Rapaport Weekly Market Comment October 27, 2016

Markets quiet with New York, Antwerp and Israel returning from Jewish holidays and India closing for Diwali festivals. Polished prices relatively stable since September HK show but overall demand relatively weak and inventories high. Rough trading active with percentage increases due to low sales last year. De Beers 3Q sales +77% to 5.3M cts., production +4% to 6.3M cts. Petra Diamonds 3Q production +30% to 1.1M cts. Luk Fook 2Q gem-set jewelry same-store sales -14%. India Sept. polished exports +30% to $2.5B, rough imports +71% to $1.8B.

RapNet Data: October 27

Diamonds 1,261,205
Value $7,934,057,373
Carats 1,341,614
Average Discount -30.61%

www.rapnet.com

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

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS
Oct-Nov 26-7 Wed-Mon

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
The diamond market is holding firm with prices on a like-for-like basis matching those realised in the period January to June.

Johan Dippenaar, chief executive officer of Petra Diamonds, on rough prices in the July to September period

MARKETS 	  

United States and Belgium: Trading quiet as dealers return from Jewish holidays…

Israel: Market quiet as traders return from nearly a month of holidays. Better variety of goods available with improved sales…

India: Market gearing up for Diwali with businesses closing, reopening Nov. 7-9. Cutting factories to shut for up to 3 weeks…

Hong Kong: Market sentiment low with Hang Seng Index falling and increased political disorder over the extent of Chinese control…

Click here for deeper analysis

INDUSTRY 	  

KP Wants Industry to Fund Civil Society Attendance

Industry members participating in Kimberley Process (KP) activities will be required to pay twice so that a non-profit group can also attend, under plans put forward by the KP chair. Anyone from the trade attending a review visit, mission or meeting at a KP intersession or plenary will contribute matching funds. The current system is unfair as trade bodies typically do not contribute towards non-governmental organizations participating despite having “significant resources,” KP chair Ahmed Bin Sulayem (pictured) said.

India’s Polished Diamond Exports Jump

India’s polished diamond exports rose 30% to $2.5 billion in September. Polished imports fell 21% to $184.6 million, leaving net polished exports 38% higher at $2.32 billion. Rough diamond imports leapt 71% to $1.8 billion, while rough exports more than doubled to $155.1 million from $67.3 million a year ago. Net rough imports grew 67% to $1.64 billion. India’s net diamond account, the difference between net polished exports and net rough imports, declined 4% to $678 million.

Swiss Watch Exports Weighed Down by HK Slump

Exports of Swiss watches declined 5.7% to $1.72 billion (CHF 1.71 billion) in September as shipments to Hong Kong dived 40% – their steepest drop in 20 months. Exports to the U.S. rose 4.7%, making it the leading market for the second time this year. Exports of precious metal watches slid 15%, while orders of timepieces worth $3,013 (CHF 3,000) or more fell 6%.

RETAIL & WHOLESALE 	  

Luk Fook Sales Decline Steepens

Luk Fook’s same-store retail sales accelerated their quarterly decline to 37% as gold sales plummeted from a high base amid “sluggish” consumer sentiment. Sales of the yellow metal by the Hong Kong-based retailer slumped 47% in the second fiscal quarter that ended September 30, weighed down by the negative base effect of the “small-scale gold rush” a year ago and the relatively high price this quarter. Gem-set jewelry sales fell 14%.

Buffett’s Richline Buys Silpada

Richline Group snapped up Silpada Designs, marking the Warren Buffett-owned jewelry subsidiary’s fourth acquisition this year. The purchase covers Silpada’s assets, including its brand name, jewelry designs and all sterling silver and fashion jewelry inventory. The seller of silver jewelry was founded by stay-at-home mothers. Terms of the deal were not disclosed.

MINING 	  

De Beers Sales Volume Jumps After Market Recovery

De Beers rough diamond sales grew 77% to 5.3 million carats in the third quarter. The jump reflected improved trading conditions compared with a slump in demand a year ago due to high stock levels. Production increased 4% to 6.3 million carats after the miner cut output last year in response to the weaker trading environment. Production in De Beers Botswanan joint venture, Debswana, jumped 12%, with output from the Jwaneng mine leaping 47% because of planned maintenance a year ago.

Petra Diamonds Production Rises 30%

Petra Diamonds’ production grew 30% to 1.1 million in the first fiscal quarter that ended September 30 because of increased contribution from “undiluted run-of-mine ore.” Recovery levels were also lifted by the joint acquisition of the Kimberley mines in January and the subsequent formation of the Kimberley Ekapa Mining joint venture. Separately, Petra said four workers were killed in three incidents at its mines during the quarter, prompting the company to increase safety initiatives.

Gahcho Kué Mine Yields 50ct. Diamond

Mountain Province will sell a 50.25-carat gem-quality diamond from the new Gahcho Kué mine in January, the largest stone yet from the Canadian project. Total output in August and September stood at 198,000 carats, of which about 97,000 carats belongs to Mountain Province, which owns 49% of the mine. De Beers holds the remainder. The first open tender of run-of-mine production will take place in Antwerp in January.

Lucapa to Sell 172ct. Rough Diamond Next Month

Lucapa Diamond Company said it will offer a 172-carat and a 104-carat diamond at a sale of goods from the Lulo mine in Angola in mid-November. Both stones are type-IIa, D-color rough diamonds and were recovered in September. Separately, a 72-carat, also type-IIa, D-color diamond will be among the stones on offer at a sale of diamonds recovered by Lulo’s alluvial mining company Sociedade Mineira Do Lulo. The sale is scheduled for mid-December.

ECONWATCH 	  

Diamond Industry Stock Report

Stornoway Diamond (+11%) led mining stocks over the past two weeks as its Renard mine opened in Canada. Petra Diamonds (+10%) was also boosted by strong production figures. In the U.S., retail stocks were mostly lower, the declines headed by Birks Group (-9.1%). European luxury stocks rose, led by Kering (+8.1%) on impressive sales results.

View the detailed industry stock report
Oct 27 (11:17 GMT) Oct 13 (11:03 GMT) Chng.
$1 = Euro 0.92 0.91 0.01
$1 = Rupee 66.86 66.90 -0.04
$1 = Israel Shekel 3.84 3.81 0.03
$1 = Rand 13.91 14.33 -0.42
$1 = Canadian Dollar 1.34 1.32 0.01

Precious Metals Chng.
Gold $1,269.50 $1,259.17 $10.33 0.8%
Platinum $967.96 $942.30 $25.66 2.7%
Silver $17.68 $17.55 $0.13 0.7%

Stock Indexes Chng.
BSE 27,915.90 27,643.11 272.79 1.0%
Dow Jones 18,199.33 18,144.20 55.13 0.3%
FTSE 6,956.16 6,974.67 -18.51 -0.3%
Hang Seng 23,132.35 23,031.30 101.05 0.4%
S&P 500 2,139.43 2,139.18 0.25 0.0%

Rapaport Weekly Market Comment November 3, 2016

New York diamond and jewelry shows lift trade sentiment with some indications of improving holiday demand. Lower qualities outperforming better-quality, more expensive goods. Chinese demand slow. Hong Kong sentiment weak with reports Chinese trade moving to other industries. India market closed for Diwali. Polished prices softening with Oct. RAPI 1 ct. -2.3%, 0.30 ct. -0.5%, 0.50 ct. -1.6%, 3 ct. +1.2%. Pandora 3Q revenue +18% to $683M, profit +40% to $208M. Hong Kong Jan.-Sep. polished imports -2% to $13.2B, exports +2% to $10.2B. Catoca 2015 revenue -4% to $582M, net profit +1% to $127M. The Rapaport Group wishes all our friends a happy, enlightening Diwali.

RapNet Data: November 3

Diamonds 1,254,380
Value $7,907,189,899
Carats 1,348,468
Average Discount -30.67%

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 26-7 Wed-Mon

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
Appetite for luxury jewelry for personal use in Mainland China by the rising middle class will remain strong. Rising disposable income, in particular among the female population, and the rising women’s job market participation rate, is the strong force behind this belief.

MARKETS 	  

United States: New York busy with steady traffic at JA, IWJG and Leuer shows. Israel Diamond Week at NY Diamond Dealers Club active with Israeli suppliers holding prices firm…

Belgium: Trading quiet with Indian dealers away for Diwali and markets closed for public holiday in Belgium…

Israel: Polished trading stable. Focus on U.S. holiday demand with many dealers in New York for Israel Diamond Week…

India: Diamond market very quiet with most businesses closed for Diwali. Dealers expected to return by Nov. 14, factories to remain closed until Nov. 21…

RAPAPORT STATEMENT 	  

Diamond Prices Decline in October

Diamond markets were quiet in October with wholesale businesses closing for the respective Chinese, Jewish and Indian holidays. Trading slowed as larger U.S. holiday orders were already filled and dealers shifted to accommodate specific requirements from their retail customers. The RapNet Diamond Index (RAPI™) for one-carat, RapSpec-A3+ polished diamonds fell 2.3% in October. The index dropped 4.3% in the first ten months of the year.

INDUSTRY 	  

Stuller Debuts Traceable Melee Supply

Diamond manufacturer Stuller said it has become the first wholesaler in the U.S. with the ability track its melee diamonds through the supply chain. The company partnered with miner Dominion Diamond Corporation to introduce CanadaMark melee to the North American market. Melee is rarely tracked because of its small size and large volume, Stuller explained.

Graff Showcases Record Heart-Shape Diamond

Graff Diamonds unveiled the “Graff Venus” diamond which it claims is the largest heart-shape, D-flawless diamond in the world. The 118.78-carat, type IIa diamond, with excellent polish and symmetry and no fluorescence, was cut in-house by Graff. It came from a 357-carat rough stone found at the Letšeng mine in Lesotho in 2015, which miner Gem Diamonds sold for $19.3 million to an undisclosed buyer in September that year.

Analyst Maintains Negative Outlook for Botswana

Standard & Poor’s left Botswanas credit rating unchanged and gave the country a negative outlook out of concern the current diamond-sector slump may be due to the industry’s structural weakness rather than cyclical economic factors. S&P forecast diamond prices will gradually recover in the medium term but maintained its A-¬/A-¬2 long¬ and short-¬term foreign and local currency sovereign credit ratings for the country.

Hong Kong’s Polished Imports Fall

Hong Kong’s polished diamond imports decreased 2.4% to $13.2 billion in the first nine months of the year mainly due to lower shipments from Israel and Belgium. Polished exports grew 2% to $10.16 billion, propelled by a 27% jump in orders from Mainland China. Rough imports fell 16% to $1 billion, while rough exports jumped 18% to $1.47 billion. Hong Kong’s net diamond account, reflecting total imports minus exports, slid 27% to $2.57 billion.

RETAIL & WHOLESALE 	  

Pandora Lifted by Asia-Pacific Growth

Denmark-based jeweler Pandora reported revenue grew 18% to $683.1 million (DKK 4.61 billion) in the third quarter as Asia-Pacific sales soared 46% and new collections were well received. Sales grew 6% in the Americas where the company is closing approximately 700 non-branded stores to improve its retail brand recognition. Sales in Europe, Middle East and Africa rose 18%. Net profit leapt 40% to $208.1 million.

Saks to Open Specialty Jewelry Store

Saks Fifth Avenue will open a store dedicated to jewelry next year as part of a program of introducing specialty boutiques. ‘The Vault’ will open in Greenwich, Connecticut, in May, focusing on “high and fine” jewelry. The department store chain also launched a specialty shoe boutique in Greenwich earlier this month and will open an outlet selling modern designer fashion in February.

