Rapaport Weekly Market Comment August 11, 2016

India IIJS show better than expected for gold jewelry but weak for diamonds. Manufacturing profit under pressure with relatively high rough prices and sluggish polished demand. Rising expectations for Hong Kong show. U.S. supporting the market but large retailers dominating demand and squeezing suppliers. U.S. independent jewelers exiting with 460 business closures (+88%) in 2Q. Blue Nile 2Q sales flat at $114M, profit -9% to $2M. Lucara 2Q revenue +169% to $141M, profit +436% to $46M after selling 813 ct. rough for $63M ($77K/ct.). Sarine 2Q revenue +45% to $21M, profit +122% to $6M. U.S. June polished imports flat at $1.7B. Hong Kong 1H polished imports -9% to $8.5B.

RapNet Data: August 11

Diamonds 1,241,001
Value $7,912,102,824
Carats 1,333,486
Average Discount -30.26%

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.

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QUOTE OF THE WEEK
In many ways, India defines our past in the diamond industry and I have no doubt that it will also help define our future.

Bruce Cleaver, CEO of De Beers, speaking at the opening of IIJS in Mumbai

MARKETS 	  

United States: Polished trading quiet. Jewelers insisting on memo rather than buying for inventory. Larger jewelry retail chains looking for goods but pushing for higher discounts…

Belgium: Antwerp diamond bourses closed until August 22 for summer vacation…

Israel: Polished trading very quiet ahead of summer vacation period. Israel Diamond Exchange to close August 15 to 28. Dealers cautious due to slow demand and tightening credit conditions…

India: Trading at IIJS show focused on gold rather than diamonds. Gold jewelry demand steady ahead of Diwali season but jewelers cautious after gold price jumps +26% to INR 31,400/10 gram…

Hong Kong: Slight improvement as dealers return from vacation and prepare for September Hong Kong show.Chinese demand improving for dossiers with retailers looking for bargains…

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INSIGHTS 	  

Can India Tap its Diamond Jewelry Potential?

The India International Jewellery Show (IIJS), which took place in Mumbai this week, reflected a cautious local diamond and jewelry trade, even if sentiment was better than expected. Suppliers arrived with low expectations as a month-long strike among jewelry retailers, high gold prices, domestic and global uncertainty, and sluggish polished diamond demand had taken their toll...

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INDUSTRY 	  

Jewelry Business Closures Accelerate

Jewelry business closures in North America grew 89% in the second quarter, the Jewelers Board of Trade reported. Some 475 companies in the U.S. and Canada closed during the period, including 21 via mergers or acquisitions and 12 through bankruptcy. Most business closures were in the U.S. as terminations there soared 88% to 460. In the first six months of 2016, closures climbed 59% to 867 in North America and by 60% to 840 in the U.S.

Sarine Sales Surge on Stronger Market

Sarine Technologies revenue rose 45% to $20.9 million in the second quarter as an improvement in rough diamond trading stimulated demand for its manufacturing equipment. Profit more than doubled to $6 million. The company also sold a record number of its Galaxy mapping systems. Positive market trends continued to drive profitability in the diamond midstream during the second quarter, Sarine said.

Hong Kong Polished Imports Continue to Slide

Hong Kong’s polished diamond imports fell 9% in the first six months of 2016, according to the Diamond Federation of Hong Kong. Shipments dropped to $8.52 billion, extending a downward trend that has persisted since the start of last year. A slump in imports from Belgium, India and Israel outweighed a slight increase in imports from the U.S. Polished exports were flat at $6.65 billion, meaning net polished imports, calculated as imports minus exports, fell 31% to $1.87 billion.

De Beers to Launch India Marketing Campaign

De Beers will run a marketing campaign in India during this year’s Diwali festival (October 30), the nation’s key selling season. The company initiated the campaign by signing a memorandum of understanding with the Gem & Jewellery Export Promotion Council at the India International Jewellery Show in Mumbai this week. The initial focus will be on smaller diamonds targeting diamond jewelry gifts to young married women.

RETAIL & WHOLESALE 	  

Blue Nile Sales Below Expectations

Blue Nile’s revenue was flat at $113.8 million in the second quarter ending July 3, below the online jeweler’s forecast of $114 million to $117 million. U.S. engagement ring sales fell 4% to $62.6 million. Sales slowed in June due to global market uncertainty after a relatively strong period in April and May, the company said.

Pandora Sales Rise

Pandora’s revenue grew 20% to $648 million (DKK 4.33 billion) in the second quarter driven by higher sales volume in all its operating regions. Profit jumped 34% to $182.9 million. Prices were mostly stable, while revenue increased 25% in local currency terms. Revenue from self-branded stores rose 39% as the company plans to accelerate the expansion of its concept stores. More than 300 new stores will be opened in 2016 compared with a previous plan to add approximately 275.

Michael Hill CEO Steps Down

Mike Parsell has resigned as chief executive officer of Michael Hill International after 16 years at the helm of the Australia-based retailer. Parsell (pictured) has seen the jeweler expand from just three stores in New Zealand when he joined the company 34 years ago to a chain of more than 300 outlets across Australia, Canada, New Zealand and the U.S. Phil Taylor, chief financial officer, will serve as acting CEO while the company searches for a permanent replacement.

Acquisitions Spur Buffett’s Retail Growth

Berkshire Hathaway, the conglomerate chaired by Warren Buffett, said retail revenue increased 6% to $3.81 billion in the second quarter of 2016. Growth was driven by acquisitions of an automotive dealer and a motorcycle gear retailer, while the business unit also includes jewelry stores Borsheims, Helzberg and Ben Bridge.

MINING 	  

Lucara’s Sales Lifted by Record 813ct. Diamond

Lucara Diamond Corp.’s revenue nearly tripled to $191.4 million in the first half of 2016 boosted by its sale of the 813-carat ‘Constellation’ diamond for a record-breaking $63.1 million. The average selling price achieved by the company jumped to $1,233 per carat from $340 per carat, while profit more than quadrupled to $63.3 million. The board declared a special cash dividend for the quarter in light of the strong results.

Cullinan Mine Yields 139ct. Rough Diamond

Petra Diamonds recovered a 138.57-carat, D-color, type IIa rough diamond, the latest in a string of large stones found at its Cullinan mine in South Africa. The company will offer the diamond at its sale in Johannesburg toward the end of the month. Last month, Petra sold a 121.16-carat diamond for $6 million, or $49,480 per carat.

Severe Snow Disrupts Letšeng Operations

Gem Diamonds said operating costs may rise as severe snowfall and winds restricted access to its Letšeng mine in Lesotho and caused its processing plant to operate at reduced rates. The company maintained its production guidance of 107,000 carats to 109,000 carats for the year but cautioned it may need to re-assess its guidance for ore tonnes treated and costs.

Diamond Miner Trans Hex Faces Takeover Bid

A consortium of three Trans Hex Group shareholders joined together to make a mandatory cash offer to acquire the diamond miner. Cream Magenta 140 Proprietary, Metcap 14 Proprietary Limited and RAC Investment Holdings Proprietary Limited already hold 72.28% of the miner’s shares and intend to buy the remainder. Cape Town-based Trans Hex is focused on mining in South Africa and Angola.

GENERAL 	  

Average Engagement Ring Price Falls

The average price of an engagement ring in the U.S. fell 0.5% to $3,360 in the second quarter, according to The Wedding Report. The average price of wedding bands declined by the same margin to $1,246 during the period. The average cost of weddings followed a similar trend, slipping 0.4% to $26,519, the quarterly report stated.

Jewelry Crime Drops as Security Improves

Losses from crime against the diamond, jewelry and watch industry decreased 7% to $30.8 million in the first half of the year, according to the Jewelers’ Security Alliance (JSA). The number of crimes fell from 562 to 528. Improved security and greater sharing of information on crimes and suspects contributed to the decline, the JSA said.

IIDGR Strikes Deal with U.K. Trade Body

The International Institute of Diamond Grading & Research (IIDGR) agreed to offer members of the U.K.’s National Association of Jewellers (NAJ) preferential terms at the De Beers subsidiary’s U.K. laboratory. The partnership gives NAJ members access to a “first-class diamond grading service at the very best rates,” said Michael Rawlinson, the trade body’s chief executive officer.

ECONWATCH 	  

Diamond Industry Stock Report

Sothebys (+22%) led U.S. industry stocks this past week on strong earnings. Other stateside U.S. shares were generally solid. Mining stocks were more mixed, with Rockwell Diamonds (+11%) leading the gains while Kennady Diamonds (-8.4%) lost value. In India, Gitanjali Gems (+27%) soared but most other industry share prices were lower.

View the detailed industry stock report

Aug 11 (12:04 GMT) Aug 4 (11:25 GMT) Chng.
$1 = Euro 0.90 0.90 0.00
$1 = Rupee 66.84 66.93 -0.09
$1 = Israel Shekel 3.81 3.83 -0.01
$1 = Rand 13.37 13.75 -0.38
$1 = Canadian Dollar 1.30 1.31 0.00

Precious Metals Chng.
Gold $1,345.30 $1,360.28 -$14.98 -1.1%
Platinum $1,171.75 $1,159.50 $12.25 1.1%
Silver $20.16 $20.40 -$0.24 -1.2%

Stock Indexes Chng.
BSE 27,859.60 27,714.37 145.23 0.5%
Dow Jones 18,495.66 18,355.00 140.66 0.8%
FTSE 6,845.56 6,720.87 124.69 1.9%
Hang Seng 22,580.55 21,832.23 748.32 3.4%
S&P 500 2,175.49 2,163.79 11.70 0.5%
Yahoo! Jewelry 657.11 997.54 -340.43 -34.1%

Rapaport Weekly Market Comment August 18, 2016

Diamond markets quiet and conservative. Buyers selective and price sensitive. Dealers hoping Sept. Hong Kong show will stimulate stronger 4Q polished trading. Chinese consumer confidence stable but Hong Kong luxury continues to slide. Polished suppliers under pressure with rising inventory and tight liquidity. Israel’s FIBI bank raises collateral requirements for diamond loans. Steady demand for 1 to 2.99 ct., D-I, SI1-I2 but VS+ softening. Stars and melee weak with sluggish demand and concerns about synthetics. Titan 1Q sales +4% to $416M, profit -16% to $19M. Gem Diamonds 1H revenue -8% to $109M, loss of $16M vs. profit of $26M. Botswana 2Q rough exports +16% to $980M.

RapNet Data: August 18

Diamonds 1,239,730
Value $7,867,352,662
Carats 1,323,398
Average Discount -30.24%

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.

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QUOTE OF THE WEEK
The diamond engine of growth has run out of steam.

Economists Keith Jefferis and Sethunya Sejoe of Econsult on the future of Botswanas diamond trade

MARKETS 	  

United States: Slight trading improvement but polished buyers in summer mode. Demand selective with lower prices spurring buyer interest…

Belgium: Market quiet with bourse services closed until August 22…

Israel: Very little activity with the Israel Diamond Exchange closed for summer vacation until August 28…

India: Slow trading and weak sentiment. Dealers preparing for Hong Kong show. Polished inventory levels high as manufacturing continues but demand slowed in the past few months…

Hong Kong: Polished trading sluggish with some improvement as dealers prepare for the September show. Smaller suppliers discounting to maintain liquidity…

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INDUSTRY 	  

NY Firm to Launch Diamond Industry Lending

Excelsior Capital Ventures will start lending to diamond and jewelry companies on October 3, aiming to fill an estimated $6 billion liquidity shortfall within the trade. The New York-based firm plans to co-lend with major banks that are already in the diamond sector and grow its exposure to $1.5 billion by 2019. Excelsior will loan up to $20 million to each borrower against diamond and precious-metal inventories as collateral.

