation to “sector perform” from “outperform” and reduced its price target for the miner to $11 from $13 per share.

The analyst reasoned that rough diamond prices will soften in the summer before they firm slightly later in the year, while a challenging outlook for the companys Jay project will also weigh on its performance. The miner recently announced a two year delay to the Jay project, which is expected to add a decade to the lifespan of Dominion’s Ekati mine.

ALROSA Recovers 241-Ct. Gem

ALROSA found a 241.21-carat rough diamond at its Nyurbinsky mine in Yakutia. The diamond is one of the largest recovered in Russia and the third largest in the companys Nyurba division.

ALROSA also said it has begun developing the Zarya pipe, a new deposit in its Aikhal Mining and Processing Division at an estimated initial investment of $149 million (RUB 9.8 billion). The mine is expected to reach a targeted capacity of 1 million tons of ore per year by 2021 and have a lifespan of 13 years.

Rockwell’s 1Q Sales Spike

Rockwell Diamonds reported rough sales surged 40% year on year to $9.3 million in the first fiscal quarter that ended May 31. This followed a restructuring aimed at reversing the recent slump in the miner’s performance. Sales by volume jumped 11% to 5,191 carats, while the average price achieved soared 26% to $1,801 per carat.

Lace Run-of-Mine Goods Sold for $189/Ct.

DiamondCorp sold two batches of rough diamonds from its Lace mine for $436,597 (ZAR 6.5 million). The 1,838 carats of run-of-mine goods sold for an average price of $189 per carat, a record high for the company. A separate parcel of 1,679 carats of diamonds from Lace’s tailings operation fetched $53 per carat.

GENERAL 	  

Guinea Greenlights Diamond Bourse

Guinea approved the opening of a diamond and gold exchange, a joint initiative with Canadian companies Investissement Royal KSA and Embee Diamond Technologies. The Diamond and Gold Bourse of Guinea Group (DGBG) will apply for membership of the World Federation of Diamond Bourses once it becomes operational. Membership of the DGBG will be open to diamantaires who are audited members of the Responsible Jewelry Council.

De Beers to Divest Stake in Coal Mine

De Beers will sell its 50% stake in the Morupule Coal Mine in Botswana to the nation’s government as the miner’s parent Anglo American prunes its commodities portfolio. The stake will be transferred to the newly formed Minerals Development Company of Botswana (MDCB), Reuters reported. De Beers holds the stake through its Debswana Diamond Mining Company subsidiary.

ECONWATCH 	  

Diamond Industry Stock Report

Sotheby’s (-10%) led almost universal declines in U.S. retail and jewelry stocks this past week, with Signet (-7.1%) continuing its fall due to “swapping” allegations. Hong Kong-based jewelry stocks also slid as low sentiment persisted, headed by Chow Sang Sang (-12%). Mining stocks generally saw a downward trajectory, led by Petra Diamonds (-16%), but Rockwell Diamonds (+10%) bucked the trend on promising results.

View the detailed industry stock report.

Jun 16 (09:52 GMT) Jun 9 (11:19 GMT) Chng.
$1 = Euro 0.89 0.88 0.01
$1 = Rupee 67.23 66.76 0.47
$1 = Israel Shekel 3.87 3.85 0.02
$1 = Rand 15.34 14.85 0.49
$1 = Canadian Dollar 1.30 1.27 0.02

Precious Metals Chng.
Gold $1,304.85 $1,259.10 $45.75 3.6%
Platinum $984.62 $1,001.50 -$16.88 -1.7%
Silver $17.72 $17.06 $0.66 3.9%

Stock Indexes Chng.
BSE 26,511.51 26,763.46 -251.95 -0.9%
Dow Jones 17,640.17 18,005.05 -364.88 -2.0%
FTSE 5,929.23 6,251.19 -321.96 -5.2%
Hang Seng 20,038.42 21,297.88 -1,259.46 -5.9%
S&P 500 2,071.50 2,119.12 -47.62 -2.2%
Yahoo! Jewelry 1,057.70 1,068.63 -10.93 -1.0%

Rapaport Weekly Market Comment June 23, 2016

Polished markets cautious. Hong Kong show begins with low expectations for Chinese demand after relatively weak JCK Las Vegas show. Prices stable at De Beers sight with boxes selling at mid-single-digit premiums amid concerns that rough market fails to reflect sluggish polished demand. Manufacturing steady. Swiss May watch exports -10% to $1.6B. Luk Fook FY revenue -12% to $1.8B, profit -41% to $124M. Shrenuj FY revenue -34% to $266M, loss of $6M vs. profit of $3M in previous year. India May polished exports +13% to $1.9B, rough imports +15% to $1.5B. Rio Tinto merges diamond and copper units to be headed by Arnaud Soirat.

RapNet Data: June 23

Diamonds 1,227,660
Value $8,191,947,803
Carats 1,320,274
Average Discount -29.29%

www.rapnet.com

The RapNet Diamond Index (RAPI™) is the average asking price in hundred $/ct. of the 10 percent best priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet - Rapaport Diamond Trading Network.

Get Current Price List | Subscribe to Rapaport | Join RapNet

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June 23-26 Thu-Sun

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QUOTE OF THE WEEK
At first I wanted to scream. Then I said in a low hoarse voice God, it’s a diamond! It’s a diamond, it’s a big diamond!’

Lucara trainee Tiroyaone Mathaba, 27, on discovering the 1,109-carat Lesedi La Rona

MARKETS 	  

United States: Polished trading quiet in New York ahead of July vacation period. Post-Las Vegas demand weaker than previous years but U.S. still considered the best market…

Belgium: Cautious activity in Antwerp. Dealers waiting for this week’s Hong Kong show to gauge Chinese demand. U.S. demand quiet but stable…

Israel: Polished trading quiet and buyers cautious. Large Israeli delegation exhibiting at Hong Kong show. Good U.S. demand for 1 to 2 ct., G-J, SI-I1 goods…

India: Polished trading slow with very few foreign buyers in the market and sluggish local Indian demand. Suppliers and buyers traveling to Hong Kong show uncertain about Chinese demand…

Hong Kong: Market focused on show which starts Thursday (June 23-26). Expectations low as buyers from mainland China remain cautious and Hong Kong retailers endure significant slowdown in customer foot traffic and sales...

Click here for deeper analysis

FIVE-MINUTE INTERVIEW 	 

Rich New Diamond Mine Ready to Sparkle

Patrick Evans, president and CEO of Mountain Province, took time out to speak with Rapaport News about the prospects for the Gahcho Kué mine in Canada’s Northwest Territories...

Click here to read the interview

INDUSTRY 	  

De Beers Opens Selling Platform to Trade

De Beers is piloting a program allowing businesses to sell rough diamonds from its online auction platform. The service is available for single stones larger than 5 carats and fancy-color diamonds. It will only be open to businesses that adhere to standards set by De Beers covering integrity of diamond sellers, product disclosure and provenance.

Shrenuj Downsizing After Somber Results

Shrenuj & Company is “rationalizing” its workforce after reporting an annual loss. Employees have started tendering their resignations, the Mumbai-based diamond and jewelry manufacturer said. Revenue on a standalone basis slumped 34% to $265.7 million (INR 17.89 billion) in the fiscal year that ended March 31. The company also reported a $6 million loss versus a $3.1 million profit a year ago. Revenue from the diamond segment dived 37%.

JAPAC Lobbies on Synthetics Wording

The Jewelers of America Political Action Committee (JAPAC) criticized a planned change to the Federal Trade Commission’s “Guides for the Jewelry, Precious Metals, and Pewter Industries” that would allow the term “cultured” when referring to synthetic diamonds. A JAPAC-led delegation of jewelers raised the issue with lawmakers in Washington, D.C., and said officials expressed interest in supporting their cause. Delegates also pushed for legislation that would eliminate the sales-tax advantage that online retailers have over brick-and-mortar businesses.

India’s Diamond Trading Advances in May

India’s polished diamond exports jumped 13% year on year to $1.97 billion in May, according to the Gem & Jewellery Export Promotion Council. Polished imports soared 27% to $249.1 million, leaving net polished exports 11% higher at $1.72 billion. Rough imports leapt 15% to $1.52 billion and rough exports increased 7.9% to $127 million, leaving net rough imports 16% higher at $1.4 billion. India’s net diamond account, the difference between net polished exports and net rough imports, declined 3.8% to $329 million.