U.S. Jewelry Store Sales Slip

U.S. jewelry store sales declined 2.1% year on year to $2.22 billion in August, according to the U.S. Census Bureau of Labor Statistics. Separate data from the U.S. Bureau of Labor Statistics showed the consumer price index (CPI) for jewelry rose 4% in August from the previous month, while in September the index fell 2.6% sequentially.

TSL Hit by Hong Kong Tourist Slowdown

Hong Kong-based Tse Sui Luen (TSL) reported revenue slid 12% to $199.9 million (HKD 1.55 billion) and profit dived 24% to $1.5 million in the six months that ended August 31. The jeweler was hit by a continued decline in tourist numbers from Mainland China. Sales in Hong Kong and Macau plummeted 32%, outweighing a 9.6% increase in Mainland China revenue.

MINING 	

Catoca Sales Fall on Weak Rough Prices

Catoca, which operates Angola’s largest diamond mine, reported revenue fell 3.5% to $582 million in 2015. Rough prices slumped 11% to an average of $87 per carat while sales volume grew 3.5% to 6.9 million carats. Production from the mine increased 4.2% to 6.7 million carats. Challenges came from lower rough and polished demand, the economic slowdown in China and the appreciation of the U.S. dollar, the miner said.

Wiese Gets Go-Ahead for Trans Hex Takeover

Trans Hex Group said the takeover offer for the South Africa-based diamond miner has been declared unconditional after competition authorities approved the deal. Cream Magenta and Metcap, which are both owned by South African retail tycoon Christo Wiese, offered $0.29 (ZAR 3.94) per share for the company in concert with RAC Investment Holdings. The miner reported revenue increased 2.5% to $20.4 million in the first half that ended September 30 and the group made a profit of $2.4 million after reporting a loss a year ago.

Lerala Mining Operations Halted

Mining at the Lerala diamond mine in Botswana was suspended to reduce accumulated ore stockpiles. Production has exceeded the plant’s current ability to process feed, resulting in surplus ore, explained Kimberley Diamonds, which operates the mine through its Botswana subsidiary Lerala Diamond Mines. The company expects the suspension to continue for three to four months or until stockpiles are reduced.

Firestone Tax Credit Enables Profit

Firestone Diamonds reported a profit in the fiscal year that ended June 30 due to a $22.6 million tax credit relating to losses incurred in prior years. The company recorded net income of $13.6 million compared with a $10.4 million loss a year ago. It would have made a loss of $9 million if not for the tax credit. The group made no diamond sales in fiscal 2016 as it is still developing the Liqhobong mine in Lesotho.

Rockwell Records Loss as Sales Slide

Rockwell Diamonds slumped to a loss in the second quarter that ended August 31 as revenue fell due to lower diamond prices. Sales dived 36% to $10 million (CAD 13.4 million) as the average price of rough sold dropped 13% to $1,560 per carat. Rough sales slid 14% to $7.9 million, while its beneficiation income – profit share from its polishing partnership with Diacore – fell 12% to $2.1 million. The junior miner reported a loss of $447,778 versus a profit of $895,556 a year ago.

GENERAL 	  

NGO Upholds Boycott of Kimberley Process

A member of the Civil Society Coalition is still boycotting the Kimberley Process (KP) despite claims it will attend the upcoming plenary meeting in Dubai. Ahmed Bin Sulayem, the United Arab Emirates (UAE)-based KP chair, earlier announced CENADEP will attend the meeting, citing a letter from CENADEP’s KP representative Albert Kabuya Muyebal. But CENADEP’s executive director Danny Singoma stressed Kabuya Muyebal was “not authorized” to make such a decision and the group will not attend the plenary.

Italian Trade Show Groups Merge

Fiera di Vicenza and Rimini Fiera completed their merger to create Italian Exhibition Group (IEG), claiming the new entity is now Italy’s largest trade show organizer. The deal is the first union of trade-show enterprises in Italy and creates the largest such business in the country by number of directly organized shows, the companies said. The new company intends to list on a stock exchange, possibly in spring 2018.

ECONWATCH 	  

Diamond Industry Stock Report

Industry stocks mainly fell this past week amid continued economic instability and political uncertainty ahead of next weeks U.S. presidential election. Birks Group (-17%) led the declines stateside, while Swatch Group (-5.8%) headed the European slides after an unfavorable ruling from the Swiss competition authorities over sales of watch movements. Hong Kong-based jewelers bucked the trend, led by Luk Fook (+11%), while Rockwell Diamonds (+7.7%) was the only miner in our list to record a share-price increase.

View the detailed industry stock report
Nov 3 (12:32 GMT) Oct 27 (11:17 GMT) Chng.
$1 = Euro 0.90 0.92 -0.01
$1 = Rupee 66.72 66.86 -0.14
$1 = Israel Shekel 3.82 3.84 -0.03
$1 = Rand 13.46 13.91 -0.45
$1 = Canadian Dollar 1.34 1.34 0.00

Precious Metals Chng.
Gold $1,291.65 $1,269.50 $22.15 1.7%
Platinum $979.00 $967.96 $11.04 1.1%
Silver $18.13 $17.68 $0.45 2.5%

Stock Indexes Chng.
BSE 27,430.28 27,915.90 -485.62 -1.7%
Dow Jones 17,959.64 18,199.33 -239.69 -1.3%
FTSE 6,808.69 6,956.16 -147.47 -2.1%
Hang Seng 22,683.51 23,132.35 -448.84 -1.9%
S&P 500 2,097.94 2,139.43 -41.49 -1.9%

Rapaport Weekly Market Comment November 10, 2016

Great changes in America as Trump victory to have major impact on political, social and economic conditions. Diamond and jewelry sector will benefit as new policies create a more prosperous middle class and greater numbers of wealthy consumers. Indian government cracks down drastically on cash by eliminating 500 and 1,000 rupee notes. Jewelry and gold sales surge as consumers dump currency. Titan Company 2Q sales +2% to $824M, profit +24% to $27M. Blue Nile to be sold for $500M to Bain Capital and Bow Street as 3Q sales -4% to $105M, profit -35% to $1.3M. U.S. Sep. polished imports +33% to $2.2B. Sarine to introduce automated color and clarity grading next year.

RapNet Data: November 10

Diamonds 1,271,715
Value $7,927,540,066
Carats 1,350,890
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.

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS

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
Nov-Dec 28-1 Mon-Thu

Rapaport Melee Auction

New York View Details

QUOTE OF THE WEEK
Whereas in the past, advertising influenced people, today people influence people.

Kent Wong, managing director, Chow Tai Fook

MARKETS 	 

United States: Polished trading soft but prices firm for 0.70 to 1.25 ct., H-J, SI, RapSpec A2+ qualities. Memo suppliers demanding quick returns before Thanksgiving…

Belgium: Positive mood with steady demand for 0.30 to 0.90 ct., H-J, SI diamonds. 1 ct., H+, VVS+ softer. Fancy shapes stable with improving demand for 1 ct. and larger Emeralds, Pears and Cushions…

Israel: Markets stable. Manufacturers challenged by low profits with high rough prices and scarce supply. Dealer prices firm with steady U.S. demand ahead of Thanksgiving…

India: Market shocked by new currency regulations as government cracks down on black markets. Consumer rush to buy gold and jewelry after government cancels 500 and 1,000 rupee notes…

Hong Kong: Trading relatively quiet. Dealers filling specific orders with little buying for inventory. Retailers preparing for Chinese New Year with trading slower than previous years…

Click here for deeper analysis

RAPAPORT STATEMENT 	  

Great Change in America

America is moving to a new future based on different values and priorities. Trump’s triumph will have a major impact on political, social and economic conditions. A tidal wave of disruption, filled with challenges and opportunities, is coming our way...

Click here to read statement

FIVE-MINUTE INTERVIEW 	  

Bringing Personalized Jewelry to the Mass Market

Rapaport’s Avi Krawitz spoke with Kent Wong, managing director of Chow Tai Fook, at the jewelers Hong Kong headquarters. Wong says the company must tailor its products to adapt to todays consumers...

Click here to read the interview

INDUSTRY 	  

Sarine Develops Automated Color and Clarity Grading

Sarine Technologies unveiled equipment for automated color and clarity grading of polished diamonds. Sarine Clarity maps inclusions and flaws and applies a set of algorithms to determine the clarity grade, using standard grading terminology. It also sorts stones and advises which market the diamond will sell best in, based on local consumer preferences. Sarine Color has lab-grade accuracy for determining a diamond’s color and is currently being tested in India. Sarine plans to start marketing the technology in mid-2017.

De Beers Opens Auction Platform to Polished Stones

De Beers launched an online trading service that enables third parties to sell polished diamonds to other businesses. The pilot service is targeted at single stones weighing more than 5 carats or those with a fancy color. The initiative, open to midstream industry members, represents an expansion of a rough trading platform De Beers introduced in June. All sellers must comply with a declaration of integrity and all diamonds offered on the platform must have evidence of manufacturing history and be screened for synthetics or treatments.

Rare Argyle Violet Diamond Sold to L.J. West

New York-based L.J. West Diamonds bought the ‘Argyle Violet,’ the centerpiece of Rio Tinto’s Argyle Pink Diamonds Tender, for an undisclosed amount. The stone is the largest violet diamond recovered from Rio Tinto’s Argyle mine in Western Australia. This year’s tender delivered the highest average price in the sale’s 32-year history, reflecting strong global demand for Argyle’s rare pink and red diamond production, Rio Tinto said.

U.S. Polished Diamond Imports Grow 33%

U.S. polished diamond imports surged 33% to $2.18 billion in September. The month was the busiest this year after May, which is propped up by the JCK Las Vegas show in June. The average price jumped 24% to $2,202 per carat. Polished exports increased 18% to $1.73 billion, which meant net polished imports more than doubled to $446 million.

RETAIL & WHOLESALE 	  

Blue Nile to be Sold for $500M

Blue Nile agreed to be acquired for $500 million by an investor group comprising Bain Capital Private Equity and Bow Street. The deal value represents a premium of about 34% over Blue Nile’s closing price on November 4. The news came as the online diamond and jewelry retailer reported profit plummeted 35% to $1.3 million in the third fiscal quarter to October 2 with sales down 4.3% to $105.1 million. U.S. engagement net sales fell 8.5% to $59.5 million.

Diwali Jewelry Sales Rise on Lower Gold Prices

Jewelry sales in India improved during the Diwali festival as a dip in gold prices helped release months of pent-up demand. Prices of the metal grew 22% between January and September, compounding the impact of Indian jewelers’ six-week strike in March and April. But a 3% decline in October boosted consumer activity. Sales jumped as much as 25% compared to Diwali last year, G. V. Sreedhar, chairman of the All India Gems & Jewellery Trade Federation, estimated.

Shock Currency Clampdown Boosts Indian Gold Sales

Jewelry and gold sales surged this week in India as consumers sought ways to get rid of cash following the government’s sudden announcement to ban 500 and 1,000 rupee notes effective on November 8. The official gold price remained relatively stable at around INR 31,000 per 10 grams in the two days since the announcement, while the “unofficial” rate surged to anywhere between INR 40,000 and INR 60,000 per 10 grams, traders estimated. Government took the measure to curb financing of terrorism and other subversive activity.

Titan Boosted by Steady Diamond Jewelry Sales

Titan Company’s profit grew 23.5% in the second fiscal quarter as the Indian jewelry retailer benefited from buoyant sales of studded jewelry. Profit after tax increased to $27.1 million (INR 1.81 billion) on a standalone basis in the three months that ended September 30, with diamond-studded jewelry outperforming the plain gold segment. Total sales were flat at $400.9 million.