Israeli Bank Tightens Lending Terms

The Israel Diamond Exchange (IDE) pledged to contest a decision by First International Bank of Israel (FIBI) to tighten its lending standards for the trade. FIBI raised collateral requirements for the diamond industry, prompting IDE president Yoram Dvash to assure bourse members his team will lobby state authorities to persuade the bank to retreat. The IDE has set up a committee to that effect and will hold an emergency meeting after its members return from summer vacation.

India’s Jewelers Applaud Simpler Tax System

India’s jewelry industry welcomed the goods and services tax (GST) passed by parliament this month even as there remain concerns about its implementation. GST is expected to be adopted on April 1, 2017, the start of India’s financial year, and will consolidate several payments that are made currently into just one charge. The new system will free up the movement of goods, said G.V. Sreedhar, chairman of the All India Gems & Jewellery Trade Federation.

Blue Diamonds Buoy Fancy Color Prices

Fancy color diamond prices edged up 0.4% in the second quarter due to a notable increase in demand for blues and pinks, according to the Fancy Color Research Foundation (FCRF). Blue diamond prices rose 1.1% and pinks increased 0.7%, offsetting a 0.5% decline in fancy yellow prices. Fancy vivid blue diamond prices jumped 8.6%.

RETAIL & WHOLESALE 	  

U.S. Jewelry Store Sales Decline

U.S. specialty jewelry store sales fell 2% to $2.2 billion in June, according to the U.S. Census Bureau. The decline contrasts with growth in previous months as sales increased 1% in the first half of the year. Sales have been buoyed by higher prices as the U.S. consumer price index (CPI) for jewelry rose 4% in July from a year earlier, according to the Bureau of Labor Statistics. The index was little changed compared to June, while the CPI for watches rose 2% sequentially.

Macys Shutting 100 Stores

Macy’s will close 100 of its 728 stores in early 2017 to focus on better-performing outlets and strengthen its digital business. While the stores slated for closure generate $1 billion in annual sales, their profitability declined in recent years and the return on investment is no longer adequate, the company said. Macy’s sales slipped 4% to $5.87 billion in the second fiscal quarter ending July 30, while profit plunged 95% to $11 million.

Titan Sales Sluggish on ‘Poor’ Wedding Season

Titan Company’s revenue increased 4% to $415.9 million (INR 27.83 billion) in the first fiscal quarter ending June 30. Growth was slower than expected as the Bangalore-based jeweler said sales were diminished by a disappointing wedding season and the recent rise in gold prices. Jewelry sales grew 3% to $319.6 million, while profit dropped 16% to $18.9 million.

Chow Tai Fook Unveils ‘4Ts’

Chow Tai Fook launched its ‘4Ts’ campaign enabling customers to track the journey of a diamond from its source. The ‘Ts’ stand for “traceable, transparent, truthful and thoughtful” and are being pitched by the Hong Kong jeweler as a new industry standard. Chow Tai Fook also developed patented technology that enables it to inscribe on each diamond a unique serial number called the ‘T mark.’ The inscription will be applied to most of its diamonds starting from 0.15 carats, SI clarity and K color.

MINING 	  

Mining Outlook Weighing on Botswana Growth

Botswana’s gross domestic product contracted 0.2% in the 12 months to March, reflecting a 21% drop in mining production, the Bank of Botswana said. The downward trend comes as rough diamond exports declined 1.8% to $1.8 billion in the first half of 2016, despite increasing 16% in the second quarter. The shaky outlook for mining means Botswana cannot rely on diamonds for economic growth, warned economists Keith Jefferis and Sethunya Sejoe of Gaborone-based consultancy Econsult

Gem Diamonds Slides to 1H Loss

Gem Diamonds reported a loss in the first half of 2016 due to a $40 million impairment charge related to downsizing operations at the Ghaghoo mine in Botswana. Production at Ghaghoo has been cut to 300,000 tonnes per year, from an earlier plan of 720,000 tonnes, due to weak market conditions. The miner made a loss of $15.9 million in the six month period versus a profit of $25.6 million the previous year. Revenue dropped 7.5% to 109.1 million.

First Gahcho Kué Sale Slated for 4Q

Mountain Province Diamonds will hold its first sale of rough from the Gahcho Kué mine in Canada in the fourth quarter. Sales will then take place every five weeks, the company said. The mine, which is 51% owned by De Beers and the rest by Mountain Province, is on track to achieve commercial production in January 2017 and is expected to yield 4.5 million carats a year over a 12-year mine life.

ALROSA Joins Responsible Jewellery Council

ALROSA has signed up for the Responsible Jewellery Council (RJC), implying it will undergo an independent audit of its operations within two years to gain RJC certification. The appraisal covers finance and legal compliance, as well as ethical criteria such as anti-corruption measures, human rights, labor conditions, social responsibility and environmental protection.

GENERAL 	  

Young Diamantaires Group Gaining Momentum

A new initiative to encourage younger diamantaires’ involvement in the industry is gaining traction ahead of its first major networking event in September. The ‘Young Diamantaires’ project grew out of a need to get trade members aged below 45 involved in the World Federation of Diamond Bourses (WFDB). An informal meeting was held in May at the World Diamond Congress in Dubai and a social gathering has been scheduled for September 15 during the Hong Kong Jewellery and Gem Fair.

Diamond Miners Appoint Key Executives

De Beers appointed Nigel Simson (pictured) senior vice-president of its product planning operation at Global Sightholder Sales (GSS). The new unit will ensure products and services are more tailored to client needs. Bernard Bradley from Volvo Car Group will replace Simson as senior VP of GSS. In other moves, Dominion Diamond Corp. appointed former De Beers executive Tim Dabson and mergers and acquisitions specialist Trudy Curran to its board. Pangolin Diamonds Corp., a Botswana-focused exploration company, hired former De Beers CEO Gareth Penny as non-executive chairman.

Gold Jewelry Demand Declines

Global demand for gold jewelry dropped 9% to $17.98 billion in the second quarter, according to the World Gold Council (WGC). By volume, demand slumped 14% to 444.1 tonnes. Demand in the first half sank to $36.3 billion, its lowest first-half level since 2010. The decline was driven by weak consumer sentiment in China and the Middle East while gold prices rallied during the period, the WGC said.

Diamond Grower Scio Widens Losses

Scio Diamond Technology recorded a loss of $1.3 million in the first fiscal quarter, reflecting a 44% decline from a year earlier. The lab-grown diamond producer cautioned its future remains uncertain even as revenue advanced 7.5% to $185,061 during the period. The effects of a water leak at its factory in December, and other risks associated with being a new business, “raise substantial doubt about the company’s ability to continue as a going concern,” management said.

ECONWATCH 	  

Diamond Industry Stock Report

Macys (+19%) led rallying U.S. retail stocks this week on news it is streamlining its bricks-and-mortar business. JCPenney (+17.5%) also unveiled a revamped strategy and saw its share price climb, while strong results lifted Kohls (+19%). Mining stocks were more mixed, led by Rockwell Diamonds (+10%), which continued its recent upward trend.

View the detailed industry stock report
Aug 18 (12:04 GMT) Aug 11 (12:04 GMT) Chng.
$1 = Euro 0.88 0.90 -0.01
$1 = Rupee 66.83 66.84 -0.01
$1 = Israel Shekel 3.78 3.81 -0.03
$1 = Rand 13.35 13.37 -0.02
$1 = Canadian Dollar 1.28 1.30 -0.02

Precious Metals Chng.
Gold $1,350.45 $1,345.30 $5.15 0.4%
Platinum $1,123.40 $1,171.75 -$48.35 -4.1%
Silver $19.75 $20.16 -$0.41 -2.0%

Stock Indexes Chng.
BSE 28,123.44 27,859.60 263.84 0.9%
Dow Jones 18,573.94 18,495.66 78.28 0.4%
FTSE 6,858.17 6,845.56 12.61 0.2%
Hang Seng 23,023.16 22,580.55 442.61 2.0%
S&P 500 2,182.22 2,175.49 6.73 0.3%
Yahoo! Jewelry 665.81 657.11 8.70 1.3%

Rapaport Weekly Market Comment August 25, 2016

Far East markets waking up with increase in activity as dealers prepare for Hong Kong show. Far East demand for larger 3 to 8 ct. stones getting more attention with D-F, IF-VVS goods becoming more interesting after price declines in recent months. U.S. market uncertain with some action in New York during DDC’s India Week. Signet 2Q sales -3% to $1.4B, profit +6% to $82M as private equity firm Leonard Green invests $625M. Tiffany 2Q sales -6% to $932M, profit +1% to $106M. Michael Hill FY revenue +10% to $421M, profit -29% to $15M. Dominion 2Q sales -24% to $160M. Swiss watch exports -14% to $1.7B in July. India July polished exports +1% to $1.7B, rough imports +27% to $1.4B.

RapNet Data: August 25

Diamonds 1,245,429
Value $7,946,242,415
Carats 1,332,049
Average Discount -30.40%

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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QUOTE OF THE WEEK
This holiday season, all eyes are on the ears.

Mark Light, CEO of Signet Jewelers, envisages strong interest in earrings this year.

MARKETS 	   	 

United States: Improved activity during India Week in New York Diamond Dealers Club (August 22 to 25). Overall polished market still cautious…

Belgium: Market slowly opening up as dealers return from vacation. Trading expected to be stable until Hong Kong Jewellery and Gem Fair (September 13 to 19)…

Israel: Trading quiet with the Israel Diamond Exchange closed until August 28…

India: Polished trading improving ahead of Hong Kong show with dealers focused on VS-SI goods. Steady U.S. and Chinese demand with a number of foreign buyers in Mumbai looking for bargains…

Hong Kong: Trading improving after long, slow summer. China and other Asian markets steady. Local Hong Kong demand slow…

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INSIGHTS 	  

Dubai Probing Rough Diamond Values

While the Kimberley Process chair is focused on advancing forums on rough valuation, questions linger about the UAEs own diamond trade....

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INDUSTRY 	  

Rio Tinto Quits Indian Mining Project

Rio Tinto has terminated its Bunder diamond mining project in India to conserve cash and cut costs. The venture in the central Indian state of Madhya Pradesh was tipped as the first significant diamond mine in India, with operations expected to commence in 2019. The miner now intends to close all project infrastructure by the end of the year.

India’s Polished Exports Rise in July

India’s polished diamond exports climbed 1% to $1.65 billion in July, according to the Gem & Jewellery Export Promotion Council. Polished imports added 2% to $272.5 million, leaving net exports 0.6% higher at $1.38 billion. Rough imports grew 27% to $1.4 billion and rough exports jumped 85% to $110.3 million, meaning net rough imports rose 24% to $1.28 billion. India’s net diamond account, the difference between net polished exports and net rough imports, plummeted 70% to $100.1 million.

ALROSA to Auction 402ct. Rough Diamond

ALROSA will offer a 401.97-carat rough diamond and a 40.25-carat polished stone at separate sales this month in Vladivostok, a city near Russia’s border with China. The miner recently opened a base in Vladivostok to help its sales to the Asia-Pacific region. A total of 19 diamonds, with a combined weight of 1,098 carats, will be up for sale at the rough auction until September 3. A tender of 28 polished diamonds will be held at the same time.

Swiss Watch Exports Continue to Fall

Swiss watch exports slumped 14% to $1.71 billion (CHF 1.64 billion) in July. Shipments to Hong Kong dived 33% and orders from the U.S. declined 15%. The high-end categories slowed, with precious-metal watch shipments falling 27%, its fifth consecutive monthly decline. Exports of timepieces priced above $3,119 (CHF 3,000) slumped 16%.