Antwerp Says Diamonds Are ‘in our DnA’

Antwerp’s diamond industry is aiming to invigorate the Belgian city’s reputation as a global capital for the sector through a new campaign. Entitled ‘Diamonds and Antwerp, it’s in our DnA,’ the initiative celebrates more than 550 years during which the city has been “synonymous” with the precious stones, according to the Antwerp World Diamond Centre. The program will involve a festive diamond-themed period starting in October 2017.

RETAIL & WHOLESALE 	  

Graff Reveals 105-Carat Diamond

Graff Diamonds unveiled a pear-shaped, 105.07-carat, D, flawless diamond at the opening of Graff’s new store at the Place Vendôme in Paris. The gem was cut and polished by the jeweler’s own gemologists from a 314-carat rough stone discovered last year at Gem Diamonds’ Letšeng mine in Lesotho. The diamond has been named the ‘Graff Vendôme’ to commemorate the open

Luk Fook’s Profit Plunges 41%

Hong Kong-based Luk Fook’s sales slumped 12% to $1.81 billion (HKD 14.03 billion) and profit plummeted 41% to $123.9 million in the past fiscal year. The company joined a string of jewelers in the region to be hit by a Chinese economic downturn and fewer tourist arrivals in Hong Kong. Sales were impacted by the strong U.S. and Hong Kong dollars relative to the Renminbi, while favorable exchange rates made locations such as Japan and Korea more attractive shopping destinations for Chinese tourists.

U.S. Jewelry Prices Rise in May

The U.S. consumer price index (CPI) for jewelry grew 3.3% in May from a month ago, according to the U.S. Bureau of Labor Statistics. The index jumped 9.9% from a year earlier. The May CPI for watches also climbed 3.3% over the previous month and spiked 7.2% from a year ago.

Swiss Watch Exports Miss a Beat

Swiss watch exports extended their decline in May because of a slump in shipments of higher-value and precious-metal timepieces. Exports dropped 9.7% to $1.62 billion (CHF 1.55 billion) as shipments of watches made from precious metals dived 24% to $512.14 million. Exports to Hong Kong plunged 17%, continuing the downtrend witnessed in recent months.

Michael Hill to Restructure for Australia Listing

Michael Hill will move its primary stock-exchange listing to Sydney next month and set up a new parent company that will be incorporated in Australia. The jeweler, which traces its roots back to New Zealand, has shifted most of its key functions to Australia. The listing on the Australian Securities Exchange will be effective July 7.

MINING 	  

Rio Tinto Merges Diamonds and Copper

Rio Tinto will combine its diamond and copper divisions to form one product unit within a new group structure. The move comes under Rio Tinto’s new chief executive officer Jean-Sébastien Jacques (pictured), who will succeed Sam Walsh on July 2. Arnaud Soirat, currently head of the company’s aluminum primary metal division, will be the London-based CEO of the merged copper and diamonds division and join Rio Tinto’s executive committee.

Cullinan Yields 121-Carat Whopper

Petra Diamonds discovered a 121.26-carat rough diamond at its Cullinan mine in South Africa. The white, type-II diamond of “exceptional” color and clarity was put up for sale at a tender in Johannesburg this week. It is the last tender for Petra in fiscal 2016, which will end June 30.

Huge Diamond Made Sorter Want to Scream

The 1,109-carat Lesedi La Rona diamond was discovered by a 27-year-old trainee who had worked at Lucara Diamond Corp. for fewer than five months. Tiroyaone Mathaba found the gem while working as a sorter, examining rock and sand produced by large diamond recovery machines, The Daily Telegraph reported. “At first I wanted to scream,” Mathaba was cited as saying. The diamond is expected to sell for more than $70 million at Sotheby’s in London next week.

Gemfields Ruby Sale Fetches $44M

Gemfields is launching a campaign to market rubies from Mozambique after the company reported its largest sale to date for stones from the country’s Montepuez mine. The miner sold $44.3 million of rough rubies and corundum from Montepuez at a June auction in Singapore. The gems fetched an average price of $29.21 per carat from 1.5 million carats.

GENERAL 	 

KP Chair Visits CAR

Ahmed Bin Sulayem became the first sitting Kimberley Process chairman to visit the Central African Republic (CAR). The tour comes after the country resumed diamond exports following a three-year moratorium. Bin Sulayem (pictured, left) met with Faustin-Archange Touadera, President of the CAR (right), and Leopold Mboli Fratran, the newly appointed minister of mines.

Antwerp Trade Selects AWDC Board

The Antwerp World Diamond Centre (AWDC) last week elected its new board, which will appoint the industry bodys president and vice-presidents next week. Vimal Lakhani of Kiran Exports and Nishit Parikh of Diarough were elected unopposed in category 1, representing firms in the highest revenue band. In the two contested categories, Amratlal Chatankumar Shah of Simplex and Rajiv Kothari of Diamstones were selected from the category 2 vote, while Samir Mehta of Snehdiam and Jacques Weisz of Weisz Diamonds Belgium were re-elected for category

Knightley Named Face of Chanel Jewelry

Keira Knightley will front Chanel’s fine jewelry line “Coco Crush,” a role previously filled by models such as Sigrid Agren and Jac Jagaciak. The star, who acted in Bend It Like Beckham and Pirates of the Caribbean previously fronted Chanel’s Coco Mademoiselle perfume and Rouge Coco lipstick. The advertisements were photographed by Mario Testino, a favorite of Chanel. They are scheduled to debut in fall 2016.

ECONWATCH 	  

Diamond Industry Stock Report

Mining stocks were mixed this past week, led by Anglo American (+13.5%), with Rio Tinto (+8.1%) gaining on news of a corporate restructuring. Goldiam International (+28%) stood out in India where stocks were otherwise mostly stable. In the U.S., Signet (+3%) showed signs of a recovery after bad publicity prompted a slide in its share price in previous weeks.

View the detailed industry stock report.

Jun 23 (12:06 GMT) Jun 16 (09:52 GMT) Chng.
$1 = Euro 0.88 0.89 -0.01
$1 = Rupee 67.29 67.23 0.07
$1 = Israel Shekel 3.82 3.87 -0.04
$1 = Rand 14.46 15.34 -0.87
$1 = Canadian Dollar 1.28 1.30 -0.02

Precious Metals Chng.
Gold $1,263.95 $1,304.85 -$40.90 -3.1%
Platinum $974.75 $984.62 -$9.87 -1.0%
Silver $17.32 $17.72 -$0.40 -2.3%

Stock Indexes Chng.
BSE 27,002.22 26,511.51 490.71 1.9%
Dow Jones 17,780.83 17,640.17 140.66 0.8%
FTSE 6,338.64 5,929.23 409.41 6.9%
Hang Seng 20,868.34 20,038.42 829.92 4.1%
S&P 500 2,085.45 2,071.50 13.95 0.7%
Yahoo! Jewelry 956.95 1,057.70 -100.75 -9.5%

Rapaport Weekly Market Comment June 30, 2016

Sentiment weak as Brexit vote adds to economic uncertainty and Hong Kong show disappoints. Stock markets volatile, currencies weak, gold rallies (+4% to $1,320/oz) as investors seek assets with store of value. Polished trading slow with Chinese buyers pushing for deeper discounts and U.S. dealers heading for July vacation. Rough markets stable with 3 to 6 grainers softening at auctions. De Beers sells $560M in June, 1H sales +12% to estimated $3B. Lucara’s 1,109 ct. ‘Lesedi la Rona’ rough diamond does not sell with high bid $61M ($55,000/ct.) at Sotheby’s London. U.S. May jewelry retail sales +4% to $6.3B. AWDC reelects Stéphane Fischler president.

RapNet Data: June 30

Diamonds 1,209,787
Value $8,046,872,741
Carats 1,301,184
Average Discount -29.34%

www.rapnet.com

The RapNet Diamond Index (RAPI™) is the average asking price in hundred $/ct. of the 10 percent best priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet - Rapaport Diamond Trading Network.
Get Current Price List | Subscribe to Rapaport | Join RapNet

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Jun-Jul 29-6 Wed-Wed

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QUOTE OF THE WEEK
There will be continuing volatility in global markets since this is completely uncharted waters. And we have already seen how the price of gold has jumped as investors seek the traditional safe haven. Both of those developments are unfortunate as they may tend to persuade consumers not to buy jewelry.