Richemont Jewelry Sales Show Resilience in Decline

Richemont’s jewelry sales slipped 2% to $2.19 billion (EUR 1.96 billion) in the first fiscal half that ended September 30. “Resilient” jewelry demand meant the category declined at a slower pace than other divisions, the luxury group said. Group revenue was flat at constant exchange rates. Timepiece sales dived 25% to $2.34 billion, driven by lower demand for fine watches.

MINING 	  

Lucara Falls into the Red

Lucara Diamond Corporation slumped to a net loss of $3.8 million in the three months ending September 30 from a profit of $44.2 million a year ago. Sales plummeted 58% to $38.1 million because only one diamond sale took place in the quarter versus two in the same period last year – of which one was an exceptional stone tender, the miner explained. The appreciation of the Botswanan pula against the dollar also damaged reported results.

Letšeng Prices Fall as Large Stone Supply Stumbles

The average selling price of Letšeng production fell in the third quarter as owner Gem Diamonds sold fewer 100-carat-plus diamonds from the Lesotho-based asset. The company sold 37,990 carats from Letšeng for a total of $61.5 million, achieving $1,619 per carat, implying a 31% decline over the average price reported a year ago. Production at Letšeng slumped 17% to 24,388 carats largely because of poor weather conditions.

Large Rough Lifts Lulo to Record Sale

Lucapa Diamond Company achieved a record $8.3 million (AUD 11 million) from a sale of rough diamonds found at its Lulo mine in Angola. The company sold a parcel of 1,864 carats at an average price of $4,452 per carat. The total was the largest to date for Lulo diamonds, excluding the exceptional 404-carat stone that fetched $16 million in February.

DiamondCorp No Longer Up For Sale

DiamondCorp shelved plans for a sale or merger after rejecting a cash takeover offer from an undisclosed bidder that it deemed undervalued the company. DiamondCorp last month said it urgently needs about $619,075 (GBP 500,000) to meet immediate funding requirements and that a sale or merger was a possible solution. However, approaches for the company turned out to be “opportunistic,” the miner said.

GENERAL 	  

KP Eyes Consensus on Rough Diamond Valuation

The Kimberley Process (KP) will hold a forum in Dubai on November 13 aimed at finding a consensus on the criteria for evaluating rough diamonds. The meeting will comprise two panel discussions featuring industry players from across the diamond industry. The event is on the first day of the annual KP plenary, which will run until November 17 in the emirate. Separately, chairman Ahmed Bin Sulayem (pictured) met with Mozambique’s President to discuss the country’s compliance and bid for KP membership.

Diamonds Direct Acquires Dallas Jeweler

Diamonds Direct bought Dallas-based Diamond Doctor, continuing its aggressive expansion into the U.S. retail space. Diamonds Direct, based in Charlotte, North Carolina, was acquired by private equity firm Blackstone Group last November. Since then it has opened branches in Oklahoma City, as well as in Charleston and San Antonio, Dallas News reported. The acquisition gives Diamonds Direct its 10th store and third in Texas

ECONWATCH 	  

Diamond Industry Stock Report

U.S. industry stocks were mostly positive this week, staving off fears of a mass sell-off following Donald Trumps surprise election victory. Blue Nile (+18%) led the pack on news of a private equity takeover, while Birks Group (+13%) and Movado Group (+13%) also gained. Far East and European stocks were relatively stable, with Richemont (+6.7%) standing out after announcing a management reshuffle. Mining stocks were mixed, headed by Rio Tinto (+14%), but Lucara Diamond (-10%) slid on disappointing results.

View the detailed industry stock report
Nov 10 (13:22 GMT) Nov 3 (12:32 GMT) Chng.
$1 = Euro 0.92 0.90 0.01
$1 = Rupee 66.74 66.72 0.02
$1 = Israel Shekel 3.84 3.82 0.02
$1 = Rand 13.84 13.46 0.38
$1 = Canadian Dollar 1.35 1.34 0.01

Precious Metals Chng.
Gold $1,279.66 $1,291.65 -$11.99 -0.9%
Platinum $983.00 $979.00 $4.00 0.4%
Silver $18.59 $18.13 $0.46 2.5%

Stock Indexes Chng.
BSE 27,517.68 27,430.28 87.40 0.3%
Dow Jones 18,589.69 17,959.64 630.05 3.5%
FTSE 6,890.61 6,808.69 81.92 1.2%
Hang Seng 22,839.11 22,683.51 155.60 0.7%
S&P 500 2,163.26 2,097.94 65.32 3.1%

Rapaport Weekly Market Comment November 17, 2016

Indian diamond industry under pressure with severe liquidity crisis as government drastically reduces money supply by invalidating 500 and 1,000 rupee currency. Rough trading slow with De Beers $470M Nov. sale smallest of the year. ALROSA Oct. rough sales $431M. Sotheby’s Geneva sells $136M (87% by lot) with emerald-cut, 17.07 ct., fancy intense pink, VVS1 diamond sold to Graff for $21M ($1.2M/ct.). Christie’s Geneva sells $97M (77% by lot) with pear-shape, 9.14 ct., fancy vivid pink, VS2 diamond fetching $18M ($2M/ct.). Belgium Oct. polished exports -17% to $775M, rough imports -7% to $897M. JBT reports number of U.S. jewelry businesses -5% to 27,142 in 3Q.

RapNet Data: November 17

Diamonds 1,265,368
Value $7,866,721,772
Carats 1,353,401
Average Discount -30.32%

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

November 16-23 Wed-Wed

Rapaport Single Stone Auction

New York & Israel

View Details
December 6-14 Tue-Wed

Rapaport Melee Auction

New York & Dubai

View Details
December 7-14 Wed-Wed

Rapaport Single Stone Auction

New York & Israel View Details

QUOTE OF THE WEEK
The market is totally immune to the macro environment.

Rahul Kadakia, international head of the Christies jewels department, on the consistent allure of colored diamonds, quoted by CNBC

MARKETS 	  

United States: Dealers filling Christmas orders are maintaining firm prices. Difficult to negotiate terms with suppliers for memo goods. Steady demand for 0.70 to 2 ct., G-J, VS2-SI2 diamonds…

Belgium: Market sentiment positive and trading steady as dealers fill holiday orders. Improving European luxury demand for 1 to 2 ct., D-G, IF-VVS RapSpec A2+ diamonds…

Israel: Steady U.S. demand before holiday season. Dealer trading slow but November better than October…

India: Cautious mood as jewelry demand and diamond trading slows due to government demonetization program. Lack of liquidity mutes activity…

Hong Kong: Polished trading slow with selective demand for Hong Kong Christmas season. Steady demand for 1 ct., G-J, VS1-SI2 diamonds…

Click here for deeper analysis

INSIGHTS 	 

Indias Attack on Cash

Prime Minister Narendra Modi’s demonetization program has far-reaching consequences for the diamond and jewelry trade...

Click here to continue reading

INDUSTRY 	  

Graff Splashes $37M on Sothebys Pink Diamonds

Sothebys sold $136 million worth of jewels at its Geneva auction. The top lot was a step-cut, 17.07-carat, fancy intense pink, VVS1 diamond ring, which sold to Graff Diamonds for $20.8 million, or $1.2 million per carat. Graff also bought a pear-shaped, 13.20-carat, fancy intense pink, internally flawless diamond, valued at $16.2 million, or $1.2 million per carat. The Sky Blue Diamond, a square-cut, 8.01-carat, fancy vivid blue, VVS1 Cartier ring, was purchased by an anonymous buyer for $17.1 million, or $2.1 million per carat, at the lower end of its pre-sale estimate. The auction sold 87% by lot.

Christie’s Geneva Sells Pink Diamond for $18M

Christie’s netted $97.1 million at its Geneva auction with a pink diamond also topping the bill. The pear-shaped, 9.14-carat, fancy vivid pink, VS2 diamond sold to an unidentified Asian buyer for $18.2 million, or $2 million per carat. The auction house set a new world record for a pair of earrings, selling two pear-shaped, D-color, flawless diamonds for $17.6 million ($170,000 per carat). The diamonds weighed 52.55 carats and 50.47 carats respectively. The auction was 77% sold by lot.

416 U.S. Jewelers Close Shop in 3Q

Jewelry business closures in the U.S. increased 31% to 416 nationwide in the third quarter, according to data from the Jewelers Board of Trade (JBT). Most companies had “ceased operations,” which means they closed for reasons other than financial difficulty or consolidation. These totaled 392, representing a 42% jump from a year ago. Bankruptcies crept up to 10 cases from nine a year earlier.

Belgium’s Rough and Polished Trading Falls

Belgium’s polished diamond exports dropped 17% from a year ago to $775.2 million in October, while polished imports fell 10% to $796 million. Net polished exports swung to negative $20.8 million from positive $50.8 million a year ago. Rough imports dropped 7% to $897.4 million, while rough exports slumped 29% to $721.1 million. Net rough imports stood at $176.3 million compared with negative $54.2 million a year earlier. Belgium’s net diamond account, representing total polished and rough imports less total exports, stood at negative $197.1 million for the month, versus positive $105 million in October 2015.

RETAIL & WHOLESALE 	  

Jewelry Ads Give Contrasting Messages

Forevermark, Tiffany & Co and Kay Jewelers released video commercials ahead of the holiday season, showing contrasting approaches to entice consumers. Forevermark and Kay’s campaigns promoting their respective ‘Ever Us’ two-stone collections feature couples in their daily interactions, targeting millennials. Tiffany’s holiday commercial follows a more traditional model, focusing on the glamour and shine of a diamond.

Holiday Sales to Gain from Post-Election Certainty

Retail sales during the U.S. holiday season will increase between 2.1% and 2.5% over last year, magnified by the relatively low base in 2015, Standard & Poor’s predicted. The forecast covered general merchandise, apparel and accessories, furniture and other retail sales. Sales this season will benefit from increased certainty after the disruptive U.S. presidential elections, commentators said while remaining cautious about the extent of any potential uptur

Alex and Ani Appoints President

Alex and Ani named Cindy DiPietrantonio its president to oversee strategy and lead daily operations. DiPietrantonio (pictured), who joined the jewelry company in July as interim chief operating officer, will report to Carolyn Rafaelian, its founder and CEO. DiPietrantonio previously served as interim president of SHEEX Performance Bed Sheets and Sleepwear where she helped raise sales by more than 400%, Alex and Ani said.

Alibaba Sells Record $18B in Single Day

Sales on Alibaba Group’s Alipay platform jumped 32% on Singles’ Day, underlining the day’s growing importance on the Chinese retail calendar. The total value of transactions hit $17.8 billion (RMB 120.7 billion) compared to $14.3 billion last year, Alibaba reported. The major shopping day, also called “11.11” since it falls on November 11, is being marketed as an occasion for single consumers to buy products for themselves.

MINING 	  

De Beers Sells $470M in Quiet November Sight

De Beers recorded its smallest sight of the year in November amid a seasonally quiet period for the rough diamond market. The ninth sales cycle of 2016 totaled $470 million compared with $178 million a year ago when the rough market was in the doldrums. Premiums on the secondary market were about 5% for higher-quality goods but sightholders noted prices softened on news of the Indian government’s move to scrap 500 and 1,000 rupee notes.