RETAIL & WHOLESALE 	  

Private Equity Firm Invests $625M in Signet

Signet Jewelers announced a $625 million investment from private equity firm Leonard Green & Partners (LGP). The deal is expected to close in the third fiscal quarter of 2017, with Jonathan Sokoloff, one of LGP’s managing partners, joining Signet’s board. Signet also reported sales fell 2.6% to $1.37 billion in the second fiscal quarter ending July 30, while profit increased 32% to $81.9 million. The jeweler adjusted its full-year guidance downward.

Tiffany Sales Slide in Challenging Environment

Tiffany & Co.’s sales fell 6% to $932 million in the second quarter that ended July 31, with steep declines recorded in the U.S., Asia Pacific and Europe. Management noted lower spending among foreign tourists in all markets and in particular pointed to weakness in Hong Kong. Comparable store sales dropped 8%. Net earnings rose 1% to $106 million as the company cut costs to offset the slump in sales.

Veteran Diamond Marketer Joins Macy’s

Macy’s hired Richard Lennox as its chief marketing officer, effective September 15. Lennox (pictured) ran the De Beers account for marketing firm J. Walter Thompson, leading a team that developed the iconic “A Diamond is Forever” campaign. He was also executive vice-president and chief marketing and ecommerce officer at Zale Corporation. The move comes after Macy’s announced plans to improve the quality of its jewelry offering amid declining group sales.

Michael Hill’s Sales Rise

Michael Hill’s revenue jumped 9.5% to $421.3 million (AUD 551.1 million) in the fiscal year ending June 30 with growth recorded across all regions. Sales in Australia, its largest market, increased 4% to $234.9 million. Revenue advanced 7% in New Zealand and 19% in Canada. U.S. sales leapt 24% with same-store revenue increasing 3.5%, which was below the jewelry retailer’s expectations and budget.

MINING 	  

Dominion’s Sales and Production Decline

Dominion Diamond Corporation’s rough sales fell 24% to $160 million in the second fiscal quarter ending July 31 due to a shift in focus to lower-value goods at its Ekati mine in Canada. Sales of rough from Ekati slumped 40% to $83.3 million, while production fell 7% to 856,000 carats due to a shutdown following a fire. Revenue from Dominion’s 40%-owned Diavik mine in Canada increased 6.5% to $76.7 million.

Stellar, Octea to Merge Sierra Leone Mines

Stellar Diamonds and Octea Mining agreed to combine their Sierra Leone projects to create the second largest diamond-mining operation in West Africa. Stellar plans to amalgamate its Tongo kimberlite project with Octea’s adjacent Tonguma asset, which would enable annual production of up to 250,000 carats of “high-value” diamonds. Trading in Stellar’s shares on London’s AIM was suspended until an admission document outlining details of the deal is published.

Lucara Invests to Improve Small Diamond Recovery

Lucara Diamond Corp. will expand the use of X-ray technology (XRT) to target smaller size diamonds at the Karowe mine in Botswana, having used the equipment to recover exceptional stones such as the 1,109-carat Lesedi La Rona. Four new XRT units will focus on diamonds ranging from 4 millimeters to 8 millimeters. The project is expected to be completed in the fourth quarter of next year at an estimated cost of up to $30 million.

Tycoon Sees Opportunity in Consolidating Mines

South African billionaire Christo Wiese sees prospects for consolidating diamond mining operations in the region, Bloomberg reported. Wiese, the country’s richest man, formed a consortium that made a cash offer for Trans Hex earlier this month. “There are opportunities for consolidating diamond operations in southern Africa,’’ he said. “Obviously we will look at growing the business as much as we can.’’

GENERAL 	  

Israel Bourse Petitions Minister Over Lending

The Israel Diamond Exchange (IDE) called on Finance Minister Moshe Kahlon to help overturn First International Bank of Israel’s (FIBI) decision to tighten its lending standards for the industry. FIBI rolled out more stringent collateral demands and now follows a policy “that does not exist in any other sector,” a petition says. IDE president Yoram Dvash has vowed to fight FIBI’s decision.

24 Karat Club to Leave Iconic Venue

The 24 Karat Club of the City of New York will cease holding its annual Grand Banquet at the city’s Waldorf-Astoria Hotel after more than 100 years due to a renovation project at the venue. The 115th banquet on January 14, 2017, will be the last one to take place in the grand ballroom, the 24 Karat Club said. A three-year refurbishment project at the luxury Manhattan hotel has forced the organization to seek an alternative.

India Diamond Week Brings Hundreds to DDC

More than 60 exhibitors and “several hundred” buyers attended the fifth India Diamond Week at the Diamond Dealers Club (DDC) of New York this week. The event, organized by DDC and India’s Gem and Jewellery Export Promotion Council, marked an increase in New York trading as dealers return from the summer break. Sixteen Indian diamond manufacturers participated alongside U.S. suppliers, enabling them to build on relationships from previous events, said Reuven Kaufman, president of the DDC.

ECONWATCH 	  

Diamond Industry Stock Report

Michael Hill (+11%) gained on strong sales results, while Blue Nile (+10%) and Charles & Colvard (+19%) both enjoyed strong weeks despite the Dow Jones index falling 0.5%. Share prices were recorded before the market opened Thursday and before reports of disappointing sales at Signet Jewelers and Tiffany & Co. Signet saw its shares fall in early trading Thursday, while Tiffany gained on improved profit. Global diamond mining stocks were mixed, led by True North Gems (+5.9%).

View the detailed industry stock report
Aug 25 (12:24 GMT) Aug 18 (12:04 GMT) Chng.
$1 = Euro 0.89 0.88 0.00
$1 = Rupee 67.05 66.83 0.22
$1 = Israel Shekel 3.76 3.78 -0.02
$1 = Rand 14.13 13.35 0.78
$1 = Canadian Dollar 1.29 1.28 0.01

Precious Metals Chng.
Gold $1,322.72 $1,350.45 -$27.73 -2.1%
Platinum $1,082.75 $1,123.40 -$40.65 -3.6%
Silver $18.56 $19.75 -$1.19 -6.0%

Stock Indexes Chng.
BSE 27,835.91 28,123.44 -287.53 -1.0%
Dow Jones 18,481.48 18,573.94 -92.46 -0.5%
FTSE 6,817.45 6,858.17 -40.72 -0.6%
Hang Seng 22,826.87 23,023.16 -196.29 -0.9%
S&P 500 2,175.44 2,182.22 -6.78 -0.3%
Yahoo! Jewelry 661.54 665.81 -4.27 -0.6%

Rapaport Weekly Market Comment September 1, 2016

Sentiment improving with dealers optimistic for Hong Kong show. Chinese buyers testing the market and pushing for deeper discounts, but dealers holding price levels to avoid losses. Lower Chinese tourist spending due to weak economy and strong dollar impacting sales at Hong Kong and global luxury jewelers. Rough market stable as manufacturers prepare production for holiday season. ALROSA reduced inventory by 6M cts. as 1H revenue +42% to $2.9B, profit +91% to $1.4B. Lukoil 1H Grib mine diamond sales +120% to $169M. Chow Sang Sang 1H revenue -16% to $1B, profit -50% to $47M. U.S. July jewelry sales +4% to $5B. Signet shares plummet 14% following reduced sales expectations.

RapNet Data: September 1

Diamonds 1,233,361
Value $7,944,677,484
Carats 1,329,463
Average Discount -30.30%

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.

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QUOTE OF THE WEEK
Although the economy has slowed down, consumers are getting more and more sophisticated.

Chow Sang Sang on plans to differentiate itself in the Chinese jewelry market

MARKETS 	  

United States: Polished trading slowly picking up. Good traffic at India Week in New York DDC but buyers selective and price sensitive while Indian suppliers holding firm on prices…

Belgium: Polished market stable but dealers cautious after summer break and waiting for Hong Kong show to signal market direction. Very few overseas buyers in Antwerp…

Israel: Slight improvement as dealers returned from two-week summer vacation. Steady U.S. demand and improving Far East demand…

India: Sentiment improving with stronger Far East demand ahead of Hong Kong show. Some foreign buyers in Mumbai looking for goods…

Hong Kong: Dealers preparing for Hong Kong show (September 13 to 19). Buyers assessing the market with calls to check prices and inventory rather than place orders before the show…

Click here for deeper analysis

INDUSTRY  

Signet to Test Diamond Tracking Technology

Signet Jewelers will trial mapping technology enabling customers to track diamonds they buy from the retailer, after allegations of diamond swapping surfaced earlier this year. The equipment enables the customer to see the flaws in a diamond. Signet will test the technology at Kay Jewelers from November to January in an attempt to improve transparency for customers, the company said.

De Beers Introduces New Synthetics Checker

The International Institute of Diamond Grading & Research (IIDGR) will unveil its latest synthetics detection equipment at the Hong Kong Jewellery & Gem Fair. The De Beers subsidiary’s new PhosView machine analyzes colorless and near-colorless diamonds from 0.003 carats to 1-carat to determine if they contain high-pressure, high-temperature (HPHT) synthetics. The machine identifies stones that emit light, indicating they might be synthetic, and pushes them aside for further analysis.

Botswana’s Diamond Exports Recover in July

Botswana’s rough diamond exports bounced back up in July after sinking to zero a year ago, according to data from the nation’s central bank. The country recorded $438.9 million in outbound shipments during the month from its major diamond mines, the Bank of Botswana reported. No exports from these mines were recorded in July 2015.

IGI Launches Radio Ad Campaign

The International Gemological Institute (IGI) will target millennials in a series of radio commercials highlighting the importance of reliable diamond grading reports. The advertisements will feature in five radio spots in select markets from September 6 to the end of the year on iHeartMedia, which reaches more than 245 million listeners per month.

RETAIL & WHOLESALE 	  

Chow Sang Sang Sales, Profit Slide

Chow Sang Sang’s revenue slid 16% to $1 billion (HKD 7.8 billion) in the six months ending June 30. Jewelry retail sales also dropped 16% to $885.9 million with the remaining revenue generated by its wholesale business. The Hong Kong-based company blamed weaker consumer sentiment and a drop in tourist spending in Hong Kong for the slump. Profit plummeted 50% to $46.9 million, with the decline widened by a $31.7 million gain recorded from the sale of an asset last year.

U.S. Jewelry and Watch Sales Rise

U.S. jewelry and watch sales from all outlets rose 4% to an estimated $5.7 billion in July, a ninth consecutive year-on-year increase. Jewelry sales climbed 4% to $5.03 billion, while watch sales grew at the same rate to $666 million, according to Rapaport News estimates. By contrast, the Consumer Confidence Index fell month-on-month in July, according to the Conference Board, before rebounding again in August.

Cartier to Reopen Renovated NY Store

Cartier will reopen its flagship store on New York’s Fifth Avenue in September following renovations. The high-end jeweler, which is owned by luxury group Richemont, started upgrading its outlet at 653 Fifth Avenue in 2014 and opened a temporary storefront seven blocks up the road at number 767. Cartier has started to promote the new-look store through sponsored social posts and an email to its newsletter subscribers, according to Luxury Daily.

Michael Hill Names First North America Chief

Michael Hill appointed Brett Halliday as its president for North America, combining the roles of U.S. retail general manager and regional manager previously held by Darcy Harkins and Ray Riley respectively. Halliday continues to head Michael Hill’s Canadian business and has been tasked with turning around the U.S. operations following disappointing sales in the past fiscal year. Separately, Tishara Mina replaced Micah Walker as general manager of Emma & Roe, Michael Hill’s charm brand.