Ernie Blom, president of the World Federation of Diamond Bourses, on the post-Brexit turmoil

MARKETS 	  

United States: Polished trading stable with dealers filling orders before two-week July vacation period. Steady demand for 1 to 3 ct., G-I, VS2-SI2 diamonds, while larger stones remain weak…

Belgium: Polished trading slow at quiet Hong Kong show and Antwerp market sluggish. Wholesalers avoiding large inventory purchases with concern prices will soften in coming months…

Israel: Market slow as dealers return from Hong Kong show. Overall concern about lagging demand as lower prices fail to stimulate sales…

India: Sentiment weak with dealers disappointed at Hong Kong show. Chinese demand cautious and fewer buyers in Mumbai ahead of U.S. vacation period…

Hong Kong: June show small and quiet. Retailers went to assess market trends and push for bargains. Suppliers willing to compromise on price had relatively busy show...

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RAPAPORT STATEMENT 	 

Brexit Impact

Brexit will not have a sustainable negative impact on polished diamond demand. The EU has not been a dominant diamond consumption center for many years...

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INSIGHTS 	  

The Rough Guide: Whos Buying Where and Why

Rapaport publishes its annual list of manufacturers and dealers buying rough diamonds from the major mining companies...

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FIVE-MINUTE INTERVIEW 	  

Diamonds Driving Growth as Consolidation Continues

The U.S. jewelry market continues to consolidate but there are also areas of growth, says Tony Capuano, president of the Jewelers Board of Trade, in his first interview with Rapaport News...

Click here to read the interview

INDUSTRY 	  

Brexit May Prove Costly for U.K. Jewelers

The cost of manufacturing and importing jewelry to the UK is expected to rise after the nation voted to leave the European Union, the National Association of Jewellers warned. Gold surged and the pound depreciated to its lowest level in more than 30 years after results from the Brexit referendum came in last week. The fallout may also affect the timing of Russia’s sale of a 10.9% stake in ALROSA if market conditions deteriorate, according to Sberbank CIB, the bank organizing the sale.

Shock as Lesedi La Rona Unsold at Auction

Lucaras share price tumbled 15% after the companys 1,109-carat Lesedi La Rona failed to sell at Sotheby’s London. The diamond drew a highest bid of $61 million, below its reserve price, which was not disclosed. Lucara Diamond Corp., which discovered the type-IIa diamond last November, will retain the stone. The diamond is the second largest rough ever found and was expected to fetch more than $70 million at the auction.

De Beers June Sales Valued at $560M

De Beers reported sales fell to $560 million in June from $636 million the previous month. Rough prices were stable and sightholders rejected only lower-quality goods, buyers said. However, De Beers adjusted its assortments resulting in some boxes becoming more expensive. De Beers rough sales jumped 12% year on year to $3.02 billion in the first half of the year, according to Rapaport estimates.

RETAIL & WHOLESALE 	  

U.S. Jewelry Sales Rise in May

U.S. jewelry and watch sales increased 4.2% to an estimated $7.17 billion in May, according to provisional government data for all retail outlets. May was the 13th consecutive month of year-on-year growth. Jewelry sales advanced 4.1% to $6.33 billion, according to Rapaport News estimates. Jewelry and watch sales for the first five months of the year grew 4.7% to an estimated $28.14 billion.

De Beers Opens First Store in Kuwait

De Beers opened its first retail store in Kuwait, adding to its Middle East locations in Dubai and Bahrain. The 145-square-meter outlet in the prestigious ‘Avenues’ shopping mall complements current De Beers stores in London, New York, Paris, Beijing, Shanghai, Hong Kong and Tokyo.

Macys Pins Hopes on New CEO

Macy’s appointed Jeff Gennette as chief executive officer, replacing Terry Lundgren as part of a succession plan to revitalize the U.S. department store chain. Gennette (pictured) has been president of the company since 2014 and will take over the additional role of CEO in the first quarter of 2017. Lundgren will continue as executive chairman and work side-by-side with Gennette.

MINING 	  

ALROSA Eyes Growth in Diamond Reserves

ALROSA plans to increase its diamond reserves by 50.4 million carats. Growth will be guaranteed by exploration of the Zarya field and follow-up exploration at the Aikhal and Verkhne-Munsoye fields, Konstantin Garanin, ALROSAs head geologist, said in an interview cited by Interfax. The miners diamond reserves stood at 1.108 billion carats at the beginning of 2016.

Diamcor Sales Surge, Prices Fall

Diamcor Mining reported the average price of its sales declined to $142.40 per carat in the first fiscal quarter from $159 per carat a year earlier. The company sold 13,385 carats for $1.9 million in the three months that ended June 30, which was more than quadruple the amount sold last year. The diamonds are from the miner’s Krone-Endora at Venetia project in South Africa.

Kimberley Completes First Lerala Rough Sale

Kimberley Diamonds sold its first parcel of rough from the Lerala Diamond Mine in Botswana for an average price of $98 per carat. Only gem-quality goods were sold in the online auction, with the rest added to a sale scheduled for September when the miner expects to see better market conditions. Production resumed at Lerala in May after a nine-month upgrade and recommissioning.

Lucapa Seeks Source of Huge Diamonds

Lucapa Diamond Company has started a drilling program to identify the kimberlite source of a series of exceptionally large diamonds it recovered at the Lulo mine in Angola. These include a 404-carat rough gem which fetched $16 million (AUD 22.5 million) in February. The project will test “high-priority” kimberlite targets at the mine and is scheduled to run through the remainder of 2016.

Dominion Contains Fire at Ekati Mine

Dominion Diamond Corporation said a fire broke out at its Ekati mine in Canada’s Northwest Territories on Thursday, prompting all staff to be evacuated from the processing plant. All personnel were accounted for and no injuries were reported. Damage was limited to a small area and did not affect the main structural components of the operation.

GENERAL 	  

AWDC Backs Fischler for Third Term

The Antwerp World Diamond Centre (AWDC) reelected Stéphane Fischler as president for a third two-year term. Fischler (pictured) was voted in by the new AWDC board which was elected earlier this month. Nishit Parikh was named vice-president.

Diamond Bourse of Canada Ushers in New Board

The Diamond Bourse of Canada has reelected David Gavin as president of its new board of directors. Its Gavins third two-year term. Minesh Shah will serve as vice president.

Law Enforcers Meet on Diamond Trafficking

Crime-catchers from around the world gathered in The Hague this week in what was described as the first global law enforcement forum on the illicit diamond trade. Europol, the European Law Enforcement Agency based in the Dutch capital, hosted the three-day conference to bring together senior law enforcement and customs officials, regulatory bodies, anti-money laundering experts and private sector experts.

ECONWATCH 	  

Diamond Industry Stock Report

Brexit hit global stocks in the immediate aftermath but the FTSE 100 was higher by mid-Thursday GMT. U.K. mining stocks varied greatly in their performance with Petra Diamonds (+9.4%) leading the pack but Gem Diamonds (-8.3%) suffering the steepest slide. Toronto-listed Lucara (-12%) declined on news that its 1,109-carat rough diamond failed to sell at auction. European industry stocks fell, headed by LVMH (-6.1%), while the U.S. and the Far East were mixed.

View the detailed industry stock report

Jun 30 (12:01 GMT) Jun 23 (12:06 GMT) Chng.
$1 = Euro 0.90 0.88 0.02
$1 = Rupee 67.51 67.29 0.22
$1 = Israel Shekel 3.85 3.82 0.02
$1 = Rand 14.81 14.46 0.34
$1 = Canadian Dollar 1.30 1.28 0.02

Precious Metals Chng.
Gold $1,317.28 $1,263.95 $53.33 4.2%
Platinum $1,001.26 $974.75 $26.51 2.7%
Silver $18.38 $17.32 $1.06 6.1%

Stock Indexes Chng.
BSE 26,999.72 27,002.22 -2.50 0.0%
Dow Jones 17,694.68 17,780.83 -86.15 -0.5%
FTSE 6,357.09 6,338.64 18.45 0.3%
Hang Seng 20,794.37 20,868.34 -73.97 -0.4%
S&P 500 2,070.77 2,085.45 -14.68 -0.7%
Yahoo! Jewelry 947.06 956.95 -9.89 -1.0%

Rapaport Weekly Market Comment July 7, 2016

Diamond markets weak as U.S. dealers take vacation. Polished prices softening with June RAPI 1 ct. -0.5%, 0.30 ct. -1.6%, 0.50 ct. -0.4%, 3 ct. -2.4%. Yuan currency cut to 5-year low (6.69/$1) may impact Chinese jewelry imports and tourist spending. Global 2015 rough production -4% to $13.9B, volume +2% to 127.4M cts., average price -6% to $109/ct. Dominion lowers 2016 Ekati production plan -16% to 4.7M cts after $19M fire damage. Petra sells 121.26 ct. Cullinan rough for $6M ($49,480/ct.) to Nemesis International and Golden Yellow Diamonds. U.S. May polished imports +2% to $3.1B, polished exports -1% to $1.4B.