ALROSA October Sales Hit $431M

ALROSA reported rough diamond sales totaled $430.8 million in October as demand remained strong despite disruptions caused by Diwali. The figure represents a decline from $435.1 million a month ago but is still relatively high for this time of year. October is seasonally slower because Indian manufacturers limit rough buying so they are not overstocked when factories close for Diwali in November.

Lucara Sells 224ct. Rough for $11M

Lucara Diamond Corp garnered $38.7 million from the sale of 12 “exceptional” stones recovered at its Karowe mine in Botswana. The top lot in the tender was a 224.5-carat, type IIa diamond which sold for $11.1 million, or $49,497 per carat. Five diamonds sold for more than $2 million each. A 162.3-carat stone drew $4.9 million, while an 81.8-carat diamond garnered $3.8 million.

Lace Diamond Mines Put into ‘Business Rescue’

DiamondCorp subsidiary Lace Diamond Mines (LDM) was placed into “business rescue,” after severe weather forced the company to halt production and request a suspension of its shares. LDM will formally appoint a business rescue practitioner in due course, the miner said. The deposit in South Africa was flooded after almost 90 millimeters of rain fell in just over an hour on November 11.

GENERAL 	  

JA: Trump Election Wont Impact Proposed Tax Bill

Jewelers of America (JA) said attempts to achieve tax “fairness” in the U.S. should be unaffected by the Republican Party’s continued control of the Senate. The tussle to pass the Marketplace Fairness Act will continue in 2017 and the Senate could consider the legislation before President-Elect Donald Trump takes office in January, according to JA. At present, online sellers such as Amazon and eBay can avoid charging and collecting sales tax in states where they do not have a warehouse or another physical presence.

Smithsonian Showcases Diavik Foxfire

A record-breaking rough diamond found in Canada has come on display at the Smithsonian National Museum of Natural History in Washington D.C., appearing until February 16. The Diavik Foxfire is the largest gem-quality rough diamond recovered in Canada, according to Rio Tinto, which owns 60% of the Diavik mine. The diamond was sold in June to Deepak Sheth of Amadena Investments LLC/Excellent Facets Inc., which chose to keep it in its rough form.

ECONWATCH 	  

Diamond Industry Stock Report

Indian jewelry stocks fell this past week as investors feared the potential impact of the governments decision to invalidate 500 and 1,000 rupee notes. The declines were led by Gitanjali Gems (-20%). U.S. retail stocks were mostly solid, headed by Kohls (+18%), amid reasonably positive expectations for the upcoming holiday season. Macys (+9%), Movado Group (+10%) and Nordstrom (+11.5%) also made healthy gains this week. European luxury and mining stocks were mixed.

View the detailed industry stock report
Nov 17 (12:00 GMT) Nov 10 (13:22 GMT) Chng.
$1 = Euro 0.93 0.92 0.01
$1 = Rupee 67.80 66.74 1.07
$1 = Israel Shekel 3.85 3.84 0.02
$1 = Rand 14.27 13.84 0.43
$1 = Canadian Dollar 1.34 1.35 -0.01

Precious Metals Chng.
Gold $1,230.57 $1,279.66 -$49.09 -3.8%
Platinum $945.50 $983.00 -$37.50 -3.8%
Silver $17.05 $18.59 -$1.54 -8.3%

Stock Indexes Chng.
BSE 26,227.62 27,517.68 -1,290.06 -4.7%
Dow Jones 18,868.14 18,589.69 278.45 1.5%
FTSE 6,769.24 6,890.61 -121.37 -1.8%
Hang Seng 22,262.88 22,839.11 -576.23 -2.5%
S&P 500 2,176.94 2,163.26 13.68 0.6%

Rapaport Weekly Market Comment November 24, 2016

Sentiment improves as holiday season starts with early Black Friday sales. Retailers discounting heavily with Macy’s offering -70% on fine jewelry. Diamond trading quiet amid tight Indian liquidity due to currency cancellation. Chinese and Indian demand cautious as U.S. dollar trumps up to 13-year high. Signet 3Q sales -3% to $1.2B, profit +13% to $17M. Chow Tai Fook 1H revenue -24% to $2.8B, profit -19% to $164M, opens first U.S. outlet in Macy’s. ALROSA 3Q revenue +70% to $1.1B, profit of $414M vs. loss of $237M. India Oct. polished exports +37% to $2.5B, rough imports +17% to $1.3B. The Rapaport Group wishes all our friends a happy Thanksgiving and a successful holiday season.

RapNet Data: November 24

Diamonds 1,277,628
Value $7,922,643,671
Carats 1,365,462
Average Discount -30.12%

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
November 16-27 Wed-Sun

Rapaport Single Stone Auction

New York & Israel

View Details December 6-14 Tue-Wed

Rapaport Melee Auction

New York & Dubai View Details
December 7-14 Wed-Wed
Rapaport Single Stone Auction

New York & Israel

View Details

QUOTE OF THE WEEK
The risk for rough prices to be repriced lower because of the increasing supply is higher than at any time in the last 24 months, in the absence of a commensurate decline in supplies from existing producers.

Kieron Hodgson, an analyst at Panmure Gordon, says rough prices could suffer as three major new mines come on stream.

MARKETS 	 	 

United States: Retail sentiment positive ahead of Thanksgiving weekend. Good season expected with low unemployment, improving consumer confidence, and strong dollar raising likelihood of Dec. interest rate hike…

Belgium: Diamond market cautious as dealers assess impact of currency cancellation. Local demand for small and lower quality diamonds plummets…

Israel: Steady trading with foreign buyers trying to get better prices in Ramat Gan than elsewhere…

India: Cautious mood as jewelry demand and diamond trading slows due to government demonetization program. Lack of liquidity mutes activity…

Hong Kong: Polished trading slow with dealers hoping this week’s International Jewelry Manufacturers’ Show will boost demand…

Click here for deeper analysis

FIVE-MINUTE INTERVIEW 	  

Luk Fook Adapts Strategy to Restore Growth

Luk Fook continues to report double-digit sales declines as it navigates the economic slowdown in China and drop in tourism to Hong Kong. Executive director Nancy Wong reveals how the company is rethinking its operations to improve its fortunes...

Click here to read the interview

INDUSTRY 	  

Shrenuj De Beers Sight Suspended

Shrenuj & Co. scaled back its Botswana operations amid continued liquidity pressure, and as the company’s De Beers sight has been suspended. Rising costs, the weakening of the rupee and stagnation in demand put the Mumbai-based diamond and jewelry manufacturer under strain, its executive director Vishal Doshi said. Shrenuj is in talks with De Beers to restore the rough supply deal to enable its Botswana operations to return to normal, possibly after the holiday season.

De Beers Selects More Accredited Buyers

Kiran Exports received De Beers ‘accredited buyer’ status following its split from Kiran Gems. That enables the Antwerp-based trading company access to De Beers ‘ex-plan’ goods that becomes available over and above De Beers supply to sightholders. Kiran Exports recently split as an independent company following a group restructuring by Kiran Gems earlier this year. Separately, South Africa-based Shimansky Diamonds said it also gained accredited buyer status.

Indias Diamond Trade Sees Substantial Growth

India’s polished exports jumped 37% year on year to $2.52 billion in October, reported the Gem & Jewellery Export Promotion Council. Polished imports slumped 31% to $195.8 million, leaving net polished exports 49% higher at $2.32 billion. Rough imports grew 17% to $1.26 billion and rough exports advanced 51% to $100.5 million, meaning net rough imports were 15% higher at $1.15 billion. India’s October net diamond account, the difference between net polished exports and net rough imports, more than doubled to $1.17 billion.

Analyst Warns of Rough Price Pressure

Increased supply may force rough prices down in 2017 as three new mines come on stream, cautioned Kieron Hodgson, an analyst at Panmure Gordon. Production from the Liqhobong, Renard and Gahcho Kué mines will enter the market, translating to an estimated 7.1 million additional carats next year. That will take its toll if diamond jewelry sales are weak this holiday season, he said. However, a strong season would buoy the market and result in a 5% rise in rough prices next year, the analyst added.

RETAIL & WHOLESALE 	  

Signet Gives Upbeat Sales Forecast

Signet Jewelers increased its full-year earnings guidance after reporting better than anticipated results for the third fiscal quarter. The company expects earnings to be in the range of $7.03 to $7.25 per share for the fiscal year ending January 2017, compared with a previous forecast of $6.90 to $7.22. The jewelry retailer reported net sales fell 3% to $1.19 billion in the third fiscal quarter that ended October 29, with same-store sales down 2%. Profit jumped 13% to $17 million.

Birks Slides to Loss in Weak Canada Economy

Birks Group’s sales fell 3% to $129.7 million in the first fiscal half amid tougher economic conditions in Western Canada. Revenue from Canada slumped 14% to $54.9 million, outweighing a 6% jump to $74.9 million in the U.S. The Montreal-based jeweler recorded a loss of $2 million versus a profit of $830,000 a year ago.

Chow Tai Fook Sales Fall, Enters U.S.

Hong Kong-based Chow Tai Fook opened its first branded store in the U.S. with the launch of a shop inside the Macy’s department store in New York’s Flushing neighborhood. The retailer also reported a 24% slump in group sales to $2.78 billion (HKD 21.53 billion) in the six months that ended September 30, weighed by a 5% decline in Hong Kong tourist arrivals from Mainland China. Profit dived 19% to $163.5 million for the period.

Higher Gold Prices Weigh on Luk Fook Sales

Luk Fook Holdings revenue plunged 22% to $705 million (HKD 5.47 billion) during the three months that ended September 30 as consumers pulled back from high-priced gold and tourist arrivals dropped in Hong Kong. Profit declined by just 6% to $55.9 million (HKD 433.7 million) as a 27% drop in costs mitigated the detrimental impact of lower sales. A shift to selling more gem-set jewelry helped lift profit margin.

MINING 	  

ALROSA Turns a Profit in 3Q

ALROSA reported a profit of $414 million in the third quarter driven by significantly higher rough diamond demand from last year. The Moscow-based miner had a loss of $236.6 million a year earlier when demand slumped due to low profitability in the manufacturing sector. As the market recovered, group revenue jumped 70% to $1.07 billion in the recent quarter, with diamond sales climbing 83% to $982.2 million.

Fire Sparks Sales Slump at Dominion

Dominion Diamond Corporation said sales dived 29% to $102.7 million in the third fiscal quarter as a fire at the Ekati mine in June forced a shift to lower-value mining areas. The average price of sales dropped 55% to $83 per carat, while the volume of rough sales jumped 56% to 1.2 million carats. Sales value was also negatively impacted by the fact that lower-price diamonds were left over from the previous quarter and sold during the period.

Indian Liquidity Stress Impacts First Renard Sale

The first sale of rough diamonds from the Renard mine in Canada garnered $7.6 million and a higher-than-expected average price as smaller stones were withdrawn because of a lack of liquidity in India. Stornoway Diamond Corporation, which owns the mine, sold 38,913 carats for an average $195 per carat at the sale. The elimination of high-denomination currency in India had a detrimental effect on demand for small and lower-quality goods, the company said.

GENERAL 	  

EU to Chair Kimberley Process in 2018

The Kimberley Process (KP) said the European Union (EU) will be its chair in 2018, meaning the bloc will serve as vice-chair next year. Australia will be in charge in 2017, represented by Robert Owen-Jones as chair. India will serve as vice chair in 2018 and take over in full in 2019. Meanwhile, the KP said Venezuela had been re-admitted following an eight-year pause from diamond exports.