MINING 	  

ALROSA Sales Lifted by Improved Rough Market

ALROSA’s sales leapt 42% to $2.87 billion (RUB 186.67 billion) in the six months to June 30. Diamond sales grew 45% to $2.7 billion, with the remaining revenue coming from other streams such as its gas and transport divisions. Profit soared 91% to $1.39 billion. The diamond market was “moderately steady” and the financials were boosted by a depreciation of the ruble against the U.S. dollar, said Andrey Zharkov, ALROSA’s chief executive officer (pictured).

Lukoil’s Diamond Revenue More Than Doubles

Lukoil’s diamond sales from its Grib mine jumped 120% in the first half, Russia’s largest oil producer reported. Diamond revenue grew to $169 million (RUB 11 billion) from $76.8 million a year ago. Sales in the second quarter were flat at $46.1 million. Lukoil started production at Grib in September 2014.

India Seeks Investor for Bunder Project

India will auction the Bunder diamond-mining project or allocate it to a state firm after Rio Tinto pulled out of the venture, Balvinder Kumar, India’s Mines Secretary, was cited by Reuters as saying. Kumar will talk with parties interested in the project when Rio Tinto formally hands it back to the state government of Madhya Pradesh, where it is located.

Firestone Extends BK11 Financing Deadline Again

Firestone Diamonds agreed to push back the deadline for the sale of its Botswana operations to Tango Mining for the fourth time to enable the buyer to finalize funding. Tango must now meet all conditions of the agreement to buy the BK11 mine in the Orapa region by September 9. Tango has agreed a $10 million non-convertible loan deal with a number of lenders to finance the acquisition.

GENERAL 	  

JVC Begins Search for New Chief

The Jewelers Vigilance Committee (JVC) set up a team to seek out a replacement for Cecilia Gardner, who is stepping down next year from multiple roles of president, chief executive officer and general counsel. Gardner (pictured) announced she will leave the JVC at the beginning of 2017 after an 18-year stint.

U.K. Blocks Export of Queen Victoria’s Coronet

The U.K. culture minister has temporarily barred Queen Victoria’s sapphire and diamond coronet from leaving the country. The jewel is at risk of being exported unless a buyer can be found to match the $6.6 million (GBP 5 million) asking price. The coronet is one of the most important jewels of Queen Victoria’s reign from 1837 to 1901.

ECONWATCH 	  

Diamond Industry Stock Report

Signet (-14%) slid following disappointing sales results and a lower outlook, with U.S. retail stocks mostly declining in tandem, led by Birks Group (-17%). Hong Kong jewelry stocks fell, headed by Luk Fook (-4.1%), as Chow Sang Sang (-1.2%) reported a heavy drop in sales and profit amid continued poor consumer sentiment. Mining stocks were mixed, with ALROSA (+0.7%) only gaining marginally despite strong results.

View the detailed industry stock report
Sep 1 (11:08 GMT) Aug 25 (12:24 GMT) Chng.
$1 = Euro 0.90 0.89 0.01
$1 = Rupee 66.99 67.05 -0.06
$1 = Israel Shekel 3.78 3.76 0.02
$1 = Rand 14.66 14.13 0.54
$1 = Canadian Dollar 1.31 1.29 0.02

Precious Metals Chng.
Gold $1,306.95 $1,322.72 -$15.77 -1.2%
Platinum $1,054.75 $1,082.75 -$28.00 -2.6%
Silver $18.67 $18.56 $0.11 0.6%

Stock Indexes Chng.
BSE 28,423.48 27,835.91 587.57 2.1%
Dow Jones 18,400.88 18,481.48 -80.60 -0.4%
FTSE 6,786.44 6,817.45 -31.01 -0.5%
Hang Seng 23,162.34 22,826.87 335.47 1.5%
S&P 500 2,170.95 2,175.44 -4.49 -0.2%
Yahoo! Jewelry 455.66 661.54 -205.88 -31.1%

Rapaport Weekly Market Comment September 8, 2016

All eyes on Hong Kong as industry focuses on important Far East show. Sentiment in cutting centers is positive with improved dealer trading but show expectations are mixed and uncertain. Polished prices stable in anticipation of the show with Aug. 1 ct. RAPI -0.8%, 0.30 ct. flat, 0.50 ct. +0.2%, 3 ct. +0.2%. Profitability under pressure as rough premiums firmed after $630M De Beers sale as cutters increase production before Diwali. Belgium Aug. polished exports +17% to $399M, rough imports +9% to $659M. U.S. July polished imports -20% to $1.8B, polished exports -2% to $1.4B. HRD Antwerp fires three employees, bans client after uncovering grading discrepancies at Mumbai lab.

RapNet Data: September 8

Diamonds 1,231,395
Value $7,943,779,151
Carats 1,336,749
Average Discount -30.21%

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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QUOTE OF THE WEEK
In order to sell diamonds and diamond jewelry successfully, one needs to tell the diamonds story.

Christopher Zoettl, general manager of Germanys Designer Diamonds

MARKETS 	  

United States: Polished trading improved slightly with dealers preparing holiday inventory. Profitability squeezed after long period of sustained price declines…

Belgium: Sentiment improving head of Hong Kong show. Steady Far East demand for 0.30 to 0.50 ct., D-H, VS-SI goods. U.S. and European buyers cautious…

Israel: Positive mood with good activity at monthly Blue & White Fair. Dealers looking at wider variety of diamonds to fill existing orders…

India: Dealers focused on Hong Kong show hoping stronger trading will raise liquidity. Large volumes expected on display at the show…

Hong Kong: Trading slowed slightly with buyers waiting for next week’s show. Sentiment cautious as local jewelry retail remains slow and large-scale buyers already holding a lot of inventory…

Click here for deeper analysis

RAPAPORT STATEMENT 	  

Diamond Prices Mixed in Slow August Trading

One-carat diamond prices remain under pressure with low trading volume during the August vacation period. Polished inventory is increasing with steady manufacturing and sluggish demand as dealers prepare for the fourth-quarter holiday season. Some improvement in under-the-carat goods as Chinese bridal demand stabilizes. The RapNet Diamond Index (RAPI™) for 1-carat diamonds fell 0.8% in August, while other sizes were relatively stable.

Purchase the full Rapaport Monthly Report – September 2016

INDUSTRY 	  

HRD Uncovers Tampered Diamond Grading Reports

HRD Antwerp has invalidated 156 diamond grading certificates and fired three employees who accepted a financial incentive for tampering with the reports at its Mumbai laboratory. A small Mumbai-based trading firm attempted to improve the grade of diamonds it submitted to the laboratory by enticing three employees, who admitted to their actions and were subsequently dismissed. The trader has been banned from working with the grading company in future.

DPA Appoints New Marketing Guru

The Diamond Producers Association (DPA) named Deborah Marquardt as chief marketing officer. Marquardt (pictured) was most recently vice-president and general manager of Time Inc.’s Style Network. She will lead the DPAs activities in the U.S. and report to Jean-Marc Lieberherr, its chief executive officer. The DPA will launch its inaugural diamond-marketing campaign this fall, focusing on digital and social media.

U.S. Polished Diamond Imports Slide

U.S. polished diamond imports slumped 20% to $1.76 billion in July, its lowest level for the month since 2012. Polished exports slipped 1.5% to $1.38 billion, driving down net imports 52% to $372 million. Rough diamond imports jumped 79% to $59 million, while rough exports grew to $24 million from $9 million a year ago. Net rough imports rose 50% to $36 million. The net diamond account, reflecting the difference between net imports and exports, dropped 49% to $407 million.

Belgiums Rough Trade Continues to Rise

Belgium’s rough diamond exports leapt 23% year on year to $530.6 million and imports jumped 9% to $659.2 million in a seasonally subdued August. Polished exports grew 17% to $398.6 million but inbound orders fell 7% to $648.2 million. The country’s net diamond account was negative $378.2 million, meaning more diamonds were brought into Belgium than shipped out during the month.

RETAIL & WHOLESALE 	  

Blue Nile to Open Webroom in Seattle

Blue Nile will open a ‘webroom’ at the Bellevue Square shopping mall near its Seattle headquarters. The outlet, which is the online retailer’s fifth physical store, allows customers to see engagement rings on-site before buying them online. Prices are 40% lower than those at traditional jewelers, the company said. Blue Nile could open between 25 and 50 webrooms, CEO Harvey Kanter said.

Boodles Joins List of Trusted Argyle Jewelers

Rio Tinto named U.K.-based jeweler Boodles as a ‘select atelier’ for its Argyle pink diamonds, granting it the right to sell jewelry set with stones from the mine. Select ateliers are Rio Tinto’s trusted retail partners for Argyle pink diamonds not sold through its main annual tender. Boodles’ official launch as a select atelier will take place in October when Rio Tinto showcases the 2016 Argyle Pink Diamonds Tender in London for the first time in four years.

WDM Approves First European Retailer

Germany’s Designer Diamonds became the first retail jeweler in Europe to join the World Diamond Mark (WDM) Authorised Diamond Dealer program. The company specializes in engagement and wedding rings, operating a store at its headquarters in Munich and two in Augsburg. WDM membership will help the company achieve higher and more profitable sales, said Christopher Zoettl, the retailer’s general manager (pictured).

MINING 	  

De Beers Sales Rise Ahead of Holiday Season

De Beers sold $630 million of rough during its seventh sales cycle this year amid improved demand with diamond cutters requiring stock for the forthcoming holiday season. Sales grew from a year ago when the market slumped and the August 2015 De Beers sight was valued at $358 million, according to Rapaport News estimates. This year’s published figure includes the latest De Beers sight as well as auction sales and supply to beneficiation and government partners.

Lucapa Achieves $1,212/ct from Lulo Sale

Lucapa Diamond Company sold $4.4 million (AUD 5.8 million) of rough from its Lulo mine in Angola at an average price of $1,212 per carat. The parcel of 3,642 carats included a 28.5-carat light pink diamond – the largest and most valuable colored diamond sold from the mine to date. Also contained in the batch were a 49.8-carat, type-IIa white diamond and two light fancy yellows weighing 11.9 carats and 10.9 carats.

KP Plans Rough Valuation Forum in Antwerp

The Kimberley Process (KP) and the Antwerp World Diamond Centre (AWDC) will hold the second forum on rough diamond valuation in Antwerp on September 30. The one-day event at the Hylitt Hotel will delve into valuation practices deployed by the global diamond industry, with the aim of developing a more formalized approach. Better awareness and conformity on rough valuations will help producing countries get more value from their mineral resources, the KP said.

GENERAL 	  

New Jewelry Fair to Open in Hong Kong

The International Gem & Jewellery Festival (IGJF) will launch next week in Hong Kong, going head-to-head with the more established Hong Kong Jewellery & Gem Fair. Running from September 13 to 18 at the Central Harbourfront Event Space, the new show will feature more than 230 suppliers from around the world. The main Hong Kong Jewellery & Gem Fair will run from September 13 to 17 at AsiaWorld-Expo and from September 15 to 19 at the Hong Kong Convention & Exhibition Centre.

JCK Shifts 2017 Vegas Show Days

Next year’s LUXURY and JCK Las Vegas jewelry shows will take place on different days of the week from previous years to accommodate those observing the Jewish holiday of Shavuot. LUXURY, an exhibition for invited retailers, will run from Friday, June 2 to Sunday, June 4. JCK Las Vegas, the broader jewelry fair, is scheduled from Monday, June 5 to Thursday, June 8.