RapNet Data: July 7

Diamonds 1,206,152
Value $7,961,138,543
Carats 1,293,426
Average Discount -29.78%

www.rapnet.com

The RapNet Diamond Index (RAPI™) is the average asking price in hundred $/ct. of the 10 percent best priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet - Rapaport Diamond Trading Network.

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS
July 11-13 Mon-Wed

Rapaport Single Stone Auction

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July 12-20 Tue-Wed

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July 20-27 Wed-Wed

Rapaport Single Stone Auction

New York & Israel

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July 23-25 Sat-Mon

RJO Buying Show 

Booth: 254

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QUOTE OF THE WEEK
Manual methods of cutting, polishing, manufacturing and designing of gems and jewelry need to be substituted with high-end machines and software.

D.S. Rawat, secretary general of the Associated Chambers of Commerce & Industry of India, calls for better working conditions in the countrys gems and jewelry trade.

MARKETS 	  	 

United States: Market quiet with dealers on vacation and NY Diamond Dealers Club closed from July 1 to 11. Some U.S. buyers in India and Israel looking for bargains during slow period…

Belgium: Sentiment relatively weak. Some improvement since Hong Kong show but polished prices continue to soften. Suppliers trying to hold out until August vacation period…

Israel: Polished trading slow. Dealers uncertain about future raise expectations for bourse initiatives to improve trading. Difficult to compete with Indian suppliers on commercial goods as prices soften and profit margins tighten…

India: Sentiment relatively weak since Hong Kong show. Trading slow during summer months with few foreign buyers in Mumbai. Domestic Indian demand cautious with subdued expectations for IIJS Mumbai show (August 4 to😎…

Hong Kong: Market remains challenging with retailers consolidating on sluggish consumer sentiment and slower tourist traffic. China better than Hong Kong but Chinese buyers cautious as yuan currency weakens to five-year low (6.69/$1)…

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RAPAPORT STATEMENT 	  

Diamond Prices Slide in June

Polished diamond prices fell in June and sentiment softened after relatively weak Las Vegas and Hong Kong shows. Steady U.S. demand is supporting the market but overall demand is sluggish. Brexit, the U.S. election and continued weakness in China’s luxury sector are fueling uncertainty...

Click here to read statemen

INDUSTRY 	  

Russia Gains as Global Diamond Output Falls

Global rough diamond production fell 4.2% to $13.88 billion in 2015 recording its first annual decline in three years, Kimberley Process data showed. Output by volume increased 2.1% to 127.4 million carats, while the average price of production dropped 6.2% to $108.96 per carat. Russia extended its lead over Botswana as the world’s largest producer.

ABN AMRO Sees Rough Prices Declining

Rough diamond prices are likely to fall as “fragile” consumer demand for jewelry does not justify higher prices, ABN AMRO said in a report. A surge in rough prices so far this year is not sustainable and may have resulted from traders’ opportunistic behavior, the researchers explained.

Shrenuj Defends Position After Asset Seizure

Shrenuj & Co is seeking legal advice to challenge an order obtained by ICICI Bank to seize its assets and prevent senior management from leaving India. ICICI in May appointed a receiver on Shrenuj Far East Limited, the diamond manufacturer’s Hong Kong subsidiary. The bank then pursued an order to add Shrenuj’s Indian inventory to its control. Shrenuj assured the Bombay Stock Exchnage the situation will not significantly affect the business.

U.S. Polished Imports Rise

U.S. polished diamond imports increased 2.3% year on year to $3.09 billion in May, typically the countrys strongest month when goods arrive for the Las Vegas shows. Polished exports declined 1.1% to $1.37 billion, leaving net polished imports 5.1% higher at $1.72 billion. The U.S. net diamond account jumped 11 percent to $1.82 billion for the month.

RETAIL & WHOLESALE 	  

Tanishq Gains in Gold-Buying Season

Titan Company expects its flagship Tanishq brand gained market share during the Akshaya Tritiya weekend in May, traditionally a time for buying gold. Sales grew while some competitors declined as much as 30%, the company said. The brand had a decent June fiscal quarter despite losing 15 trading days due to a nationwide jewelers’ strike. Stricter rules about presenting identity cards when buying jewelry also impacted sales, Titan said.

Birks Group Returns to Profit

Birks Group swung to a profit of $5.4 million in fiscal 2016 versus a loss of $8.6 million the previous year. Comparable store sales advanced 3% even as total revenue fell 5.2% to $285.8 million, weighed by the strengthening of the U.S. dollar against its Canadian counterpart. The performance was driven by new store designs, new collections and marketing campaigns, Birks explained.

MINING 	  

Large Cullinan Diamond Fetches $6M

Petra Diamonds sold a 121.26-carat rough diamond for $6 million in June. A joint venture between Nemesis International and Golden Yellow Diamonds bought the diamond for $49,480 per carat. The diamond was recovered at the Cullinan mine in South Africa.

Dominion Cuts Ekati Forecast, CFO to Leave

Dominion Diamond Corporation lowered its production guidance at the Ekati mine for this fiscal year to 4.7 million carats from 5.6 million carats previously planned. The mine’s processing plant is shutting for three months following a fire with repairs estimated at $19.3 million.

The miner also announced the departure of chief financial officer Ron Cameron, effective July 15. Cara Allaway, currently vice-president group controller, will temporarily fill the role until Dominion finds a permanent replacement.

De Beers Allowed to Flood Snap Lake

De Beers received permission to flood the tunnels of the Snap Lake mine in Canada’s Northwest Territories after suspending operations due to poor market conditions. The company is considering whether to sell, close, re-open or continue suspension at the mine, which it put onto care and maintenance in December. The mine yielded 1.2 million carats in 2015 but hasnt made money since production began in 2008, according to a Reuters report.

Lucapa Weighs Floating on London’s AIM

Lucapa Diamond Company is considering a listing on Londons Alternative Investment Market. The move comes after the company said it is expanding its operations and seeking the kimberlite source of large stones recovered at its Lulo alluvial mine in Angola. Lucapa said the UK’s Brexit vote has not impacted investor interest in the possible listing.

Gemfields to Hike Ruby Output

Gemfields has secured $65 million of debt financing which will be used to ramp up ruby production and for general expenses. The loan facilities will enable Gemfields to expand its Montepuez operations in Mozambique to 20 million carats a year after recovering 8.4 million carats in the fiscal year that ended June 30, 2015.

GENERAL 	  

London Bourse Well Placed to Cope With Brexit

The London Diamond Bourse (LDB) said it is in a strong position to cope with Brexit because of its access to a bonded warehouse enabling duty-free trading. However, the dive in the pound’s value – falling to a 31-year low against the dollar this week – makes life harder for London dealers because they buy diamonds in dollars and sell in sterling, said Victoria McKay, LDB’s chief operating officer.

Report Cites Poor Pay in India Gem Trade

India’s gem and jewelry industry is suffering from a labor shortage driven by rock-bottom pay and dangerous working conditions, according to a report by the Associated Chambers of Commerce & Industry of India and the Thought Arbitrage Research Institute. Salaries in India’s gem and jewelry sector are half of those in other industries as they stand at an average of $3,740 (INR 252,000) per year versus $7,550 in pharmaceuticals, $7,330 in capital goods and $6,574 in electronics, the report said.

Trump Ring Fetches $300K at Auction

A Harry Winston engagement ring given by Donald Trump to Marla Maples in 1991 sold for $300,000, or $40,268 per carat, at an auction in New York. The emerald-cut, 7.45-carat diamond ring went to an unnamed private collector. The selling price was at the low end of the pre-sale estimate set by Joseph DuMouchelle, the Birmingham, Michigan-based auction house that sold .

ECONWATCH 	  

Diamond Industry Stock Report

Birks Group (+574%) skyrocketed from a relatively low base after reporting positive results. U.S. retail stocks were otherwise generally stable. In the Far East, Chow Sang Sang (+11%) and Luk Fook (+14%) jumped. Peregrine Diamonds (+15%) was the strongest of the mining stocks after promising findings from an assessment at its Chidliak Diamond Project in Canada.