Swiss Watch Export Slump Steepens

Swiss watch exports dived 16% to $1.66 billion (CHF 1.68 billion) in October, the heaviest drop this year, as expectations of a third-quarter recovery fell flat. Orders from Hong Kong plummeted 22% while exports to the U.S. fell 17%. Exports of precious-metal timepieces tumbled 28%.

ECONWATCH 	  

Diamond Industry Stock Report

U.S. stocks performed well this past week as the holiday shopping season drew nearer, led by Charles & Colvard (+11.5%). Signet (+3.3%) gained on improved full-year earnings guidance, but Birks Group (-15%) slumped as it posted a 1H loss. In the Far East, Chow Tai Fook (+9.4%) gained as the jeweler reported a gentler profit decline than it had in the past. Indian jewelers continue to suffer from the short-term effects of the governments decision to invalidate high-denomination notes. Declines were headed by Gitanjali Gems (-5.5%).

View the detailed industry stock report
Nov 24 (13:30 GMT) Nov 17 (12:00 GMT) Chng.
$1 = Euro 0.95 0.93 0.02
$1 = Rupee 68.72 67.80 0.91
$1 = Israel Shekel 3.88 3.85 0.02
$1 = Rand 14.23 14.27 -0.04
$1 = Canadian Dollar 1.35 1.34 0.01

Precious Metals Chng.
Gold $1,185.20 $1,230.57 -$45.37 -3.7%
Platinum $916.25 $945.50 -$29.25 -3.1%
Silver $16.32 $17.05 -$0.73 -4.3%

Stock Indexes Chng.
BSE 25,860.17 26,227.62 -367.45 -1.4%
Dow Jones 19,083.18 18,868.14 215.04 1.1%
FTSE 6,811.33 6,769.24 42.09 0.6%
Hang Seng 22,608.49 22,262.88 345.61 1.6%
S&P 500 2,204.72 2,176.94 27.78 1.3%

Rapaport Weekly Market Comment December 1, 2016

Holiday season begins with optimism as stock markets hit record high on Black Friday. Foot traffic flat, average spend -3% to $289 over Thanksgiving weekend, reports NRF. Millennial shift to online purchases continues with Cyber Monday sales +13% to $3.5B, according to Adobe Digital Insights. Polished market stable with buying opportunities in India due to rupee liquidity crisis. Shrenuj nears deal to ease $450M debt as De Beers sight suspended. Christie’s HK sells $79M (80% by lot). Tiffany 3Q sales +1% to $949M, profit +5% to $95M. Lukoil 3Q Grib diamond sales +33% to $62M. Alan Bronstein elected president of Natural Color Diamond Association.

RapNet Data: December 1

Diamonds 1,296,155
Value $7,964,274,890
Carats 1,361,974
Average Discount -30.33%

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

QUOTE OF THE WEEK
The weekend results underline the importance of brands effectively converging digital and physical channels to deliver a single, seamless shopping experience to consumers, particularly during the high-volume holiday season.

Shelley Kohan, vice president of retail consulting at RetailNext, on Black Fridays shift online

MARKETS 	  

United States: Positive sentiment as stock market rally and strong dollar lift expectations for holiday season. Jewelers expect sales bump in coming weeks…

Belgium: Trading quiet with steady low-volume orders for the holiday season. Some dealers buying bargains (“Metzios”) amid Indian liquidity crisis…

Israel: Polished trading stable with steady orders from U.S. independent retailers. Demand from larger chains has slowed. Little inventory buying as jewelers focus on selling during holiday season…

India: Polished trading quiet with dealers very cautious after rupee currency cancellation. Domestic demand slow. Opportunistic foreign buyers looking for bargains during liquidity crunch…

Hong Kong: Steady traffic at Jewellery Manufacturers Association Show (Nov. 24-27) but diamond sales weak…

Click here for deeper analysis

INDUSTRY 	  

Cautious ALROSA Seeks to Steady Rough Prices

ALROSA pledged to keep rough diamond prices stable in an effort to support manufacturers’ profit margins after demand improved this year. Sales jumped 54% in the first nine months of the year with prices generally steady at its monthly sales, chief executive officer Andrey Zharkov said. The miner plans to increase diamond production by 5% to 38.85 million carats next year, Russian news service TASS cited Zharkov as saying.

Shrenuj Nears Debt Deal to Ease Liquidity Crisis

Shrenuj & Co. is close to securing at least $100 million in funding to ease its debt crisis. The Mumbai-based company is in the final stages of preparing the deal, which it expects to announce in mid-December, sources said. Shrenuj has bank debts amounting to $450 million, of which $35 million is overdue. A strain on liquidity has forced the company to scale down its diamond-cutting operations in Botswana, while its De Beers sightholder status was suspended in July.

Blue Diamond Tops Billing at Christie’s Hong Kong

Christie’s garnered $79 million (HKD 611 million) at its Hong Kong Magnificent Jewels auction, selling 80% by lot and 84% by value. The highlight was the sale of a marquise-cut, 4.29-carat, fancy vivid blue, internally flawless diamond ring for $11.8 million, or $2.7 million per carat. Christie’s also sold the oval-shaped, 10.05-carat ‘Ratnaraj’ ruby and diamond ring for $10.2 million, which at just over $1 million per carat was the third-highest average price on record for a ruby.

Sotheby’s Hong Kong Jewelry Auction Fetches $3.5M

Sotheby’s notched sales of $3.5 million (HKD 26.8 million) at its Important Jewels and Jadeite auction in Hong Kong. The most expensive item was an early 20th-century gem-set and diamond dragon bracelet, which fetched $266,000, double its pre-sale upper estimate of $103,160. A brilliant-cut round, 6.01-carat, D-color, internally flawless diamond failed to sell, having had a low-end pre-sale estimate of $515,800. The auction was sold 56% by lot and 37% by value.

Sarine Profit Signals Manufacturing Recovery

Sarine Technologies said third-quarter sales jumped 82% to $17.3 million due to stronger polished demand in key markets and a recovery in the rough sector. The company, which supplies equipment to diamond manufacturers, reported a profit of $4 million versus a loss of $1.4 million a year ago. Sales still lag the $20.4 million revenue reported two years ago, despite the significant growth from 2015.

RETAIL & WHOLESALE 	  

Black Friday Sales Decline

Sales and foot traffic at physical stores in the U.S. fell over the Thanksgiving and Black Friday weekend as more retail business moved online, initial figures showed. In-store sales declined 4.2% and traffic fell 4.4%, according to RetailNext. ShopperTrak said foot traffic was flat on Black Friday and declined 1% across the two days. The average spend fell 3% from last year to $289 over the weekend, according to the National Retail Federation.

Cyber Monday Pulls Ahead

Online retail activity over Black Friday and Cyber Week increased from last year. Sales from desktop computers climbed 17% to $1.29 billion on Thanksgiving and jumped 19% to $1.97 billion on Black Friday, ComScore reported. Online sales during Cyber Monday rose 12% to $3.4 billion with toys and electronics driving ecommerce spending, according to Adobe Digital Insights.

Tiffany Sparkles With Rare Sales Rise

Tiffany & Co.’s sales increased 1% to $949.3 million in the three months that ended October 31 marking the jeweler’s first sales rise in two years. An improvement in fashion jewelry drove growth, partly offsetting flat engagement and wedding jewelry and weak high-end statement pieces. At constant exchange rates, sales were flat, while comparable store sales fell 3%. Net earnings increased 5% to $95.1 million.

Hearts On Fire Hit by U.S. Challenges

Revenue generated by the Hearts On Fire jewelry brand declined in the first fiscal half because of tough conditions in the U.S. retail market, its Hong Kong-based parent Chow Tai Fook reported. Hearts On Fire sales slid 9% to $41.8 million (HKD 324.5 million) in the six months ending September 30, while its operating loss widened 21% to $8.5 million. The brand’s wholesale revenue slumped 14%, while its retail revenue increased 12%.

MINING 	  

Lukoil’s Diamond Mine Sales Jump

Lukoil’s diamond revenue from its Grib mine in Russia rose 33% to $61.9 million (RUB 4 billion) in the third quarter. Sales more than doubled to $232.3 million in the first nine months from $108.4 million a year ago. Lukoil, Russia’s largest oil producer, started recovering rough diamonds at Grib in September 2014 and production continues to ramp up to full capacity.

Lucapa Secures Angola Exploration Permit

Lucapa Diamond Company received approval to explore the Lulo Diamond Project in Angola for another five years. Lucapa has already stepped up its kimberlite exploration program in anticipation of the government approval, with two rigs drilling the priority kimberlite targets and a third due to arrive in Angola in December. The Lulo alluvial mine is the source of several large rough diamonds, including the biggest in Angola’s history that fetched $16 million in February.
DiamondCorp Battles to Save Lace Mine

Deloitte began talks with stakeholders in the Lace Diamond Mine (LDM) as parent company DiamondCorp continues to assess the viability of its troubled South African operation. LDM entered business rescue earlier this month after torrential rain left the South African mine flooded, resulting in a suspension of operations for more than 12 weeks.

Two Diamond Mines for Sale in South Africa

Rockwell Diamonds placed two of its mines on the selling block in an attempt to turn the company’s fortunes around. The junior miner started a process to sell the Remhoogte/Holsloot and Saxendrift mines in South Africa to streamline its operations. The turnaround plan encompasses measures to accelerate production at the Wouterspan mine, which includes moving its Holsloot processing plant to the site.

GENERAL 	  

Cartier Insists Walmart Not Authorized Distributor

Cartier distanced itself from an $18,000 diamond watch sold online by Walmart on Black Friday and said the department store is not one of its official retailers. Walmart listed the Cartier Roadster XL Chrono men’s timepiece on its ecommerce site with an advertised price roughly 60% off the manufacturers suggested retail price of $46,500. Cartier said it had no knowledge or involvement in selling or marketing the item and could not confirm its authenticity.
Richemont to Cut 211 Swiss Watch Jobs

Richemont is on the cusp of another round of layoffs at its Swiss watchmaking operations as demand for timepieces sank this year. The company plans to cut 211 jobs at Piaget and Vacheron Constantin, Swiss trade union Unia said. This follows 300 layoffs across Piaget, Vacheron Constantin and Cartier in May, according to Unia. Sales at Richemont’s specialist watchmakers slid 17% in the six months to September 30, mirroring a decline in Swiss watch exports.

Bronstein to Lead Color Diamond Association

The Natural Color Diamond Association elected Alan Bronstein of Aurora Gems (pictured) as president, replacing JFine Inc.’s Jordan Fine in the position. Jose Batista of Rio Diamond Corp. was voted in as vice-president, sharing the role with Breanne Wittrock. Scott West of L.J. West Diamonds will take over the roles of secretary and treasurer from Jeffrey Post of Gem Platinum. All members will start their new positions in January.

ECONWATCH 	  

Diamond Industry Stock Report

After the U.S. market hit a record on Black Friday, retail stocks fell as early holiday sales data pointed to a shift away from physical stores to online shopping. Charles & Colvard (-11.4%), Macys (-6%) and Nordstrom (-4.5%) led the declines, but Tiffany (+4.2%) gained on better-than-expected results. European and Far Eastern luxury stocks were solid, led by Hong Kong-based Chow Sang Sang (+4.5%). Indian industry stocks showed a limited recovery after recent slides following the governments clampdown on cash transactions, led by Gitanjali Gems (+14%). Mining stocks were mixed.