Brides Uninspired by Emerald-Cut Diamonds

Emerald-shape diamonds have limited popularity among people seeking an engagement ring, according to a survey by The Wedding Report. Some 38.3% of respondents would avoid the style, revealed the poll which encompassed couples visiting costofwedding.com from July 1 to 20 and those responding to an email questionnaire. In contrast, 26.7% said they “love” the emerald cut whereas 5.8% said it would be too hard to pair it with a wedding band.

ECONWATCH 	  

Diamond Industry Stock Report

Mining stocks were generally positive this past week after De Beers reported promising rough sales ahead of the holiday season. Its parent company, Anglo American (+10%), was among the sharp rises, which were led overall by Lucara (+13%). However, True North Gems (-92%) slid from an already low base amid news its Greenland subsidary filed for voluntary bankruptcy. Strong Chinese import data boosted regional stocks, with Chow Tai Fook (+8.6%) and Luk Fook (+7.7%) both gaining.

View the detailed industry stock report

Sep 8 (10:50 GMT) Sep 1 (11:08 GMT) Chng.
$1 = Euro 0.89 0.90 -0.01
$1 = Rupee 66.42 66.99 -0.57
$1 = Israel Shekel 3.75 3.78 -0.03
$1 = Rand 13.88 14.66 -0.79
$1 = Canadian Dollar 1.29 1.31 -0.02

Precious Metals Chng.
Gold $1,347.40 $1,306.95 $40.45 3.1%
Platinum $1,095.75 $1,054.75 $41.00 3.9%
Silver $19.91 $18.67 $1.24 6.6%

Stock Indexes Chng.
BSE 29,045.28 28,423.48 621.80 2.2%
Dow Jones 18,526.14 18,400.88 125.26 0.7%
FTSE 6,875.22 6,786.44 88.78 1.3%
Hang Seng 23,919.34 23,162.34 757.00 3.3%
S&P 500 2,186.16 2,170.95 15.21 0.7%

Rapaport Weekly Market Comment September 15, 2016

Positive atmosphere at Hong Kong show with trading slightly better than low expectations. Buyers maintain cautious outlook for holiday season. Far East retailers requiring less inventory as China expansion slows. Suppliers holding prices to minimize losses from expensive rough. De Beers estimates 2015 global rough sales -30% to $13.7B, rough production -0.7% to 141M cts. with value -10% to $17.5B, average price -8% to $124/ct. Insight report notes millennials driving growth but diamond content in jewelry sales -2% to $24.7B last year. Dominion 2Q sales -24% to $160M, loss of $33M vs. loss of $18M a year ago. Richemont jewelry sales -16% in first five months, warns 1H profit -45%.

RapNet Data: September 15

Diamonds 1,253,101
Value $8,000,226,523
Carats 1,346,501
Average Discount -30.22%

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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QUOTE OF THE WEEK
We are still optimistic about China. It’s still a huge market for diamond consumption.

Kent Wong, managing director of Chow Tai Fook

MARKETS 	  

United States: Stable market with dealers watching for trends from Hong Kong show. Buyers selective and pushing for higher discounts…

Belgium: Positive sentiment with large delegation of Antwerp suppliers holding firm prices at Hong Kong show…

Israel: Dealers relieved at steady Hong Kong show following long, inactive summer…

India: Polished market stable with suppliers maintaining prices at Hong Kong show. Indian buyers looking for bargains…

Hong Kong: Busy activity with steady traffic at Hong Kong show. Conservative Far East buyers limiting inventory orders…

Click here for deeper analysis

INDUSTRY 	  

Positive Atmosphere at Hong Kong Show

Sentiment was positive but buyers were cautious in the opening days of the Hong Kong Jewellery & Gem Fair. Traffic was steady and there was some buying activity at the loose diamond section as buyers have been out of the market for so long, exhibitors noted. Polished prices were relatively stable with manufacturers defending tight profit margins. The finished jewelry exhibition, which began Thursday at a separate venue, saw light traffic on the opening day. Retailers maintain a cautious outlook for Far East diamond consumption this holiday season.

‘A Diamond is Forever’ Relaunched in China

De Beers is relaunching its A Diamond is Forever’ marketing in China as the company is targeting millennials this holiday season. Millennials spent more than $25 billion on diamond jewelry across the U.S., China, India and Japan, accounting for more than half the total retail value of diamond jewelry purchases in those top four markets, according to its Diamond Insight Report published this wekend

HRD Renames its Diamond Grading Reports

HRD Antwerp rebranded its grading certificates as ‘Diamond Grading and Jewelry Reports’ due to the legal connotations of using the term ‘certificate’ and to align with common global industry terminology. The new documents also feature durable and tear-proof paper and security features such as UV print, micro-line structures, micro-text and a hologram. The reports will appear on the market from October 3.

De Grisogono Buys Rights to 813ct. Diamond

De Grisogono, a Swiss jeweler, purchased the rights to the world’s most expensive rough diamond, the Constellation. The company entered into a partnership with Dubai-based Nemesis International, which bought the 813-carat diamond from Lucara Diamond Corporation for $63 million in May. The Constellation was recovered at the Karowe mine in Botswana in November and cutting and polishing is scheduled to be completed by mid-2017.

RETAIL & WHOLESALE 	  

Chow Tai Fook Braces for Short-Term Volatility

Chow Tai Fook cautioned the jewelry market environment remains challenging even as the company expects its sales slide to ease. The second half of calendar 2016 will be better than the first half because the jeweler is working off a low base after last year’s sales slump, managing director Kent Wong told Rapaport News. Chow Tai Fook’s revenue fell 12% to $7.3 billion (HKD 56.59 billion), while profit slumped 46% to $384 million in the fiscal year ending March 31.

Richemont Sales Slump Prompts Profit Warning

Richemont’s sales dropped 14% at actual exchange rates in the five months ending August 31 due to a “difficult global environment,” the luxury group said. Sales slid 13% at constant rates. Jewelry sales, including the company’s Cartier and Van Cleef & Arpels brands, retreated 16% at actual rates and 15% at constant rates. Operating profit will tumble 45% in the first half and net profit will be impacted at a similar level, the company forecast.

Tiffany Names Mark Erceg as New CFO

Tiffany & Co. appointed Mark Erceg its new chief financial officer (CFO) effective October 18. Erceg, whose most recent position was CFO at Canadian Pacific Railway Ltd, replaces Ralph Nicoletti, who resigned in May to join another company. His appointment comes amid declining sales as spending in key markets tightened. Tiffany’s sales slid 6% to $932 million in the second quarter that ended July 31.

Frederick Goldman Hires Veteran to Oversee Quality

Frederick Goldman appointed former Gemvara executive Noah Pearce as director of quality engineering with a focus on bridal and fine jewelry. Pearce has more than 20 years experience in the industry, having served as director of quality assurance and manufacturing at Gemvara, an online retailer which was recently acquired by Warren Buffett’s Richline Group.

MINING 	  

Dominion Loss Widens After Ekati Fire

Dominion Diamond Corporation’s net loss widened 82% to $32.9 million in the three months that ended July 31. A fire at the Ekati mine in Canada during the quarter resulted in a plant closure and an estimated $15 million in repairs. Operations are expected to resume September 21. Diamond sales slumped 24% to $160 million. Separately, Dominion hired Matthew Quinlan as chief financial officer from CIBC World Markets.

Rockwell Diamonds CEO Resigns

James Campbell resigned as chief executive officer of Rockwell Diamonds amid a review of the company’s operations. He’ll be replaced by Tjaart Willemse, a former De Beers operations manager who will continue to assess Rockwell’s management structures and operating plans. A strategic review in August found the recently acquired to Remhoogte mine is operating below plan, while construction of the new plant at Wouterspan is behind schedule and costing more than projectets

DiamondCorp Cuts Loss at Lace Mine

DiamondCorp’s pre-tax loss narrowed to $328,000 (GBP 247,221) in the first half from $4.2 million a year earlier, driven by favorable foreign-exchange rates. The company cautioned sales may lag in the coming months because of operational issues at its Lace mine in South Africa. DiamondCorp is preparing to hold its first sale in Antwerp on September 17 but will offer fewer diamonds than expected as production at Lace was disrupted by flooding in August.

Firestone Pulls Sale of BK11 Mine to Tango

Firestone Diamonds’ sale of the BK11 mine in Botswana fell through after Tango Mining failed to meet the purchase conditions by September 9. The deal was initially scheduled to close in September last year, but Firestone extended the deadline four times to enable Tango to finalize the requisite funding. This time, it said the agreement has finally lapsed and the deal will not proceed.

Merlin Diamond Mine to Resume Operations

Merlin Diamonds will restart production at its mine in Australia’s Northern Territory in October after the provincial government approved its mining plan. The Merlin mine has an indicated and inferred resource of 4.3 million carats and an 11-year life span. Merlin said it has started pumping out water from the Kaye pit in preparation for minimum

GENERAL 	  

Apple Discontinues 18k-Gold Luxury Smartwatch

Apple’s $17,000 gold smartwatch failed to make it to the company’s latest product range, signaling the technology giant has retreated from the luxury timepiece category. The Apple Watch Series 2 is available in lightweight aluminum, stainless steel cases or ceramic. As the 18-karat gold version is no longer available, the ceramic timepiece is now the most expensive in the collection, starting at $1,249.

Jadeite Bangle Headlines Sothebys HK Auction

A “highly important” green jadeite bangle is slated to be the most valuable item at Sotheby’s jewelry auction in Hong Kong next month, drawing an estimate of up to $9 million (HKD 70 million). The vivid emerald-green bangle is a rare example of “jadeite of the best quality,” Sotheby’s said. Its lower estimate is $6.5 million.

Natural Color Diamond Association Opens in U.K.

The Natural Color Diamond Association (NCDIA) will launch a U.K. branch to facilitate networking among members of the trade and increase the public’s awareness about colored diamonds. The first meeting will take place November 10 at the London campus of the Gemological Institute of America (GIA). David Warren, Christies senior international jewelry director, will deliver a talk on colored diamonds the auction house has put under the hammer over the years.

ECONWATCH 	  

Diamond Industry Stock Report

U.S. retail and industry stocks mainly fell, led by Sothebys (-7.5%), in a week that saw the Dow Jones index drop 2.7%. European industry share prices mostly declined, headed by Richemont (-6%) on disappointing results that prompted a profit warning. Gitanjali Gems (+42%) led generally stronger Indian stocks, while Rockwell (-14%) suffered the heaviest drop of the major diamond miners after its CEO resigned. Mining stocks otherwise showed a mixed performance.

View the detailed industry stock report
Sep 15 (11:15 GMT) Sep 9 (10:50 GMT) Chng.
$1 = Euro 0.89 0.89 0.00
$1 = Rupee 67.00 66.42 0.58
$1 = Israel Shekel 3.78 3.75 0.03
$1 = Rand 14.29 13.88 0.41
$1 = Canadian Dollar 1.32 1.29 0.03

Precious Metals Chng.
Gold $1,321.47 $1,347.40 -$25.93 -1.9%
Platinum $1,034.75 $1,095.75 -$61.00 -5.6%
Silver $19.00 $19.91 -$0.91 -4.6%

Stock Indexes Chng.
BSE 28,412.89 29,045.28 -632.39 -2.2%

Rapaport Weekly Market Comment September 22, 2016

Sentiment improves at Hong Kong show (7/10) with steady traffic but restrained buying ahead of National Day festival (Oct. 1). Good demand for 0.30 to 2 ct., G-J, VS-SI diamonds but sales were limited as suppliers refused very deep discounts. 3 to 4 ct. weak. Mixed demand for 5 ct.-plus. Picky Far East buyers shifting to lower price points and restricting inventory purchases. Excess Chinese inventories have been coming down with some buying to meet current demand. ALROSA Aug. rough sale +53% to $243M. Petra Diamonds FY revenue +1% to $431M, profit +12% to $67M. India Aug. polished exports +11% to $1.9B, rough imports +72% to $1.1B. De Beers, Mountain Province open Gahcho Kué mine.