View the detailed industry stock report

Jul 7 (13:01 GMT) Jun 30 (12:01 GMT) Chng.
$1 = Euro 0.90 0.90 0.00
$1 = Rupee 67.39 67.51 -0.12
$1 = Israel Shekel 3.88 3.85 0.03
$1 = Rand 14.65 14.81 -0.15
$1 = Canadian Dollar 1.29 1.30 0.00

Precious Metals Chng.
Gold $1,361.70 $1,317.28 $44.42 3.4%
Platinum $1,087.50 $1,001.26 $86.24 8.6%
Silver $19.92 $18.38 $1.54 8.4%

Stock Indexes Chng.
BSE 27,201.49 26,999.72 201.77 0.7%
Dow Jones 17,918.62 17,694.68 223.94 1.3%
FTSE 6,552.62 6,357.09 195.53 3.1%
Hang Seng 20,706.92 20,794.37 -87.45 -0.4%
S&P 500 2,099.73 2,070.77 28.96 1.4%
Yahoo! Jewelry 940.97 947.06 -6.09 -0.6%

Rapaport Weekly Market Comment July 14, 2016

Market seasonally quiet. Prices stable but financial pressure mounting as polished inventory grows. Inventory levels increased significantly in 1H amid aggressive rough buying and sluggish polished demand. Profit margins and liquidity tightening as activity slowed in July. Share placement values ALROSA at $7.5B as government reportedly sells 10.9% stake for $818M. Okavango 1H rough sales +23% to $284M, volume +35% to 1.75M cts., average price -9% to $162/ct. Petra, Ekapa merge Kimberley mining operations. Belgium June polished exports -17% to $1.2B, rough imports -11% to $945M. Chow Tai Fook 1Q China sales -13%, HK / Macau sales -22%.

RapNet Data: July 14

Diamonds 1,226,470
Value $7,967,552,000
Carats 1,311,985
Average Discount -30.19%

www.rapnet.com

The RapNet Diamond Index (RAPI™) is the average asking price in hundred $/ct. of the 10 percent best priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet - Rapaport Diamond Trading Network.

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS
July 12-20 Tue-Wed
Rapaport Melee Auction

New York & Dubai

View Details July 20-27 Wed-Wed

Rapaport Single Stone Auction

New York & Israel

View Details July 23-25 Sat-Mon

RJO Buying Show 

Booth: 254 Indianapolis, IN View Details

August 4-8 Thu-Mon IIJS Booth #AL026-032

Mumbai

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QUOTE OF THE WEEK
The only way forward for diamond companies to attract affordable funding — given the current slim margins — is that companies acting in the so-called midstream become more corporate.

Pierre De Bosscher, director of De Bosscher Consulting, and former CEO of the Antwerp Diamond Bank (ADB)

MARKETS

United States: Trading quiet with many dealers still on vacation. Activity expected to remain slow through July / August summer period. Steady demand for better-quality, RapSpec A2 diamonds…

Belgium: Sentiment weak as dealers anticipate slow trading throughout 2H. Suppliers preparing for vacation before bourses officially close from August 1 to 22…

Israel: Polished trading slow ahead of August summer vacation. U.S. demand stable with some post-Vegas orders and goods sent on memo…

India: Manufacturer inventory rising as dealers avoid extra supply. Liquidity tight after strong rough buying in 1H. Some polished suppliers offering higher discounts looking to boost transactions and improve cash flow…

Hong Kong: Polished trading weak on slower consumer jewelry demand across Greater China. Major retailers consolidating stores after aggressive decade-long expansion…

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FIVE-MINUTE INTERVIEW 	  

Stuller Hedging its Bet on Synthetics

Rapaport News caught up with Stanley Zale, vice-president of diamonds and gemstones at Stuller, to discuss some of the bold moves Stuller has made this year and the group’s perspective on the retail jewelry market.

Click here to read the interview

INDUSTRY 	  

Sarine Sees Market Turnaround

Sarine Technologies, a supplier of equipment used in diamond manufacturing, expects second-quarter revenue to jump as improved market sentiment boosted sales of its mapping systems. Sales increased to more than $20 million in the second quarter that ended June 30, implying a surge of at least 39% over a year ago. The company expects to report higher profit when it releases full results for the period in the coming month.

Okavango 1H Rough Sales Soar

Okavango Diamond Company’s sales jumped 23% to $284 million in the first half after the volume of rough supplied grew 35% to 1.75 million carats – its highest level since sales began in late 2013. The average price achieved across its auctions fell 9% to $162 per carat during the period. The Botswana parastatal said rough prices recovered in the first quarter but eased back since then as demand has softened.

Belgium Diamond Trade Slumps in June

Belgium’s diamond trade declined in June with polished exports down 17% to $1.15 billion and polished imports declining 12% to $1.22 billion. Rough imports fell 11% to $945.3 million and rough exports slid 16% to $959.8 million, reversing a surge in May. Belgium’s June net diamond account swung to negative $64.4 million versus positive $62.7 million a year earlier, meaning total imports of rough and polished exceeded exports during the month.

Rio Tinto Unveils Red Diamond Coin

Rio Tinto unveiled the first coin that features a rare red diamond from its Argyle mine in Western Australia. Known as the Kimberley Treasure, the coin has a price tag of $762,280 (AUD 1 million) and is being touted by the miner as an investment piece. The coin is made from one kilogram of 99.99% fine gold and features a radiant-cut, 0.54-carat red diamond from the Argyle mine.

RETAIL & WHOLESALE 	  

Chow Tai Fook Revenue Falls

Chow Tai Fook’s sales continued to decline in the first fiscal quarter that ended June 30 due to weak consumer sentiment in Hong Kong and Macau and a drop in tourist arrivals from Mainland China. In Hong Kong and Macau, retail revenue plunged 22% and same-store sales slid 20%. The group’s retail sales in Mainland China fell 13% and same-store sales slumped 17%.

Famed Jeweler Tivol Dies at 92

Legendary jewelry retailer Harold Tivol, chairman of Kansas City-based Tivol, died aged 92, The Kansas City Star reported. Born in Kansas City, Tivol started his career working in his father Charles Tivols store and later took over the reins. He oversaw the company’s growth and received prestigious accolades including the American Gem Society’s Triple Zero award.

MINING 	  

ALROSA Share Sale Raises $818M

Russia raised approximately $818 million (RUB 52.2 billion) from its sale of a 10.9% stake in ALROSA, The Wall Street Journal reported. The government priced the shares at RUB 65 each, a discount of 3.8% to the closing price at the time of the sale. The Russian Direct Investment Fund, Russia’s sovereign wealth fund, and its co-investors bought about half of the shares on offer, the report said.

Petra, Ekapa Combine Kimberley Operations

Petra Diamonds and Ekapa Mining agreed to merge their operations in South Africas Kimberley region in a bid to extend mining in the historic diamond-mining area. As part of the deal, Petra’s Kimberley Underground mines, Ekapa’s tailings operations, the Kimberley Miners Forum and the Kimberley Mines tailings operations have been combined. The venture is 75.9% owned by Petra and its Black Economic Empowerment partners with the remaining 24.1% held by Ekapa Mining.

Stornoway Raises $63M Ahead of Renard Production

Stornoway Diamond Corporation raised $63.3 million (CAD 82.7 million) after shareholders exercised their rights to purchase warrants before they expired on July 8. The funds will be used to complete construction of the Renard mine where ore processing is scheduled to start in September and commercial production is projected for December. The Ottawa-located mine has probable reserves of 22.3 million carats and a 14-year projected lifespan.

Rockwell Back in the Black After Restructuring

Rockwell Diamonds swung to a profit of $438,000 (CAD 570,000) in its first fiscal quarter from a loss of $4 million (CAD 5.2 million) a year earlier. The improvement followed a strategic review that saw the company sell its Angola operation and place one of its South Africa mines on care and maintenance. Rough diamond sales surged 46% to $9.3 million (CAD 12.1 million) and costs were cut by 25%. Rockwell expects rough prices to remain stable but trading to slow during the ongoing “historically quiet” second fiscal quarter.

Record Angola Diamond Lifts Lucapa Sales

Lucapa Diamond Company‘s revenue spiked to $26.2 million versus $2.9 million a year earlier having sold a 404-carat diamond recovered at the Lulo mine in Angola for $16 million (AUD 22.5 million). The average price of the company’s total sales soared to $5,686 per carat during the period, compared with $976 per carat a year ago. Excluding the 404-carat stone, the average price achieved was $2,421 per carat.

ALROSA’s Nyurba Unit Unearths 214-Ct. Diamond

ALROSA recovered a 214.65-carat diamond from Nyurbinskoye placer deposit, the second such special stone found in the area in the past two months. The company said the diamond measures 42.11mm x 34.26mm x 16.07mm, is translucent with a grey hue and classified it as a 4 black clivage/makeable grey rough diamond. The Nyurbinskoye placer deposit is located near the Nyurbinskaya mine, where ALROSA found a 241-carat diamond with similar characteristics in June.