View the detailed industry stock report
Dec 1 (13:54 GMT) Nov 24 (13:30 GMT) Chng.
$1 = Euro 0.94 0.95 -0.01
$1 = Rupee 68.37 68.72 -0.34
$1 = Israel Shekel 3.83 3.88 -0.04
$1 = Rand 14.10 14.23 -0.13
$1 = Canadian Dollar 1.34 1.35 -0.01

Precious Metals Chng.
Gold $1,168.52 $1,185.20 -$16.68 -1.4%
Platinum $904.75 $916.25 -$11.50 -1.3%
Silver $16.38 $16.32 $0.06 0.4%

Stock Indexes Chng.
BSE 26,559.92 25,860.17 699.75 2.7%
Dow Jones 19,123.58 19,083.18 40.40 0.2%
FTSE 6,708.46 6,811.33 -102.87 -1.5%
Hang Seng 22,878.23 22,608.49 269.74 1.2%
S&P 500 2,198.81 2,204.72 -5.91 -0.3%

Rapaport Weekly Market Comment December 8, 2016

Polished market stable during peak jewelry selling season. Small melee significantly weakened by India’s currency demonetization. Larger stones relatively unaffected. Nov. RAPI 1 ct. +0.5%, 0.30 ct. +0.5%, 0.50 ct. -1%, 3 ct. +1.2%. Manufacturing profitability better than last year with De Beers Jan. to Nov. rough price index -5%. Lukoil to sell Grib mine to Russian Otkritie investment group for $1.5B. Christie’s NY sells $51M with rectangular, 51.35 ct., D, VVS1 diamond sold for $5.6M ($108,422/ct.). Belgium Nov. polished exports -6% to $878M, rough imports +60% to $1.1B. GIA opens synthetic melee testing service.

RapNet Data: December 8

Diamonds 1,279,046
Value $7,900,529,253
Carats 1,355,391
Average Discount -30.18%

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

December
6-15
Tue-Thu

Rapaport Melee Auction

New York & Dubai

View Details

December
7-14
Wed-Wed

Rapaport Single Stone Auction

New York & Israel

View Details

January
11-18
Mon-Mon

Rapaport Single Stone Auction

New York & Israel

View Details

RapNet is Fully Mobile 

App now available on iOS and Android.
Download now

QUOTE OF THE WEEK
I would like to have more diamonds, to be very explicit. That’s a priority area.

Diamond mines are on Rio Tinto CEO Jean-Sébastien Jacques wish list this holiday season.

MARKETS 	  

United States: Positive sentiment due to improved trading during the holiday season. Many inquiries for memo goods from independent jewelers…

Belgium: Steady last-minute orders for specific goods from U.S. and European independent jewelers. Dealers relatively satisfied with holiday trading but still cautious about the market…

Israel: Dealer trading quiet with most orders complete for the U.S. holiday season. Steady demand for under-the-carat GIA goods with some weakness and rising inventory for 0.50 to 0.89 ct., D-I, IF-VVS diamonds…

India: Dealers trying to normalize operations after Nov. government demonetization liquidity crisis. Larger exporters resuming regular activity with full manufacturing capacity after Diwali break…

Hong Kong: : Dealer sentiment slightly improved with steady orders for the Chinese New Year season. Buyers shifting to lower price points with good demand for 0.30 to 1 ct., G-J, VS-SI diamonds…

Click here for deeper analysis

RAPAPORT STATEMENT 	  

Diamond Prices Firm Slightly with U.S. Optimism

Diamond trading slowed in November as Indian liquidity dried up and manufacturing shut down for Diwali. U.S. jewelers completed their inventory purchases and focused on selling during the holiday season rather than buying from overseas suppliers. Sentiment improved as the season began and polished prices firmed despite slow dealer trading. The RapNet Diamond Index (RAPI™) for 1-carat, RapSpec A3+ diamonds gained 0.5% in November.

Purchase the full Rapaport Monthly Report – November 2016

INSIGHTS 	  

Diamond Industry Now Banking on Legitimacy

The diamond industry has added several layers of legitimacy this year as more companies are complying with standards set out by banks, regulators and suppliers. Encouragingly, the trade ended 2016 in a far healthier place than a year ago with officials starting to view the industry as a more normal market...

Click here to continue reading

INDUSTRY 	  

De Beers Rough Prices Drop 5% in 2016

De Beers rough diamond price index fell 5% in 2016 despite a vastly improved diamond market. Diamond prices declined for the period January to November, while prices rose among other commodities in parent Anglo American’s portfolio. De Beers is still expected to drive growth at Anglo American this year as diamond sales grew in the first half whereas revenue fell from each of its other core businesses. Including this week’s final sight of the year, De Beers sales are expected to exceed $5.6 billion for 2016, from $4.1 billion last year.

Bain Warns of Looming Rough Bubble

Strong growth in rough sales this year may lead to a repeat of last year’s damaging inventory pile-up if consumer demand does not improve, Bain & Company warned. Rough sales grew 20% in the first half as the midstream restocked following an inventory sell-off. However, jewelry retail might not be keeping pace as sales were hit by weaker economic conditions in parts of the U.S. and a temporary drop in overall consumer expenditure, Bain explained.

ABN AMRO Forecasts Polished Price Recovery

ABN AMRO predicted polished diamond prices will increase next year as it expects improved economic conditions will boost U.S. and Chinese demand. U.S. jewelry consumption will benefit from a stronger labor market, rising housing prices and the impact of President-Elect Donald Trump’s fiscal stimulus, the bank argued. Polished prices have declined this year, with the RAPI for 1-carat polished diamonds dropping 3.8% in the first 11 months.

Belgium’s Polished Diamond Exports Decline

Belgium’s polished exports fell 6% to $878 million in November, according to the Antwerp World Diamond Centre. Polished imports dropped 10% to $695 million, while net polished exports rose 14% to $183 million. Rough imports grew 60% to $1.14 billion, while rough exports increased 63% to $1.05 billion. Net rough imports rose 32% to $87 million. Belgium’s November net diamond account, representing total polished and rough exports minus total imports, edged up 1% to $96 million.

RETAIL & WHOLESALE 	  

Christies Sells 51 Carat Diamond for $5.6M

Christie’s sold $51 million worth of jewelry at its New York auction with the top lot, a rectangular, 51.35-carat, D-color, VVS1 diamond ring selling for $5.6 million, or $108,423 per carat. A total 13 items fetched more than $1 million each, including a cushion-cut, 75.41-carat sapphire ring that fetched $3.8 million. Christie’s earlier reported a stronger than expected Paris auction, with total receipts of $4.1 million (EUR 4 million) as 45% of items sold above their estimates.

Diamonds Shine in Bonhams London Auction

Bonhams sold $8.6 million (GBP 6.8 million) worth of jewelry at its London auction. The highlight of the diamonds on offer was a pear-shape, 12.08-carat, D-color, VVS1-clarity diamond ring, which went to a telephone bidder for $975,797, or $79,000 per carat. However, the selling price was surpassed by a 14.13-carat Kashmir sapphire ring, which drew a winning bid of $1.7 million.

Blue Nile Says Takeover Bid Unchallenged

Blue Nile did not receive additional takeover bids during a 30-day period in which it could consider proposals from third parties, according a company filing. The online jewelry retailer agreed to a $500 million acquisition by Bain Capital Private Equity and Bow Street last month. However, the terms permitted it to solicit bids from other potential buyers during a ‘go-shop’ period. With the period now over, Blue Nile is subject to “customary restrictions” when engaging with alternative proposals.

MINING 	  

Grib Diamond Mine Sold for $1.5B

Lukoil agreed to sell its Grib diamond project to Russian investment group Otkritie Holding for $1.45 billion in cash. The deal is expected to close in the first quarter of 2017 following government approval. Production at Grib was launched in September 2014, with initial projections pointing to peak levels of 4.5 million carats a year. The majority of the mines production is sold by tender via the Antwerp-based subsidiary Grib Diamonds, which wont be affected by the acquisition, sources said.

Rio Tinto U-Turns to Prioritize Diamonds Again

Rio Tinto plans to expand its diamond mining operations, new CEO Jean-Sebastien Jacques (pictured) told Bloomberg. The miner mulled divesting from diamonds in 2013 but held on to the business unit because of growing luxury demand in Asia and continued strength of the North American market. Rio Tinto intends to increase diamond production to a range of 19 million to 24 million carats in 2017, from 18 million to 21 million carats planned for this year.

De Beers to Add 25 Years to Botswana Mine

Debswana, De Beers mining joint venture in Botswana, is close to completing a tailings project that will extend the Letlhakane mine’s lifespan by 25 years. The Letlhakane Mine Tailings Resource Treatment Project will enable Debswana to continue producing rough diamonds at the site even when mining at the main deposit comes to an end next year. The project is 80% complete, and Debswana expects it will be officially launched in the third quarter of 2017.

ALROSA Sales Weather Indian Liquidity Storm

ALROSA reported diamond sales jumped 63% year on year to $255.2 million in November with rough sales of $245.6 million and revenue from polished coming in at $9.6 million. The figures represented continued strength in the rough market even as Indias liquidity crisis damaged demand for smaller and lower-quality diamonds, ALROSA’s vice president Yury Okoemov said.

India Cash Crunch Stalls Gemfields Auction

Gemfields pushed back a sale of higher-quality emeralds by two months to enable Indian buyers to adapt to the government’s decision to invalidate higher-value currency notes. The auction of stones from the Kagem mine in Zambia will now take place in February instead of this month. India abolished its INR 500 and INR 1,000 rupee notes in November to curb black-market transactions, resulting in lower liquidity which hit the cash-focused jewelry and gem trade.

GENERAL 	  

GIA Rolls Out Synthetic Melee Testing Service

The Gemological Institute of America (GIA) has started accepting stones for its automated melee testing service, which identifies potential synthetics in batches of small melee diamonds. Following a five-month pilot, the service is now open at most GIA laboratories for customers to submit round, 0.005 to 0.25-carat, D-Z color diamonds. GIA will charge $0.08 per stone for smaller diamonds, starting at the 0.90-1.49 millimeter range, and increase its prices gradually up to $0.40 per stone for the 3.50-4.00 millimeter highest tier.

De Beers Expands Surat Grading Center

De Beers plans to expand its diamond grading facility in Surat, India, increasing the services it offers there. The International Institute of Diamond Grading & Research (IIDGR), a subsidiary of De Beers, will invest $5 million to enhance the center, adding 10,000 square feet to its existing 15,000 square feet of floor space. The expansion includes enlarging its melee testing service, launching a new melee grading service next year, and a new educational service.

Cameroon Enabling CAR Conflict Diamonds: NGO

Conflict diamonds from the Central African Republic (CAR) are entering the supply chain because of poor prevention controls, non-governmental group Partnership Africa Canada (PAC) alleged. Rough stones are being smuggled across the border into Cameroon and adjudged conflict-free after they receive Kimberley Process certificates, PAC claimed. Ahmed Bin Sulayem, the United Arab Emirates-based chair of the KP for 2016, said its monitoring team has been probing the issue for several months.

JBT, MJSA Unveil New Board Chiefs

The Gemological Institute of America (GIA) elected industry veteran Dione Kenyon as chair of its board of governors. Kenyon (pictured), who recently retired as president and chief executive officer of the Jewelers Board of Trade, will take over the role from John Green, president and CEO of jewelry chain Lux Bond & Green, who remains on the board. Separately, Manufacturing Jewelers & Suppliers of America (MJSA) elected Steven Cipolla as chair, succeeding Ann Arnold, who has been appointed chair of the MJSA Education Foundation.