RapNet Data: September 22

Diamonds 1,242,397
Value $7,900,621,86
Carats 1,331,885
Average Discount -30.28%

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

September 21-28 Wed-Wed

Rapaport Single Stone Auction

New York & Israel

View Details Sep-Oct 28-7 Wed-Fri

Rapaport Melee Auction

New York & Dubai

View Details Oct-Nov 26-2 Wed-Wed

Rapaport Single Stone Auction

New York & Israel View Details

QUOTE OF THE WEEK
Given the slowdown in China and Hong Kong, we were not expecting an exceptional performance, but foot traffic was heavier than forecast and there was certainly plenty of interest from buyers, even if they were looking for highly specific items and not buying in large volumes.”

Ernie Blom, president of the World Federation of Diamond Bourse

MARKETS 	  

United States: Steady trading in New York with sentiment lifted by positive reports from Hong Kong show. Dealers focused on filling orders for the holiday season…

Belgium: Trading more upbeat than before Hong Kong show. Good demand from U.S. retail programs with steady demand for 0.30 to 2 ct., G-J, VS-SI diamonds…

Israel: Improved mood as dealers returned from Hong Kong. Steady demand for dossiers and 1 ct., G-J, VS-SI, GIA diamonds…

India: Stable market with steady U.S. demand. Melee weak with pockets of better demand in +8 segment…

Hong Kong: Dealers focused on closing transactions from last week’s show. Hong Kong retail sentiment weak due to tourist slump and high rentals…

Click here for deeper analysis

INSIGHTS 	  

Hong Kong Show Keeps Holiday Hopes Alive

The Hong Kong Jewellery & Gem Fair gave the diamond industry the assurances it sought for the important fourth quarter holiday season even as buying was cautious. Despite the challenging and changing Far East market environment, it can be considered a good show....

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INDUSTRY 	  

HRD Antwerp Parts Company with CEO Macken

HRD Antwerp terminated its contract with chief executive officer Peter Macken after less than 18 months because of “differing strategic views.” The grading laboratory appointed Ari Epstein, CEO of the Antwerp World Diamond Centre, as its interim CEO. Epstein is the fifth person to lead HRD in four and a half years.

India’s Polished Diamond Exports Rise

India’s polished diamond exports jumped 11% to $1.94 billion in August, according to the Gem & Jewellery Export Promotion Council. Polished imports increased 9% to $264 million, leaving net exports 11% higher at $1.68 billion. Rough diamond imports soared 72% to $1.05 billion, while rough exports jumped 39% to $122.4 million. Net rough imports leapt 78% to $928 million. India’s net diamond account, calculated as the difference between net polished exports and net rough imports, slid 24% to $751 million.

Swiss Watch Exports Extend Decline

Swiss watch exports fell 9% to $1.38 billion (CHF 1.35 billion) mostly due to a 26% slide in shipments of precious-metal timepieces, according to the Federation of the Swiss Watch Industry. Items priced at $3,070 (CHF 3,000) or higher dived 14%, offsetting increases in certain less expensive categories. Orders from Hong Kong plummeted 29%, their 18th consecutive month of decline.

Color Diamonds Buoyant at Bonhams Auction

A rare oval-cut, 3.81-carat, fancy intense blue, I1-clarity diamond sold for $3 million (GBP 2.3 million), or $792,450 per carat, weighing in as the top lot at Bonhams jewelry auction in London. The auction totaled $8.4 million (GBP 6.4 million) and was 72% sold by lot. Colorless diamonds featured in the sale included a marquise-cut, 11-carat, D-color, VS1-clarity, type IIa diamond, which sold for $802,052 (GBP 614,500) or $72,913 per carat, triple the lower end of the pre-sale estimate.

RETAIL & WHOLESALE 	  

U.S. Jewelry Store Sales Slide

U.S. specialty jewelry store sales fell in July in line with declines reported by the major U.S. jewelers during the second quarter. Sales fell 2.2% to $2.1 billion across outlets selling only jewelry and watch products during the month, according to the U.S. Census Bureau. Signet Jewelers earlier reported that same-store sales at its U.S.-based Sterling division fell 3.1% in the fiscal quarter that ended July 31, while its Zale U.S. division saw same-store sales decline 2.2%.

Consumers Show Tiffany Some Love Online

Tiffany & Co. was adjudged the “most loved” among 60 retail brands that have a presence on social media by analytics company NetBase. The researchers surveyed more than 430 million posts on social media platforms such as Twitter, Facebook and Instagram over the year to July 27. Amazon was the most mentioned, but none of the brands matched Tiffany for the level of positivity and passion among customers.

Gitanjali’s Sales and Profit Jump

Gitanjali Gems revenue grew 30% to $553.5 million (INR 37.1 billion) in the first fiscal quarter that ended June 30, The Mumbai-based retailer’s jewelry revenue leapt 36% to $440 million, outweighing a 1.6% decline in loose diamond sales to $124.5 million. Net profit for the period almost quadrupled to $8.6 million.

Asian Star Revenue Rises

Asian Star’s revenue increased 2.7% to $127.6 million (INR 8.55 billion) in the first fiscal quarter ending June 30, the Mumbai-based diamond manufacturer reported. Profit fell 3.9% to $2.9 million. Revenue from the company’s diamond segment advanced 4.1% to $118.1 million, outweighing a 12% drop in jewelry revenue to $13.4 million.

MINING 	  

ALROSA Sales Jump in August

ALROSA said it sold $243 million worth of rough diamonds in August, representing a 53% rise from a year earlier when market conditions slumped. Polished sales totaled $6.3 million for the month. The Russian mining company noted the market was stable but maintained a “moderately conservative” outlook. It was the first time ALROSA announced a monthly sales value.

De Beers Opens 54M Ct. Gahcho Kué Mine

De Beers announced the launch of its largest mine outside southern Africa, Gahcho Kué, which is expected to produce about 54 million carats over its lifetime. The deposit is the world’s largest new diamond mine in the past 13 years and is on track for full commercial operation in the first quarter of 2017. The project is a joint venture between De Beers and Mountain Province Diamonds.

Lucapa Finds 104ct. Diamond at Lulo Mine

Lucapa Diamond Company recovered a 104-carat, D-color diamond at its Lulo mine in Angola. The type-IIa stone is the fourth rough diamond above 100 carats extracted from the deposit this year and the fifth since operations began. The company discovered 53 “special” stones above 10.8 carats in the first half of the year and a further 59 in July alone.

Petra’s Profit Rises on Lower Costs

Petra Diamonds reported profit increased 12% to $66.8 million in the fiscal year that ended June 30 as improved efficiencies and cost controls offset a 6% decline in rough diamond prices. Revenue increased 1% to $430.9 million, driven by a higher sales volume. Adjusted mining and processing costs were reduced 5.5% to $257.7 million. A weakening of the South African rand, meaning lower costs when reported in U.S. dollars, also boosted profit.

GENERAL 	  

ALROSA Develops Synthetic Detection Equipment

ALROSA intends to start selling synthetic detection equipment next year. The miner developed the devices in conjunction with the Technological Institute for Superhard and Novel Carbon Materials, a Russian federal body. The contraptions sift out polished diamonds that originate from lab-grown or treated stones or from simulants such as cubic zirconia or moissanite. Weighing less than 1.5 kilograms, the devices can be plugged into a USB port or operated using a smartphone battery.

NDT Produces Biggest Synthetic Blue Diamond

New Diamond Technology (NDT) unveiled a 10.07-carat lab-grown diamond that it claims is the world’s largest polished blue synthetic diamond. The emerald-cut, fancy deep blue, SI1 stone was graded by the International Gemological Institute (IGI) in Antwerp and put on display at the Hong Kong Jewellery & Gem Fair earlier this month.

Rarity Calculator Launched for Color Diamonds

The Fancy Color Research Foundation (FCRF) unveiled a Fancy Color Rarity Evaluator to determine the scarcity of a fancy color diamond. The calculator provides an estimate for the number of diamonds mined each year, allocating a rarity level ranging from common to super-stone. The FCRF also plans to introduce “rarity certificates” for select jewelry before the end of 2016.

Second Jewelry Summit Scheduled for Tucson

The second Jewelry Industry Summit to advance sustainability and responsible sourcing initiatives will take place January 29 to 30 in Tucson. The forum hopes to build on the inaugural summit held earlier this year in New York where attendees committed to develop numerous project ideas. Goals of the upcoming include assessing which programs are effective, reviewing progress made on the initiatives already in place and developing a shared vision for sustainable business and responsible sourcing.

ECONWATCH 	  

Diamond Industry Stock Report

Mining companies led gains among diamond and jewelry companies listed on the financial markets this week. Anglo American (+14%) enjoyed the sharpest increase after Barclays upgraded its rating on the stock and subsidiary De Beers opened a new mine in Canada. Petra Diamonds shares rose (+8.1%) on encouraging fiscal year earnings. Europe’s luxury retailers LVMH (+5%) and Richemont (+6.3%) gained, partially reversing the slump in share prices due to a cautious outlook for this year.

View the detailed industry stock report
Sep 22 (11:15 GMT) Sep 15 (11:15 GMT) Chng.
$1 = Euro 0.89 0.89 0.00
$1 = Rupee 66.64 67.00 -0.36
$1 = Israel Shekel 3.76 3.78 -0.02
$1 = Rand 13.48 14.29 -0.81
$1 = Canadian Dollar 1.30 1.32 -0.02

Precious Metals Chng.
Gold $1,334.85 $1,321.47 $13.38 1.0%
Platinum $1,052.00 $1,034.75 $17.25 1.7%
Silver $19.90 $19.00 $0.90 4.7%

Stock Indexes Chng.
BSE 28,773.13 28,412.89 360.24 1.3%
Dow Jones 18,293.70 18,034.77 258.93 1.4%
FTSE 6,926.89 6,687.54 239.35 3.6%
Hang Seng 23,759.80 23,335.59 424.21 1.8%
S&P 500 2,163.12 2,125.77 37.35 1.8%

Rapaport Weekly Market Comment September 29, 2016

Diamond market stable. Positive sentiment in the trading centers despite lower than usual holiday orders. U.S. retailers driving demand but consumers cautious amid election uncertainty. Chinese jewelry demand steady ahead of National Day festival (Oct. 1). Polished inventory rising as manufacturers raise production before Diwali vacation (Oct. 30). Steady prices but weaker assortments reported at relatively small De Beers Oct. sight. Rapaport offices will be closed on Monday and Tuesday (Oct. 3-4) due to Rosh Hashanah. Best wishes to all for a happy, healthy, peaceful and prosperous Jewish New Year.

RapNet Data: September 29

Diamonds 1,258,329
Value $7,944,164,659
Carats 1,340,019
Average Discount -30.46%

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

Sep-Oct 28-7 Wed-Fri

Rapaport Melee Auction

New York & Dubai

View Details
Oct-Nov 26-2 Wed-Wed

Rapaport Single Stone Auction

New York & Israel

View Details November 8-16 Tue-Wed

Rapaport Melee Auction

New York & Dubai

View Details

QUOTE OF THE WEEK
The diamond business generally has been quite slow to adapt. People need to think very differently in the future.