GENERAL 	  

De Beers Launches Beneficiation Program

De Beers has partnered with the South African government and the country’s diamond-cutting industry to launch the ‘Enterprise Development Project for Diamond Beneficiators’ project. The company will supply rough to five historically disadvantaged South African diamond cutters and help them develop to possibly become De Beers accredited buyers and eventually sightholders.

JCK Show to Move Back to The Venetian in 2019

The JCK and Luxury shows in Las Vegas will return to the Sands Expo and Convention Center in 2019. The shows were until 2010 located at the Sands, which is part of The Venetian and The Palazzo resorts, but were moved to the Manadalay Bay hotel complex. The shows, which typically take place in early June, will remain at Mandalay Bay for the next two years.

Antwerp Fair Opens Doors to Foreign Exhibitors

Belgium’s diamond industry is inviting overseas companies for the first time to participate in the Antwerp Diamond Trade Fair. The eighth edition of ‘BrilliAnt’ will take place from January 29 to 31 at the Antwerp Diamond Kring’s trading hall. Organizers will consider applications on a first-come, first-served basis and will only accept companies which are members of a bourse affiliated with the World Federation of Diamond Bourses.

Israel Changes Format for Diamond Week

The next edition of the International Diamond Week in Israel will see a new format, with the Israel Diamond Exchange (IDE) aiming to attract people from a wider range of bourses around the world. Trading will take place on the floor of the bourse in Ramat Gan from Monday, February 13, to Wednesday, February 15, while the final day on Thursday, February 16, will be left open for individual meetings, free tours and other activities organized by the

ECONWATCH 	  

Diamond Industry Stock Report

Jewelry retailers led the increases as most stock indices tracked by Rapaport News climbed this week. Signet (+8.2%) recovered some lost ground after its share price plunged in the previous two months as did Tiffany (+4.6%). The major Hong Kong retailers made similar gains despite Chow Tai Fook (+5.8%) reporting a continued slide in its sales during its first fiscal quarter.

View the detailed industry stock report

Jul 14 (13:01 GMT) Jul 7 (13:01 GMT) Chng.
$1 = Euro 0.90 0.90 0.00
$1 = Rupee 66.87 67.39 -0.52
$1 = Israel Shekel 3.85 3.88 -0.03
$1 = Rand 14.25 14.65 -0.41
$1 = Canadian Dollar 1.29 1.29 0.00

Precious Metals Chng.
Gold $1,321.75 $1,361.70 -$39.95 -2.9%
Platinum $1,085.55 $1,087.50 -$1.95 -0.2%
Silver $20.08 $19.92 $0.16 0.8%

Stock Indexes Chng.
BSE 27,942.11 27,201.49 740.62 2.7%
Dow Jones 18,372.12 17,918.62 453.50 2.5%
FTSE 6,699.81 6,552.62 147.19 2.2%
Hang Seng 21,561.06 20,706.92 854.14 4.1%
S&P 500 2,152.43 2,099.73 52.70 2.5%
Yahoo! Jewelry 969.25 940.97 28.28 3.0%

Rapaport Weekly Market Comment July 21, 2016

Markets weak during summer trading lull. Dealers frustrated by sluggish demand, rising inventory and tight profit. Rough market quiet with lower premiums during ALROSA sale. De Beers 1H production -15% to 13.3M cts., sales +29% to 17.2M cts., prices -14% to $177/ct. ALROSA 1H production -16% to 16.9M cts., sales +21% to 21.7M cts., prices -3% to $117/ct. Rio Tinto 1H production +2% to 8.96M cts. Letšeng 1H sales flat at $106M, average price -16% to $1,899/ct.Israel 1H polished exports -14% to $2.6B. Chow Sang Sang warns 1H profit -50%/-60%. Luk Fook 1Q same-store sales -22%. Morgan Stanley predicts lab-grown diamonds to capture 15% of melee market, melee prices under pressure.

RapNet Data: July 21

Diamonds 1,222,805
Value $7,963,113,027
Carats 1,315,873
Average Discount -30.04%

www.rapnet.com

The RapNet Diamond Index (RAPI™) is the average asking price in hundred $/ct. of the 10 percent best priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet - Rapaport Diamond Trading Network.

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS

July 20-27 Wed-Wed

Rapaport Single Stone Auction

New York & Israel

View Details July 23-25

QUOTE OF THE WEEK
Improved technology and economics, and potentially more receptive consumers have propelled lab grown diamonds into a serious potential disruptor of a jewelry category that has existed for more than a century. Diamond miners can contain the threat, but it could be costly.

Morgan Stanley analysts on publication of a research note ‘Game of Stones’ about the potential impact of lab-grown diamonds.

MARKETS 	  

United States: Trading quiet after dealers returned from vacation. Tough to sell goods that are not typical, commercial-quality diamonds for engagement ring market…

Belgium: Polished market slow. Dealers buying only what they need before vacation begins (August 1 to 22)…

Israel: Sentiment weak with July trading slower than usual. Some suppliers discounting to improve turnover and increase liquidity…

India: Some U.S. and Chinese buyers in Mumbai looking for bargains but trading slow and sentiment weak. Quiet market expected through August…

Hong Kong: Dealer market quiet but stable during seasonally slow period. Jewelers only buying for specific customer demand and not for inventory as retail sales contract…

Click here for deeper analysis

INDUSTRY 	  

De Beers Sales Volume Soars

De Beers sales volume surged 29% from a year ago to 17.2 million carats in the first half as diamond manufacturers restocked inventory that had depleted toward the end of 2015. Average realized prices dropped 14% to $177 per carat, while De Beers price index declined 8% since January. De Beers has scaled back its mining operations in the weak market conditions, resulting in production declining 15% to 13.314 million carats in the first six months of 2016.

ALROSA’s Second-Quarter Sales Buoyant

ALROSA’s rough diamond sales climbed to at least $1.2 billion in the second quarter, up 19% from a year earlier. Sales volume jumped 7% to 9.6 million carats, while the average price advanced 12% to $127 per carat. Brokers noted demand slowed at this week’s July sale as the market has started to cool. ALROSA revised down its production plan for 2016 to 37 million carats, from 39 million carats. Output dropped 6% to 16.9 million carats in the first half.

India’s Rough Trade Slows in June

India’s rough imports plunged 20% to $1.2 billion in June after De Beers reported lower demand reflected typical seasonal patterns during the month. Rough exports surged 27% to $130 million. Polished exports from the world’s largest diamond manufacturing center were flat at $1.85 billion, while polished imports rose 5% to $252 million. India’s net diamond account more than doubled to $519 million, representing the added value of the diamond trade.

Israel’s Diamond Trade Slides amid Weak Sentiment

Israel’s polished diamond exports fell 14% to $2.61 billion in June as shipments dropped to the U.S. and Hong Kong, its two largest markets. Polished imports slid 10% to $1.62 billion. Rough imports were flat at $1.63 billion, while rough exports increased 2% to $1.39 billion. Israel’s net diamond account declined 23% to $756 million. Dealers noted a tough trading environment this year as global demand continues to decline and Israel struggles to maintain its place in the market.

RETAIL & WHOLESALE 	  

Chow Sang Sang Issues Profit Warning

Chow Sang Sang warned profit is expected to plunge 50% to 60% for the first half of 2016 as consumer sentiment in China and Hong Kong weakened. The jeweler attributed the slump to a decline in sales turnover and unrealized losses from its gold hedging activities. The drop in net income would be higher had it not been for a one-off gain of $31.7 million (HKD 246 million) from a disposal of shares in Hong Kong Exchanges and Clearing Limited in 2015.

Luk Fook Extends Quarterly Revenue Declines

Luk Fook Holdings same-store sales at self-operated locations dropped 24% over the three months that ended March 31. The performance was weighed down by a 26% drop in gold sales and a 19% slide in gem-set jewelry from a year ago. The company noted sluggish retail sentiment in Hong Kong and Macau and a steeper drop in Mainland China, where gem-set jewelry products “started to decline.”

Swatch having a Tough Time

Swatch Group net income slumped 52 percent to $266.5 million (CHF 263 million) due to continued global economic volatility and the impact of an “overvalued” Swiss franc. Sales fell 11% to $3.77 billion (CHF 3.72 billion) weighed by its wholesale division. Positive sales in Southeast Asia and the Middle East could not compensate for weakness in Hong Kong and Europe. Swatch singled out the Harry Winston brand after the high-end jeweler posted a strong half-year and record month in June.