ECONWATCH 	  

Diamond Industry Stock Report

Global markets continued to strengthen this week, with the Dow Jones Industrial Average up 2.2% and the FTSE gaining 3 percent. Rio Tinto (+11%) led mining stocks, with Anglo American (+7.2%) and Firestone Diamonds (+6.7%) also performing well. U.S. retail was headed by JCPenney (+10%), while resurgent European stocks were led by Swatch Group (+8.1%). Indian jewelry companies appear to be have recovered from the effects of the governments new cash policy for the time being, with Goenka Diamond (+6.5) growing in value the fastest.

View the detailed industry stock report
Dec 8 (13:10 GMT) Dec 1 (13:54 GMT) Chng.
$1 = Euro 0.93 0.94 -0.01
$1 = Rupee 67.37 68.37 -1.00
$1 = Israel Shekel 3.79 3.83 -0.04
$1 = Rand 13.67 14.10 -0.43
$1 = Canadian Dollar 1.32 1.34 -0.02

Precious Metals Chng.
Gold $1,174.97 $1,168.52 $6.45 0.6%
Platinum $947.75 $904.75 $43.00 4.8%
Silver $17.12 $16.38 $0.74 4.5%

Stock Indexes Chng.
BSE 26,694.28 26,559.92 134.36 0.5%
Dow Jones 19,549.62 19,123.58 426.04 2.2%
FTSE 6,911.92 6,708.46 203.46 3.0%
Hang Seng 22,861.84 22,878.23 -16.39 -0.1%
S&P 500 2,241.35 2,198.81 42.54 1.9%

Rapaport Weekly Market Comment December 15, 2016

U.S. holiday season driving positive sentiment. Trump-effect expected to boost jewelry demand as financial markets climb to record levels. Fed interest rate hike signals improving economic outlook. Chinese, Indian and Middle East markets cautious. Polished diamond shortages expected in 1Q as Indian production declines due to government demonetization scheme. De Beers 2016 rough sales +36% to $5.8B. Tight Indian liquidity reduces Dec. sight to $418M. Dominion 3Q revenue -29% to $103M, operating loss of $9M vs. profit of $10M last year. U.S. Nov. polished imports -3% to $2.1B, polished exports -2% to $1.3B. AGS names Katherine Bodoh to replace Ruth Batson as CEO.

RapNet Data: December 15

Diamonds 1,270,405
Value $7,851,023,420
Carats 1,365,046
Average Discount -30.39%

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
January 11-18 Wed-Wed

Rapaport Single Stone Auction

New York & Israel

View Details
January 17-25 Tue-Wed

Rapaport Melee Auction

New York & Dubai

View Details
February 1-8 Wed-Wed

Rapaport Single Stone Auction

QUOTE OF THE WEEK
We believe investors have an overly bearish view on the diamond market, while we find it being in much better shape.

Analysts at VTB Capital

MARKETS 		 

United States: Sentiment positive with dealers filling last-minute orders. Holiday demand good but not hot. Shortages making it difficult to meet selective fancy-shape demand…

Belgium: Trading slow and winding down before Christmas vacation. Buyers lacking urgency are making offers at deep discounts. Very few foreign buyers in Antwerp…

Israel: Trading quiet but dealers optimistic about U.S. holiday demand. Suppliers filling last-minute orders and charging premium for goods that are difficult to find…

India: Dealers cautious with very few buyers in Mumbai. Demonetization policy continues to impact domestic Indian demand with tight liquidity in melee market…

Hong Kong: : Dealer activity slowing as retailers complete holiday inventory buying. Steady demand for 0.30 to 1 ct., D-H, VS2-SI2 diamonds with shortage of better-quality RapSpec A2+ goods…

Click here for deeper analysis

INSIGHTS 	  

Rough Supply Signals Shift in Balance of Power

Diamond mining companies have conjured up strong growth this year. At the same time, unlike in previous years, there’s a sense manufacturing profit improved, as average rough prices dropped 5 percent and 15 percent respectively in the past two years. Let’s hope it continues as theres still much room for improvement...

Click here to continue reading

FIVE-MINUTE INTERVIEW 	  

Israel Gearing for Diamond Market Recovery

Israel’s diamond industry leadership is confident that new initiatives in trading and manufacturing, along with its ongoing talks with regulators and banks, will stimulate growth when global demand returns...

Click here to read the interview

INDUSTRY 	

Tight Indian Liquidity Slows De Beers Sales
De Beers rough diamond sales fell to $418 million in December from $476 million the previous month as tight Indian liquidity hit demand for lower-priced goods. The Indian government’s invalidation of INR 500 and INR 1,000 currency notes dented demand for smaller rough often traded in rupee. Demand for larger stones was stable and prices were unchanged, with premiums on the secondary market at low single-digit percentages. De Beers sales increased 36% to an estimated $5.6 billion for the full year.

Analyst Upbeat on ALROSA 

VTB Capital raised its price target for ALROSA shares saying buoyant holiday jewelry sales are expected to result in a wave of restocking among retailers next year. The investment bank increased its 12-month target to $2.27 (RUB 140) from $1.70 (RUB 105), while maintaining a ‘buy’ rating for the Russian diamond miner. The share has increased about 75% since the beginning of the year, trading at $1.60 (RUB 99) Thursday afternoon in Moscow.
U.S. Polished Diamond Imports Decline

U.S. polished diamond imports fell 3% to $2.1 billion in October, government data showed. Polished exports declined 2% to $1.3 billion, driving net imports down 5% to $794 million. Rough diamond imports more than tripled to $51 million, while rough exports grew almost five-fold to $118 million. That left net rough imports at negative $67 million versus negative $7 million. The net diamond account, reflecting the difference between net imports and exports, fell 12% to $727 million.
Asian Star Sales Jump in Fiscal 2Q

Asian Star’s revenue rose 28% to $124 million (INR 8.38 billion) in the second fiscal quarter, the Mumbai-based diamond manufacturer reported. Profit increased 18% to $2.6 million (INR 176.8 million). Revenue from diamonds jumped 24% to $111 million (INR 7.52 billion), with sales in the jewelry division up 34% to $20 million (INR 1.34 billion).

RETAIL & WHOLESALE 	  

Harrods Dusts Off 228ct. Diamond

Harrods unveiled "one of the world’s rarest" diamonds putting the stone on display for the first time at its department store in London. The pear-shaped, 228.31-carat, G-color, VS1-clarity polished diamond will be available to view by appointment, having been in “hiding” in Harrods’ vault, the retailer said. It is rare for a diamond of this weight, cut, polish and symmetry to be sold outside auction, said Helen David, chief merchant at Harrods.

De Beers Opens Signature Store in New York

De Beers Diamond Jewellers unveiled its flagship store on New York’s Madison Avenue. The company had a standalone store on Fifth Avenue since 2005 but moved it to premises on Madison Avenue that were more “intimate” and “exclusive,” CEO François Delage told Bloomberg. To enhance the customer experience, the store has made rough diamonds available for customers to touch and feel, to enable a better sense of the finished product’s origin.

Marquise 18ct. Diamond Tops Sothebys NY Sale

Sotheby’s sold $29.7 million worth of jewelry at two December auctions in New York. A marquise-shaped, 18.04-carat, D-color, VVS1-clarity diamond ring from the collection of philanthropist Marjorie Fisher drew the highest bid of $1.8 million, or $102,134 per carat. The diamond was sold at Sotheby’s Magnificent Jewels auction, which fetched $25.2 million and was 87% sold by lot and 77% by value. A separate auction, the Fine Jewels sale, garnered $4.6 million and was 80% sold by lot and 87% by value.

MINING 	  

Constellation Diamond Boosts Lucara’s 2011
Lucara Diamond Corp. expects revenue of $295 million in 2016, implying a 32% increase from last year. Its performance was buoyed by the sale of the 813-carat Constellation diamond for $63.1 million, ranking as the most expensive rough diamond in history. The average price for the year is expected to be $823 per carat, whereas it would be $649 per carat had the Constellation not sold. The company anticipates 2017 revenue of $200 million to $220 million, excluding potential sales of exceptional diamonds such as the 1,109-carat Lesedi La Rona.
Fire Drags Dominion to Operating Loss

Dominion Diamond Corporation’s sales slumped 29% to $103million across its Ekati and Diavik mines during the third fiscal quarter ending October 31. The miner reported an operating loss of $9.1 million versus an operating profit of $9.5 million a year ago. A fire at Ekati in June dented profits as it resulted in fixed or standby costs of $22.4 million and forced Dominion to temporarily shut the processing plant. Third-quarter sales from Ekati alone fell 38% to $54.8 million.
ALROSA Targets U.S., China for Large Rough Sales

ALROSA will resume auctions of large rough diamonds above 10.8 carats in New York and introduce regular large-stone auctions in Vladivostok from next year, executives told more than 70 ALROSA Alliance clients. Located near the Chinese border, Vladivostok will provide the company with a base to target the Asian market. ALROSA also presented its 2017 trading schedule to clients and revealed plans to open a representative office in Mumbai.
DiamondCorp Rough Prices Lag Expectations

DiamondCorp reported a lower-than-expected average price at its latest rough tender because of weaker demand for smaller goods and a shortage of its higher-quality large stone supply. The miner sold 5,117 carats of rough diamonds for $590,745, or $115 per carat. The average value for the year was consequently reduced to $146 per carat from a previous forecast of $164 per carat. The sale comprised goods recovered before subsidiary Lace Diamond Mines (LDM) was placed in business rescue last month.

GENERAL 	  

HRD Antwerp Puts Focus on Asia

HRD Antwerp partnered with Shanghai-based jewelry retailer Chow Tai Seng to introduce a service to boost confidence among consumers in China. The pair will jointly run a ‘Centre of Excellence’ that sells only HRD-graded diamonds and is designed to explain grading to consumers. HRD earlier announced it will be the first grading lab to offer bilingual diamond reports, starting with English-Korean and English-Chinese. HRD launched both initiatives during an Antwerp trade mission to promote the city’s diamond industry in China and Korea.
American Gem Society Names New CEO

The American Gem Society (AGS) promoted Katherine Bodoh to chief executive officer, effective March 1. Bodoh (pictured), currently the organization’s deputy executive director, was previously director of commercial lines marketing and industry relations at Jewelers Mutual Insurance Company, where she liased between Jewelers Mutual and the AGS’s guilds. She will succeed Ruth Batson, who announced her retirement in February and will remain at the AGS until the end of May to help with the transition.
Mark Gershburg Resigns from U.S. KP Authority

Mark Gershburg stepped down as director of the U.S. Kimberley Process Authority (USKPA) to focus on Gemological Science International (GSI), the company he founded and serves as CEO. New York-based USKPA administers and controls the use of U.S. Kimberley Process certificates for the export of rough diamonds from the country. Gershburg (pictured) said growth at GSI, which offers gemstone identification and grading services, left him with little time to spend on other activities.
Correction

The headline of a story in last week’s TradeWire about the appointment of Dione Kenyon as chair of the Gemological Institute of America’s board should have read “GIA, MJSA Unveil New Board Chiefs,” and not as published.

ECONWATCH 	  

Diamond Industry Stock Report

U.S. and Asian industry stocks mainly declined as the Feds interest rate hike on Wednesday hit global markets. U.S. declines as of Thursday 1 p.m. GMT were led by JCPenney (-8.5%), while Chow Sang Sang (-5.6%) headed the slide in the Far East. Indian stocks were mixed, with gains led by Gitanjali Gems (+7.9%), while Lypsa Gems (-7.7%) dropped most. ALROSA (+9.4%) gained as it announced the repayment of a $370M bank loan.