Bruce Cleaver, CEO of De Beers, speaking to the Financial Times

MARKETS 	  

United States: Dealers cautious as trading slow for this time of year. Presidential election adding to uncertainty. Inventory rising with new Indian supply outpacing sales before Diwali break…

Belgium: Positive sentiment continues after Hong Kong show. Steady demand for 0.30 to 3 ct., D-H, VS2-SI, VG+ diamonds. Improving melee demand…

Israel: Upbeat mood despite cautious trading after Hong Kong show. Dealers filling orders before Oct. Jewish holiday period…

India: Polished trading stable with steady demand for stars and melee for the U.S. market. -2’s weakest melee category. Steady demand for 0.30 to 2 ct., D-J, VS-SI diamonds…

Hong Kong: Regular activity returns after positive September show improves mood. Price sensitive Chinese buyers driving demand…

Click here for deeper analysis

INDUSTRY 	  

Top Diamond Lot Fails to Sell at Sotheby’s NY

Sotheby’s Important Jewels sale in New York garnered $9 million as its headline piece failed to find a buyer. Bids for the oval, 27.35-carat, D-color, VS2-clarity diamond and platinum ring did not meet its reserve price after Sotheby’s estimated it would sell for $2 million to $2.5 million, or up to $91,408 per carat. The auctioneer did not disclose the highest bid it received for the stone.

Botswana’s Diamond Exports Extend Decline

Botswana’s rough diamond exports continued a retreat in August, underlining the country’s need to diversify its economy as it celebrates 50 years of independence. Outbound shipments fell 5% to $399.7 million, according to data from the Bank of Botswana.

CAR Set to Increase Diamond Exports

The Kimberley Process (KP) declared three new ‘compliant zones’ in the Central African Republic, meaning diamond exports from those regions can resume after a suspension of more than two years. The KP’s monitoring team approved shipments from the sub-prefectures of Boda, Carnot and Nola in the west of the country. CAR was re-admitted to the KP in May and two shipments have already been made from the Berberati region.

RETAIL & WHOLESALE 	  

U.S. Jewelry Prices Jump in August

The U.S. consumer price index (CPI) for jewelry increased 4% in August from the previous month, according to the U.S. Bureau for Labor Statistics. The reading was 9% higher than a year ago. The August CPI for watches fell 1.5% month on month and rose 6% year on year. The CPI for jewelry and watches combined jumped 2% from July and 8% from a year earlier.

Swiss Watches Face Worrying Time

Swiss watch executives are increasingly pessimistic about the industry’s prospects, according to Deloitte, as timepiece exports slumped to the lowest level in five years in the first half. The proportion of industry leaders who expect the market to go pear-shaped stands at 82%, while 65% are downbeat about the countrys main export markets for the next 12 months. Swiss watch exports fell 7% to $9.8 billion (CHF 9.5 billion) in the first six months of the year.

MINING 	  

Sales Slump Highlights Despair at Rockwell

Rockwell Diamonds sales slumped in its fiscal second quarter because of operational and financial management issues. Sales dropped 21% to $7.6 million after group production declined 15% to 4,747 carats during the quarter that ended August 31. A general breakdown in controls, inadequate work planning and the lack of project front-end loading has led to a series of financial management concerns and business risks, newly appointed CEO Tjaart Willemse claimed.

Dominion Sells Largest Ekati Diamond on Record

Dominion Diamond Corp. sold a 186-carat diamond, the largest recovery on record from the Ekati mine, for $2.8 million. The gem-quality stone was found at the Pigeon kimberlite pipe at Ekati in June, before a fire halted operations at the mine. The company suspended mining at the Lynx and Pigeon open pits to save on costs, while it spent $15 million on repairs. The plant returned to full operational capacity September 21.

Lulo Mine Yields Another Massive Diamond

Lucapa Diamond Company recovered a 172.67-carat, D-color, type-IIa diamond from its Lulo mine in Angola. The stone is the fifth diamond above 100 carats found at Lulo this year. A Lucapa rough sale achieved an average price of $1,868 per carat as the miner garnered $4.1 million (AUD 5.3 million) for a parcel of 2,209 alluvial diamonds. The next sale in October will feature the 172-carat stone and a 104-carat diamond recovered earlier this month.

Diamond Miner Spurns South Africas Richest Man

The board of Trans Hex Group advised shareholders to decline a takeover bid from South Africa’s richest man, after a panel of independent members found the offer undervalues the company. Consultants hired by the independent board members valued the company at $0.59 (ZAR😎 per share, compared with $0.29 (ZAR 3.94) per share offered by a consortium of bidders that included retail tycoon Christo Wiese.

GENERAL 	  

Record Blue Topaz to Go on Show

A 9,381-carat polished topaz will go on display at London’s Natural History Museum from October 19. The world’s largest flawless blue topaz measures 15 centimeters by 10.5 centimeters. Named the Ostro stone, It was treated to give it a vivid blue color. The original rough was discovered 30 years ago by explorer Max Ostro in Minas Gerais, Brazil.

Gemfields Boosted by Rising Emerald Demand

Gemfields’ revenue and profit surged in the past fiscal year, driven by record prices and successful marketing campaigns to raise demand for the colored gemstones. Sales jumped 13% to $193.1 million and profit after tax soared 90% to $23.5 million. Marketing efforts have built up the profile of its Zambian emeralds, Gemfields said

ECONWATCH 	  

Diamond Industry Stock Report

Mining shares mainly gained this past week, led by Gemfields (+21%) after it reported promising results and strong demand for emeralds. U.S., European and Far East retail stocks mostly declined, headed by JCPenney (-4.5%). Australia-listed Michael Hill showed a contrasting performance, its stock soaring (+40%) from a relatively low base.

View the detailed industry stock report
Sep 29 (12:54 GMT) Sep 22 (11:15 GMT) Chng.
$1 = Euro 0.89 0.89 0.00
$1 = Rupee 66.90 66.64 0.26
$1 = Israel Shekel 3.76 3.76 0.00
$1 = Rand 13.80 13.48 0.32
$1 = Canadian Dollar 1.31 1.30 0.01

Precious Metals Chng.
Gold $1,318.62 $1,334.85 -$16.23 -1.2%
Platinum $1,025.10 $1,052.00 -$26.90 -2.6%
Silver $19.04 $19.90 -$0.86 -4.3%

Stock Indexes Chng.
BSE 27,827.53 28,773.13 -945.60 -3.3%
Dow Jones 18,339.24 18,293.70 45.54 0.2%
FTSE 6,921.10 6,926.89 -5.79 -0.1%
Hang Seng 23,739.47 23,759.80 -20.33 -0.1%
S&P 500 2,171.37 2,163.12 8.25 0.4%

Rapaport Weekly Market Comment October 6, 2016

Diamond trading slow over Jewish New Year and China National Day holiday. Chinese demand improving with Sept. gold, silver and jewelry sales +11%. Dealers focused on filling U.S. Christmas orders. Polished prices stable with Sept. RAPI 1 ct. -0.2%, 0.30 ct. +0.3%, 0.50 ct. -0.2%, 3 ct. -0.2%. Polished market squeezed by relatively high rough prices with suppliers preferring to delay sales rather than suffer losses from expensive rough. Rough prices firm as De Beers reports better-than-expected $485M Oct. sales. De Beers, GJEPC to launch generic marketing campaign on Oct. 10 for India Diwali season. Rapaport offices will be closed on Wednesday (Oct. 12) due to Yom Kippur.

RapNet Data: October 6

Diamonds 1,256,944
Value $7,886,363,289
Carats 1,326,300
Average Discount -30.72%

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

Oct-Nov 26-2 Wed-Wed

Rapaport Single Stone Auction

New York & Israel

View Details November 8-16 Tue-Wed

Rapaport Melee Auction

New York & Dubai

View Details
November 16-23 Wed-Wed
Rapaport Single Stone Auction

New York & Israel

View Details

QUOTE OF THE WEEK
We expect to bring back the excitement to the category and increase consumer awareness about diamonds and prices.

Praveenshankar Pandya, chairman of Indias GJEPC, on its new generic marketing campaign with De Beers

MARKETS 	  

United States: Polished trading slow with many businesses closed during Jewish New Year. Dealers focused on filling holiday demand with retail inventories in line with last year…

Belgium: Market quiet with many businesses closed over Jewish New Year. Positive sentiment continues although dealers cautious about U.S. and European holiday demand…

Israel: Bourse closed for three days during Jewish New Year. Dealers focused on filling U.S. holiday orders with good demand for 0.30 to 0.89 ct., D-I, VS-SI2 and 1 to 2 ct., D-I, VS-SI2 diamonds…

India: Polished trading stable with steady U.S. and Chinese demand. Melee improving with very small -2 melee still weak…

Hong Kong: Dealer trading slow with wholesale Chinese businesses closed for week of Oct 1. National Day holiday…

Click here for deeper analysis

RAPAPORT STATEMENT 	  

Diamond Prices Stable in September

Diamond markets were steady in September. Sentiment improved as trading at the Hong Kong show was better than expected even though buyers refrained from large inventory purchases. The polished market was supported by relatively high rough prices as suppliers held polished prices firm, preferring to delay sales rather than suffer losses from expensive rough. The RapNet Diamond Index (RAPI™) for one-carat, GIA-graded polished diamonds declined 0.2% in September. The index dropped 2.7% in the third quarter and is down 2% since the beginning of the year.

Purchase the full Rapaport Monthly Report – October 2016

INDUSTRY 	  

Indian Generic Marketing Campaign to Launch

De Beers and the Gem & Jewellery Export Promotion Council unveiled a generic marketing campaign to promote diamonds and diamond jewelry in India. The program will launch October 10 ahead of the key holiday selling season, targeting women from 25 to 35 with a “hectic lifestyle and craving for romance and pampering,” the GJEPC said. It will initially run for three months on television, print and digital media.

Antwerp Steps Up Battle with Synthetics

Belgium’s diamond industry leaders pledged actively to enforce guidelines set out by the World Federation of Diamond Bourses to combat undisclosed synthetics. Antwerp’s four exchanges will be among the first to implement the instructions from January 1. These include an obligation to provide a clear description of goods on invoices and memo documents. In addition, HRD Antwerp’s M-Screen device for screening melee will be available for free at the bourses.

RETAIL & WHOLESALE 	  

Costco Told to Pay $13.75M to Tiffany

Costco Wholesale was ordered to pay $13.75 million in damages to Tiffany & Co. after selling counterfeit diamond engagement rings bearing the jewelers name. A Manhattan jury awarded Tiffany $5.5 million compensation and a further $8.25 million in punitive damages. The trial was aimed at determining how much Costco is liable for damages after a court last year ruled Costco had willfully infringed Tiffany’s trademark by selling rings with its iconic name.

Top Lot Fails to Sell Again at Sotheby’s

A jadeite bangle estimated at up to $9 million (HKD 70 million) did not find a buyer at a Sothebys auction in Hong Kong. The piece was the most expensive item at the sale. Two weeks earlier, the headline lot at the companys New York auction met the same fate when an oval, 27.35-carat, D-color, VS2-clarity diamond and platinum ring failed to hit its reserve price.

Boehmer et Bassenge Boutique to Debut at Christies

Jewelry designed by Boehmer et Bassenge’s new boutique Maison de Haute Joaillerie will co-lead a Christie’s Magnificent Jewels auction in Geneva on November 15. The top lot is a pair of diamond earrings estimated to fetch $20 million to $30 million. They feature the world’s largest pair of pear-shaped, D-color, flawless diamonds with a symmetrical cut and weigh 52.55 carats and 50.47 carats. At the same auction, Christie’s will offer a pear-shaped, 9.14-carat, fancy vivid pink diamond estimated at $16 million to $18 million.