Higher Prices Drive U.S. Jewelry Sales Growth

U.S. specialty jewelry store sales grew 2% to $2.79 billion in May as jewelry prices also rose, according to government data. The increase is in line with the uptrend seen in 2016 as sales at specialty jewelers climbed 2.1% to $11.62 billion during the first five months. Jewelry prices, as measured by the consumer price index (CPI), advanced 7% in June from a year earlier. The CPI for jewelry retreated 0.4% month to month in June, after increasing 3.3% in May.

India’s Bluestone Raises $30M to Fund Expansion

Bluestone closed a $30 million (INR 2 billion) round of fundraising to strengthen its position in India’s online jewelry market. The funds will be used to expand the company’s design and manufacturing capacity, and for marketing initiatives. India’s jewelry market is expected to grow from $60 billion currently to $110 billion in the next five years, with online sales projected at $2 billion to $3 billion, according to Bluestone. The company is targeting a four-fold increase in revenue to $149 million (INR 10 billion) by 2018.

MINING 	  

Rio Tinto Cuts Full-Year Rough Output Guidance

Rio Tinto lowered its diamond production forecast for this year following a restructuring that saw the group merge its diamonds and copper businesses. The company now expects to recover between 18 and 21 million carats, which is still above last year’s 17.4 million carats. The group’s diamond production advanced 2% to 8.959 million carats in the first half with output at its Argyle mine up 4% due to a ramp up of underground operations. Production at the Diavik mine fell 5%.

Letšeng Average Prices Slide

Average prices at the Letšeng mine in Lesotho dropped 16% to $1,899 per carat in the first half due to a shift in mining to lower-value but higher-grade areas. Mine operator Gem Diamonds said fewer large diamonds – above 100 carats – were recovered during the period. Letšeng’s revenue was flat at $106.3 million with the volume of sales increasing 19% to 55,959 carats during the six months.

Stornoway Launches Ore Processing at Renard Mine

Stornoway Diamond Corporation started processing ore at its flagship Renard mine, signaling the first diamond production in Canada’s Quebec province. Commercial production will be achieved once processing has been maintained for 30 days at 60% of the plant’s capacity. The mine is expected to reach full capacity within nine months and subsequently produce 1.8 million carats per annum in the first 10 years, at an average valuation of $155 per carat.

Firestone Diamonds Plans First Sale

Firestone Diamonds expects to host its first sale of rough in January as construction at the Liqhobong mine in Lesotho continues ahead of schedule. Development of the mine was 85% complete at the end of June and production is expected to come on stream in the fourth quarter. The mine will take at least six months to reach full capacity of 1 million carats per year and is expected to yield between 380,000 and 450,000 carats in the fiscal year ending June 30.

GENERAL 	  

Lab Grown Diamonds Pose Threat to Melee Prices

Lab-grown diamonds will probably develop into a niche that could take a 15% share of the melee diamond market, according to research by Morgan Stanley. That would impact prices and may result in the mined melee market dropping 12% in value, the analysts said. The research foresees lab-grown diamonds taking a 7.5% share of the larger-gems space but without impacting prices. Morgan Stanley urged ALROSA and De Beers to each invest at least $200 million a year in marketing to combat the threat.

Tiara Gems Buys Million-Dollar Kimberley Treasure

Rio Tinto sold its ‘Kimberley Treasure’ gold and diamond coin to Dubai-based Tiara Gems and Jewellery, a specialist in rare fancy color diamonds and collectibles. The coin, which is made up of one kilogram of 99.99% fine gold and includes a radiant cut, 0.54-carat red diamond from the Argyle mine, was snapped up within 48 hours of becoming available for sale. Rio Tinto did not disclose the actual sale price, but previously put a $762,280 (AUD 1 million) price tag on the piece.

Londons Jewelry District to get $3M Makeover

Hatton Garden business owners approved a $3.3 million (GBP 2.5 million) investment to carry out improvements in London’s famed jewelry district. A Business Improvement District (BID) will be set up in October to carry out the upgrade over the next four-and-a-half years. The development will focus on providing better business connections and representation for the business community, promoting the area, improving the public facilities, and enhancing the environment.

ECONWATCH 	  

Diamond Industry Stock Report

While most of the major indices rose, diamond and jewelry companies had a mixed week on the stock markets. Gains were led by Firestone Diamonds (+19.3%) and Stornoway Diamonds (+17.5%), as both are nearing first production at their respective mine developments. Retailers had a tougher time with Chow Sang Sang (-8.7%) and Luk Fook (-5.1) noting continued sales declines in 2016 reflecting a weak consumer environment in Hong Kong. Swatch Group (-5.8%) noted similar trends as its profit plunged in the first half.

View the detailed industry stock report

July 21 (13:01 GMT) Jul 14 (13:01 GMT) Chng.
$1 = Euro 0.91 0.90 0.01
$1 = Rupee 67.18 66.87 0.31
$1 = Israel Shekel 3.85 3.85 0.00
$1 = Rand 14.29 14.25 0.04
$1 = Canadian Dollar 1.31 1.29 0.01

Precious Metals Chng.
Gold $1,319.28 $1,321.75 -$2.47 -0.2%
Platinum $1,082.50 $1,085.55 -$3.05 -0.3%
Silver $19.35 $20.08 -$0.73 -3.6%

Stock Indexes Chng.
BSE 27,710.52 27,942.11 -231.59 -0.8%
Dow Jones 18,595.03 18,372.12 222.91 1.2%
FTSE 6,701.39 6,699.81 1.58 0.0%
Hang Seng 22,000.49 21,561.06 439.43 2.0%
S&P 500 2,173.02 2,152.43 20.59 1.0%
Yahoo! Jewelry 998.19 969.25 28.94 3.0%

Rapaport Weekly Market Comment July 28, 2016

NY jewelry shows quiet. Better goods stable but market sentiment weak. Dealers cautious ahead of summer vacations in Belgium and Israel. Low expectations for next week’s Mumbai show as gold jewelry sales decline after price surge (+28% in Rupee for 2016). De Beers 1H revenue +8% to $3.3B, underlying earnings +5% to $379M. Petra FY sales +1% to $431M. LVMH 1H jewelry & watch sales +4% to $1.8B. U.S. government guarantees Barclays Bank $125M loan facility for Botswana manufacturing. Chow Tai Fook plans to supply diamonds to U.S. retailers as China jewelry sales slow. Rapaport to offer guaranteed 100% natural, untreated, melee diamonds for sale at August 9-18 auction.

RapNet Data: July 28

Diamonds 1,230,307
Value $7,987,674,845
Carats 1,316,444
Average Discount -30.20%

www.rapnet.com

The RapNet Diamond Index (RAPI™) is the average asking price in hundred $/ct. of the 10 percent best priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet - Rapaport Diamond Trading Network.

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS

August 4-8 Thu-Mon
IIJS

Booth: AL026-032

Mumbai

View Details
August 9-18 Tue-Thu

Rapaport Melee Auction 

New York & Dubai

View Details
August 24-31 Wed-Wed

Rapaport Single Stone Auction

New York & Israel

View Details
September 6-15 Tue-Thu

Rapaport Melee Auction

New York & Hong Kong View Details

QUOTE OF THE WEEK
In the midstream, caution in rough diamond buying is expected to prevail, as the supplies bought by diamantaires in the first half of 2016 are gradually converted into polished.

Anglo American, the parent company of De Beers, on the outlook for the diamond industry in the second half of 2016

MARKETS 	  

United States: Focus on NY Jewelry week but activity slow. JA, Luxury and Antique shows more about networking than trading. Jewelers trying to differentiate themselves to profit in weak…

Belgium: Polished trading relatively busy with suppliers closing deals before three week vacation (August 1 to 22). Dealers happy to take a break as global trading expected to slow until September…

Israel: Polished trading quiet due to summer slowdown and sluggish global demand. Dealers preparing for vacation with Israel Diamond Exchange to close August 15 to 28…

India: Polished trading slow. Buyers selective and uncertain about prices. Few foreign buyers in Mumbai as U.S., Israel and Belgium seasonally quiet…

Hong Kong: Dealer sentiment mixed with some noting slight improvement this week. Chinese demand stable. Hong Kong retail sluggish…

Click here for deeper analysis

ANNOUNCEMENT 	  

Rapaport to offer 100% guaranteed natural, untreated, melee diamonds for sale at August 9-18 auction

"Melee diamond markets are under pressure due to the unethical behavior of dealers who mix synthetic diamonds into parcels of natural diamonds. It is vital that we create legitimate markets for natural diamonds by statistically sample testing melee parcels and, where possible and practical, testing all diamonds in a parcel to ensure that buyers have an opportunity to source 100% guaranteed natural untreated diamonds.