MINING 	  

De Beers Sales Beat Expectations

De Beers sold $485 million of rough diamonds in its eighth sales cycle of the year, exceeding expectations in a seasonally quiet period ahead of the Diwali holiday in India. While the figure for September is still the lowest for this year, sales soared 57 percent from a year ago when demand hit rock-bottom levels. Sales in the 7th cycle were restated at $639 million. The Diwali vacation in India from October 30 means demand for inventory is lower as manufacturers hold on to fewer goods during the period.

ALROSA’s Monthly Rough Sales Rise to $435M

ALROSA’s rough diamond sales increased to $435.1 million in September amid stronger demand and mirroring results from rival miner De Beers. Polished sales stood at $18.9 million, taking group sales to $454 million. Demand was good in almost all categories of rough, ALROSA’s vice-president Yury Okoemov said.

Lucara Sets Diamond Tender for November

Lucara Diamond Corp. will hold its second “exceptional” stone tender of 2016 from November 7 to 16, featuring at least 12 diamonds with a combined weight of about 1,100 carats. Lucara, which discovered the 1,109-carat Lesedi La Rona last November, also completed the first stage of modifications to its processing plant as part of the upgrade to its Large Diamond Recovery system. This will enable the company to find more thousand-carat diamonds, it said.

ECONWATCH 	  

Diamond Industry Stock Report

Retail stocks were mainly stronger this week, led by Signet (+8.7%) in a week that saw it close a $625 million investment from private equity group Leonard Green & Partners. European share prices were solid, while Hong Kong-based Chow Sang Sang (+5.3%) gained in contrast to otherwise lower industry stocks in the Far East. Petra Diamonds (+7.3%) led mixed mining stocks.

View the detailed industry stock report
Oct 6 (12:25 GMT) Sep 29 (12:54 GMT) Chng.
$1 = Euro 0.89 0.89 0.00
$1 = Rupee 66.75 66.90 -0.15
$1 = Israel Shekel 3.78 3.76 0.03
$1 = Rand 13.83 13.80 0.02
$1 = Canadian Dollar 1.32 1.31 0.01

Precious Metals Chng.
Gold $1,261.95 $1,318.62 -$56.67 -4.3%
Platinum $969.75 $1,025.10 -$55.35 -5.4%
Silver $17.56 $19.04 -$1.48 -7.8%

Stock Indexes Chng.
BSE 28,106.21 27,827.53 278.68 1.0%
Dow Jones 18,281.03 18,339.24 -58.21 -0.3%
FTSE 7,031.56 6,921.10 110.46 1.6%
Hang Seng 23,952.50 23,739.47 213.03 0.9%
S&P 500 2,159.73 2,171.37 -11.64 -0.5%

Rapaport Weekly Market Comment October 13, 2016

Trading centers quiet over Jewish holidays. U.S. stable with good demand for H-K, SI-I1’s before Christmas selling season. Indian buyers looking for deals with rising expectations for Diwali sales after good monsoon season and lower rupee gold prices (-5%). LVMH 3Q jewelry & watch revenue +2% to $966M. U.S. Aug. net polished imports -1% to $240M. Belgium Sep. polished exports -11% to $1.2B, rough imports +39% to $1.2B. DPA launches generic advertising videos targeting millennials. Rapaport offices will be closed Monday and Tuesday (Oct 17-18) and the Rapaport Price List will not be published next week (Oct. 21) due to Jewish holiday of Succot.

RapNet Data: October 13

Diamonds 1,266,599
Value $7,963,703,562
Carats 1,341,918
Average Discount -30.47%

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.

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RAPAPORT ANNOUNCEMENTS
Oct-Nov 26-2 Wed-Wed

Rapaport Single Stone Auction

New York & Israel

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November 8-16 Tue-Wed
Rapaport Melee Auction

New York & Dubai

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November 16-23 Wed-Wed

Rapaport Single Stone Auction

New York & Israel

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QUOTE OF THE WEEK
Maybe we won’t ever get married and maybe we will, but I will spend my future with you.

The line from the DPAs generic marketing video advertisement sums up how it is presenting diamonds to millennials.

MARKETS 	  

United States: Trading sentiment improves for holiday season as DPA launches unconventional video ads focused on millennials who think differently about diamonds and relationships…

Belgium: Trading quiet over Jewish holiday period. Dealers focused on filling U.S. pre-season orders…

Israel: Short week in Israel due to Yom Kippur holiday. Bourse to close Sunday and Monday (Oct. 16-17) with half-day services over rest of the Succot holiday…

India: Market slow with dealers already in festive mode after auspicious Dussehra holiday on Tuesday (Oct. 11). Very few foreign buyers in Mumbai during Jewish holiday period…

Hong Kong: Polished market stable but few buyers from trading centers. Steady demand for 0.30 to 0.50 ct., G-J, VS-SI diamonds…

Click here for deeper analysis

FIVE-MINUTE INTERVIEW 	  

An Industry Perspective

Rapaport’s Avi Krawitz spoke with newly appointed De Beers CEO Bruce Cleaver at the recent Hong Kong Jewellery & Gem Fair. Cleaver maintains short-term caution for the diamond market but outlines some burgeoning opportunities.

Click here to read the interview

INDUSTRY 	  

DPA Campaign Focuses on Imperfect Relationships

The Diamond Producers Association (DPA) launched an advertising campaign that breaks with tradition by featuring imperfect relationships and emphasizing “real” and “precious” human connections. The group released two “provocative” video commercials telling the story of couples on life journeys together as it aims to connect with millennials. In contrast with traditional diamond advertising, which often featured glamorous, perfect models, the ads portray the lives of real people and the warts and blemishes of their relationships.

U.S. Polished Imports Rise

U.S. polished diamond imports jumped to the highest level seen in the seasonally slow month of August in three years. Inbound shipments of polished rose 2.4% to $1.66 billion. Polished imports by weight grew 4% to 906,469 carats, while the average price declined 1.5% to $1,833 per carat. Polished diamond exports, meanwhile, increased 3% to $1.38 billion, driving net imports down 0.7% to $280 million.

U.S. Jewelry Industry Returns to Myanmar

Representatives of the U.S. gem and jewelry industry made their first visit to Myanmar since President Barack Obama said he will lift remaining economic sanctions. The delegation was aimed at re-establishing lines of commerce between the two nations. It was led by American Gem Trade Association president Jeffrey Bilgore and chief executive officer Douglas Hucker, Jewelers of America President and CEO David Bonaparte and Jim Shigley, a seasoned gemologist at the Gemological Institute of Amerika.

Belgium’s Rough Trade Soars

Belgium’s rough trading leapt in September as shipments of uncut diamonds continued to outperform polished. Rough exports soared 61% to $1.42 billion and rough imports surged 39% to $1.21 billion. By volume, rough exports jumped 26% to 10.78 million carats. Net rough imports slumped to negative $212.7 million from negative $14 million a year ago. By contrast, polished exports slid 11% to $1.24 billion, while polished imports declined 5% to $1.28 billion.

RETAIL & WHOLESALE 	  

Sothebys Expects $3M/ct. for Cartier Blue Diamond

A blue diamond ring will go under the hammer in Geneva next month with an estimated price tag of $15 million to $25 million, or up to $3.1 million per carat. The square emerald-cut, 8.01-carat, fancy vivid blue diamond, named the ‘Sky Blue Diamond,’ will headline Sotheby’s Magnificent Jewels and Noble Jewels auction on November 16. Mounted by Cartier, the diamond also has “excellent” polish and is a type-IIb stone.

LVMH Watch & Jewelry Sales Rise

LVMH Moët Hennessy Louis Vuitton’s revenue from watches and jewelry rose 3% to $2.74 billion (EUR 2.49 billion) in the first nine months of the year as its iconic Bulgari jewelry brand gained market share. “Organic” revenue growth, which assumes a comparable structure and constant exchange rates, was 4%. During the third quarter, watch and jewelry sales grew 3% to $965.8 million, representing a 2% rise in organic revenue.

NRF Predicts U.S. Holiday Sales to Rise

U.S. sales in the upcoming holiday season will increase amid an improvement in jobs and income and stronger consumer sentiment, the National Retail Federation forecast. Revenue is expected to rise 3.6% to $655.8 billion year on year in November and December, beating the 10-year growth average of 2.5%.

Titan Warns of Stagnant Indian Jewelry Demand

India-based Titan Company said demand was weak in the second fiscal quarter as consumers suffered from “consumption fatigue.” The quarter that ended September 30 started off with expectations of improvement because of a “bountiful” monsoon season. But in the end, sales of gold jewelry were sluggish even as studded-jewelry sales beat expectations.

MINING 	  

Lulo Mine Production Hits Record Levels

Lucapa Diamond Company said production from its Lulo mine in Angola reached its highest point yet for both total output and average size in the third quarter. The alluvial mine yielded 8,853 carats in the three months that ended September 30 – representing a 154% jump over the same period a year ago. The average weight of diamonds grew an impressive 62% to 1.9 carats per stone as 137 “specials” above 10.8 carats were extracted.

Stornoway to Sell Renard Rough Ahead of Schedule

Stornoway Diamond Corporation will hold the first sale of diamonds from its Renard mine two months earlier than expected. The sale will start November 14 in Antwerp. First ore from the mine in Québec, Canada, reached the diamond plant July 15, with 111,556 carats produced by September 30. Output included 21 “special” stones larger than 10.8 carats.

GENERAL 	  

New Synthetics Detector Works on ‘All’ Jewelry

DRC Techno launched a device for detecting synthetics which it claims is the market’s first machine that sifts out lab-grown diamonds in all types of jewelry. ‘J-Secure’ identifies synthetics from 0.003 carats to 10 carats. The basic model is designed for retail stores, while the ‘J-Secure plus’ machine is for a company’s purchase office. The equipment picks up diamonds created using chemical vapor deposition (CVD) and high pressure-high temperature (HPHT), the two main methods for growing synthetic diamonds.

SimplexDiam Buys All Items in JSN Liquidation Sale

SimplexDiam purchased all the jewelry lots in the liquidation of JSN Jewellery, the wholesale manufacturing division of Canada-based Ben Moss Jewellers. The sale is the “largest” jewelry liquidation this year, with the goods valued at about $4 million at wholesale cost. The company bought more than 8,500 pieces, mostly in commercial price points below $500 at wholesale.

ECONWATCH 	  

Diamond Industry Stock Report

LVMH (+4.8%) gained this past week on strong sales results, with other Europe-based luxury stocks such as Swatch Group (+7.5%) and Richemont (+7.3%) also strengthening. Gemfields (-7.1%) was the weakest performer of the listed miners, many of which lost value. In the U.S., Birks Group (-11%) headed the declines, while Charles & Colvard (+5.2%) was the strongest performer.

View the detailed industry stock report
Oct 13 (11:03 GMT) Oct 6 (12:25 GMT) Chng.
$1 = Euro 0.91 0.89 0.01
$1 = Rupee 66.90 66.75 0.14
$1 = Israel Shekel 3.81 3.78 0.03
$1 = Rand 14.33 13.83 0.50
$1 = Canadian Dollar 1.32 1.32 0.01

Precious Metals Chng.
Gold $1,259.17 $1,261.95 -$2.78 -0.2%
Platinum $942.30 $969.75 -$27.45 -2.8%
Silver $17.55 $17.56 -$0.01 -0.1%

Stock Indexes Chng.
BSE 27,643.11 28,106.21 -463.10 -1.6%
Dow Jones 18,144.20 18,281.03 -136.83 -0.7%
FTSE 6,974.67 7,031.56 -56.89 -0.8%
Hang Seng 23,031.30 23,952.50 -921.20 -3.8%
S&P 500 2,139.18 2,159.73 -20.55 -1.0%