"Rapaport Auctions will be providing thousands of carats of sample tested melee (99% tolerance and 1% significance levels) as well as select parcels of 100% tested melee at our upcoming August 9-18 melee auctions. The diamond trade must protect the promise of diamonds and the integrity of its people by separating natural diamonds from synthetics," said Ezriel Rapaport, Director of Rapaport Global Trading.

INDUSTRY 	  

U.S. Backs Funding for Botswana Diamond Trade

The U.S. government’s Overseas Private Investment Corporation (OPIC) guaranteed a $125 million loan to Botswana’s diamond manufacturing sector. Barclays Bank of Botswana will provide the loan, which is the first tranche of a broader $250 million OPIC loan-guarantee program for Botswana’s diamond industry. Additional lenders may join the program in the future.

Botswana Beneficiation Still Viable, Says Minister

Diamond beneficiation is still a viable project in Botswana despite lower supply to the country’s manufacturers, Kitso Mokaila, the Minister of Minerals, Energy and Water Resources, told parliament. The number of diamond factories operating in Botswana has fallen to 19 factories employing just 2,000 people as market conditions weakened, Mmegi cited Mokaila as saying. Rough supply to local manufacturers slumped 46% to $502.2 million in 2015 but sales were “off to a good start” this year fetching $343 million in the first four sales, according to Mokaila.

Fischler Elected VP of World Diamond Council

The World Diamond Council (WDC) named Stephane Fischler as its vice-president (VP) to succeed Andrey Polyakov as president in 2018. Fischler (pictured), a partner in Fischler Diamonds and president of the Antwerp World Diamond Centre, is also VP of the International Diamond Council and the Diamond Development Initiative. Ronnie Vanderlinden was reelected treasurer of the WDC for a second term, while Udi Sheintal will remain its corporate secretary.

Jewelers of America Enlists New Directors

Jewelers of America (JA) elected Mike Alexander, a vice-president at Jewelers Mutual Insurance Company (pictured, right), and Ronda Daily, CEO of Bremer Jewelry (left), as board members until 2019. The new directors were voted in at JA’s semi-annual board meeting in New York on July 23, replacing outgoing directors Brian Mann of David Mann, Inc, and Teresa Saldivar of Teresa’s Jewelers.

RETAIL & WHOLESALE 	  

Chow Tai Fook Targets U.S. Diamond Sales

Chow Tai Fook is looking to supply rough and polished diamonds to U.S. retailers as the jeweler seeks new revenue streams following a sales slump in China and Hong Kong. The jeweler plans to start the enterprise within a year and has set up a team to conduct feasibility studies.

Bulgari Lifts LVMH Jewelry Sales

Jewelry and watch sales at LVMH Moët Hennessy Louis Vuitton increased 4% to $1.77 billion in the first half of 2016. The business unit’s profit from recurring operations was flat at $225.3 million. Growth was driven by the Bulgari brand which “outperformed” the market, while TAG Heuer was also singled out as it gained market share in part due to the success of its Connected smartwatch.

Swiss Watch Exports Continue to Slide

Swiss watch exports fell 16% to $1.66 billion (CHF 1.64 billion) in June, the steepest drop this year. Shipments of precious-metal watches dropped 31% to $497.5 million with all other major categories suffering a decline. Orders from Hong Kong, Switzerland’s largest trade partner for watches, fell 29% to $187.9 million, the 17th consecutive month of decline. The worst-performing price category was the $203 (CHF 200) to $506 (CHF 500) range where exports slid 20%.

India Eases Rules on Controversial Excise Tax

The Indian government relaxed its rules regarding a 1-percent excise duty on jewelry that led to a six-week strike earlier this year. Under the new terms, businesses with revenue of up to $2.2 million (INR 150 million) are exempt from the tax, whereas the previous cut-off was $1.8 million (INR 120 million). The change comes after the government set up a committee to interact with the jewelry trade over the tax.

MINING

De Beers Earnings Rise

De Beers reported revenue grew 8% to $3.27 billion and underlying earnings rose 5% to $379 million in the first half of 2016. The miner benefited from stronger rough diamond demand, tighter cost controls and favorable exchange rates. Rough sales jumped 11% to $3.1 billion, spurred by a 29% leap in sales volume which outweighed a 14% drop in average prices. Rough demand improved as manufacturers and dealers replenished inventories that were reduced in the second half of last year, the company said

Snap Lake Mine up for Sale

De Beers is looking to sell the Snap Lake mine in Canada after suspending operations in December. The company has hired Bank of Montreal to market the asset which has failed to make money since production started in 2008, according to Reuters. In June, De Beers received approval to flood the mine’s tunnels, which would reduce its maintenance costs. The flooding will likely occur in the fourth quarter if no buyer is found.

Petra Sales Rise Despite Depressed Prices

Petra Diamonds revenue climbed 1.4% to $430.9 million in the fiscal year that ended June 30 as increased sales volume outweighed a drop in rough prices. Diamond sales by weight jumped 9% to 3.4 million carats and prices fell 6% during the year. Production jumped 16% to 3.7 million carats, above the company’s upper guidance of 3.65 million carats. Petra expects production to rise to between 4.6 million and 4.8 million carats in fiscal 2017.

Diamcor Earnings Fall Deeper Into the Red

Diamcor Mining reported its net loss plummeted 80% to $4.3 million (CAD 5.6 million) in the fiscal year ending March 31. Sales jumped 52% to $3.5 million (CAD 4.7 million) as plant efficiencies and processing volumes improved. However, operating expenses rose 53% to $3.7 million as it ramped up operations at the Krone-Endora at Venetia project in South Africa.

GENERAL 	  

Sarine Pens Deal with Singapore Retailer

Sarine Technologies struck a deal with Soo Kee Group to provide its digital diamond display equipment at the Singapore-based jeweler’s Love & Co. stores. The ‘Sarine Profile’ technology will be implemented in the LVC Lovemark diamond collection at Love & Co. stores in Singapore and Malaysia, marking the products first roll out in Asia. The equipment enables jewelers to integrate Sarine’s digital platform to its inventory and communications systems.

RJC, Miners Advance Work on Responsible Jewelry

The Responsible Jewellery Council (RJC) and the Alliance for Responsible Mining (ARM) renewed an agreement to strengthen their collaboration in promoting and facilitating responsible jewelry supply chains. The two organizations said they share objectives to promote responsible precious-metals supply chains and will continue cooperating to ensure their standards and assurance models are “mutually supportive.” They also aligned aspects of their assurance systems.

Pippa Middleton Ring Spurs Asscher Cut Craze

Asscher-cut diamonds have soared in popularity since Pippa Middleton received an engagement ring with the fancy shape, according to 77 Diamonds. Middleton, the Duchess of Cambridge’s younger sister (pictured), got engaged to hedge fund manager James Matthews last weekend. Matthews proposed with an Asscher-cut diamond thought to weigh about 4 carats.

ECONWATCH 	  

Diamond Industry Stock Report

U.K.-listed miners had a strong week, led by Stellar Diamonds (+35%), which gained from a low base on news of joint ventures in Guinea and Liberia. Anglo American (+6.3%) rose as the miner reported a narrower loss and lower net debt. Mining stocks elsewhere were mixed, with declines headed by True North Gems (-6.3%). LVMH (+8.2%) led European luxury retail stocks following solid results.

View the detailed industry stock report

July 28 (11:36 GMT) July 21 (13:01 GMT) Chng.
$1 = Euro 0.90 0.91 -0.01
$1 = Rupee 67.04 67.18 -0.14
$1 = Israel Shekel 3.82 3.85 -0.03
$1 = Rand 14.26 14.29 -0.03
$1 = Canadian Dollar 1.32 1.31 0.01

Precious Metals Chng.
Gold $1,341.95 $1,319.28 $22.67 1.7%
Platinum $1,145.69 $1,082.50 $63.19 5.8%
Silver $20.37 $19.35 $1.02 5.3%

Stock Indexes Chng.
BSE 28,208.62 27,710.52 498.10 1.8%
Dow Jones 18,472.17 18,595.03 -122.86 -0.7%
FTSE 6,736.61 6,701.39 35.22 0.5%
Hang Seng 22,174.34 22,000.49 173.85 0.8%
S&P 500 2,166.58 2,173.02 -6.44 -0.3%
Yahoo! Jewelry 1,020.52 998.19 22.33 2.2%