View the detailed industry stock report
Dec 15 (13:05 GMT) Dec 8 (13:10 GMT) Chng.
$1 = Euro 0.96 0.93 0.03
$1 = Rupee 67.81 67.37 0.43
$1 = Israel Shekel 3.85 3.79 0.06
$1 = Rand 14.05 13.67 0.38
$1 = Canadian Dollar 1.33 1.32 0.01

Precious Metals Chng.
Gold $1,129.98 $1,174.97 -$44.99 -3.8%
Platinum $917.75 $947.75 -$30.00 -3.2%
Silver $16.22 $17.12 -$0.90 -5.3%

Stock Indexes Chng.
BSE 26,519.07 26,694.28 -175.21 -0.7%
Dow Jones 19,792.53 19,549.62 242.91 1.2%
FTSE 6,947.02 6,911.92 35.10 0.5%
Hang Seng 22,059.40 22,861.84 -802.44 -3.5%
S&P 500 2,253.28 2,241.35 11.93 0.5%

Rapaport Weekly Market Comment December 22, 2016

Diamond trading centers quiet as we enter holiday period. Dealers optimistic about U.S. demand as financial markets rally toward Dow 20,000, and dollar strengthens. Chinese spending restrained as government limits capital outflows and yuan weakens -7% in 2016 to $/6.95. Rough trading slow and manufacturers cautious with very little new polished entering the market. Botswana’s Okavango 2016 rough sales +80% to $547M, volume +110% to 3.4M cts. India Nov. polished exports -10% to $1.2B, rough imports +91% to $1.2B. Israel diamond industry pens deal with Tax Authority. Belgium adopts Carat Tax. We wish everyone a happy, healthy, ‎prosperous and peaceful New Year.‎

RapNet Data: December 22

Diamonds 1,253,552
Value $7,811,002,807
Carats 1,354,060
Average Discount -30.43%

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

January
11-18
Wed-Wed

Rapaport Single Stone Auction

New York & Israel

View Details

January
17-25
Tue-Wed

Rapaport Melee Auction

New York & Dubai

View Details

February
1-8
Wed-Wed

Rapaport Single Stone Auction

New York & Israel

View Details

RapNet is Fully Mobile 

App now available on iOS and Android.
Download now

QUOTE OF THE WEEK
I never hated a man enough to give him diamonds back.

Hungarian actress Zsa Zsa Gabor, who passed away this week aged 99

MARKETS 	  

United States: Polished trading stable with suppliers still getting last-minute calls before Christmas weekend. Mixed season for dealers with steady demand for 0.70 to 2 ct., G-I, VS2-SI2 diamonds…

Belgium: Trading slow with bourses and businesses closing for two weeks over Christmas and New Year (Dec. 26 to Jan. 6). Steady demand for commercial-quality 0.30 to 2 ct., G-I, VS2-SI dossiers…

Israel: Mixed sentiment as dealers figure out new tax deal, hoping it will end long-running investigations…

India: Low trading activity with large export-focused companies doing better than domestic suppliers. U.S. demand flat with some foreign buyers looking for bargains from distressed Mumbai dealers…

Hong Kong: Jewelry retailers relatively positive during Christmas season, despite low tourist numbers. Dealer trading slow as retailers prepare for Chinese New Year…

Click here for deeper analysis

THE YEAR IN REVIEW 	  

The 10 Most Read Diamond Stories of 2016

Grading misdemeanors, undisclosed synthetics and the glamour of super-sized diamonds emerged as the most alluring themes impacting the industry in 2016...

Click here to continue reading

INDUSTRY 	  

Israel Diamond Trade Signs Deal with Tax Authority

Israel’s diamond industry reached an agreement with authorities on a new law that exempts traders from paying taxes if they incur a loss. Diamond companies will be taxed on profit, whereas up until now the levy was based on revenue. The new rules are in line with international financial guidelines and could make the nation’s diamond sector more attractive to lenders, explained Yoram Dvash, president of the Israel Diamond Exchange.

Belgium’s Carat Tax Passed into Law

Belgium’s Parliament approved the new Carat Tax that is expected to simplify the trade’s tax calculation as it removes the need to valuate inventory. The levy will take effect for the tax year 2017, applying to income generated in the current year. The tax will be based on sales rather than profit, and is levied on an assumed gross margin of 2.1%. Companies can then subtract expenses and tax deductions down to a minimum taxable margin of 0.55% of revenue.

Landmark Ruling Forces Rough Diamond Refund

The Israel Diamond Exchange (IDE) ordered a dealer to cancel the sale of a rough diamond after he failed to disclose the stone had undergone value analysis using the Sarine Galaxy machine. The arbitration is the first of its kind after the World Federation of Diamond Bourses adopted new guidelines in May aiming to keep a level playing field between buyers and sellers in rough transactions. The Galaxy maps inclusions in a diamond indicating the best way it can be cut to obtain optimal value. With the Galaxy 2000 model, buyers cannot determine whether it has undergone scanning without the disclosure.

Trump Policies Good for Diamonds: De Beers CEO

Donald Trump’s proposed policies as U.S. president are expected to boost diamond sales as the trickle-down effect of lower taxes will bolster luxury demand, according to De Beers chief executive officer Bruce Cleaver (pictured). Lower taxes and the creation of more jobs will lift disposable income and translate into consumers buying more diamonds, Cleaver said in an interview with Bloomberg. In the longer term, diamond demand is expected to grow faster than supply, supporting the industry, the executive added.

RETAIL & WHOLESALE 	  

U.S. Jewelry Prices Decline

The U.S. consumer price index (CPI) for jewelry declined 3% in November from the previous month, according to government data. The index fell as gold prices slid 8% during the month, while diamond prices were relatively stable. The CPI for watches fell 4% but was still 2% higher than a year ago. Separately, sales in U.S. specialty jewelry stores increased 4.7% from a year earlier to $2.18 billion in October, government data showed.
Cartier Necklace Drives Tiancheng Jewelry Sales

Tiancheng International recorded sales of $29 million (HKD 228 million) across its three jewelry auctions in Hong Kong this year. This included auctions in June and December and a charity event in June. The December auction was 63% sold by lot and almost 60% sold by value, with a 42.42-carat Cartier Burmese sapphire necklace stealing the show by fetching $2.6 million.
Pandora Takes Control of Belgium, Luxembourg Stores

Pandora agreed to acquire its licensed store network in Belgium and Luxembourg from distributor Gielen Trading as part of a strategy to exert greater control over its brand. The Copenhagen-based jeweler will pay Gielen Trading $14.6 million (EUR 14 million) for the stores, of which $2.1 million (EUR 2 million) is related to inventory. The deal will come into effect on June 30, adding 13 concept stores and three shop-in-shops to Pandora’s roster of retail locations in the two countries.

New DGSE Boss Eyes Acquisitions

DGSE Companies is targeting acquisitions as it seeks to become profitable and competitive again, its new CEO John Loftus said. Loftus became DGSEs fourth CEO in three years when he took office on December 12, replacing Matthew Peakes. DGSE, which buys and resells jewelry, diamonds and precious metals, will “focus on strategic or transformative acquisitions of smaller competitors, subsidiaries, or other complementary businesses,” Loftus said. The company’s net loss widened 38% to $1.2 million in the first half of 2016.

MINING 	  

Okavango Unveils New Way of Selling Rough

Okavango Diamond Company will pilot selling rough diamonds via term auctions next year, meaning customers will be able to bid for committed supply over a three-cycle sales period. This will enable clients to plan their production for approximately three months as the supply they win will be guaranteed over the period, managing director Toby Frears explained. The term auctions will be held in conjunction with Okavango’s spot auctions which take place 10 times a year in Gaborone. Okavango sales jumped 80% to $546.5 million in 2016.
Lesedi La Rona Poised For 1H Sale

Lucara Diamond Corp. plans to sell the 1,109-carat Lesedi La Rona in the first half of next year, after the diamond failed to find a buyer at a Sotheby’s auction in June. The stone, which is the second largest rough diamond ever recovered, is currently undergoing analysis to determine the most valuable way it can be polished. It was estimated to break the $70 million mark at Sotheby’s but none of the bids met the reserve price. The diamond will not be placed on auction again, with the most likely sales format being a single bid offer, Lucara’s CEO William Lamb said.
Gemfields Sees Robust Demand at Ruby Auction

Gemfields sold $30.4 million worth of rubies and corundum at an auction in Singapore last week with the average price of $27.79 per carat indicating healthy global demand, the miner said. The company sold 1.1 million carats out of 1.4 million carats on offer from the Montepuez ruby deposit in Mozambique. Some customers did not attend the auction due to the negative impact of India’s demonetization policy on liquidity, Gemfields pointed out.

GENERAL 	  

Almod Diamonds to Open Canada Cutting Factory

New York-based Almod Diamonds will expand production of its patented Crown of Light diamond cut by opening a new manufacturing facility in Canada’s Northwest Territories next year. Almod, an affiliate of retailer Diamonds International, said the Yellowknife factory will cover 12,000 square feet, complementing its existing production centers in New York, Namibia and Ukraine. The factory site was formerly used by Tiffany & Co.’s manufacturing division.
Swiss Watch Slump Eases in November

The decline in Swiss watch exports slowed in November as shipments to Hong Kong avoided the massive decline seen in previous months. Global exports fell 5.6% to $1.8 billion (CHF 1.86 billion), registering the second smallest drop of the year. Shipments to Hong Kong slipped 0.7% to $241.8 million. One of the reasons for the narrower decline was the fact that November had one more working day than last year, the Federation of the Swiss Watch Industry explained.
KP to Audit CAR Diamond Stockpiles

The Kimberley Process (KP) is seeking a forensic auditor to comb through diamond stockpiles in the Central African Republic (CAR). The applicant will be tasked with assessing which stones recovered during the nation’s suspension may be exported and which are considered conflict diamonds. Tens of thousands of carats are estimated to have accumulated since CAR was banned from the KP in 2013 after a rebel coup. Mining was permitted but exports were blocked until the country’s re-admission this year.
IGI Chief Joins U.S. Kimberley Process Authority Board

The U.S. Kimberley Process Authority (USKPA) elected International Gemological Institute (IGI) president and CEO Jerry Ehrenwald (pictured) as a director. This followed the resignation of Mark Gershburg, founder and CEO of Gemological Science International. The USKPA controls the use of Kimberley Process certificates for rough diamonds exported from U.S. shores. Following Ehrenwald’s appointment, the authority’s operations will be run out of the IGI’s facilities on New York’s Fifth Avenue.

ECONWATCH 	  

Diamond Industry Stock Report

U.S. retail and luxury stocks were generally weak, even as the Dow Jones Industrial Average rose. Nordstrom (-10%) took the biggest hit but Sothebys (+5.4%) bucked the trend. Industry stocks were stronger in Europe, where Swatch Group (+3.3%) led the increases. Gitanjali Gems (-13%) headed the declines in India.

View the detailed industry stock report
Dec 22 (13:24 GMT) Dec 15 (13:05 GMT) Chng.
$1 = Euro 0.96 0.96 0.00
$1 = Rupee 67.95 67.81 0.14
$1 = Israel Shekel 3.82 3.85 -0.02
$1 = Rand 14.07 14.05 0.03
$1 = Canadian Dollar 1.35 1.33 0.01

Precious Metals Chng.
Gold $1,130.30 $1,129.98 $0.32 0.0%
Platinum $910.00 $917.75 -$7.75 -0.8%
Silver $15.85 $16.22 -$0.37 -2.3%

Stock Indexes Chng.
BSE 25,979.60 26,519.07 -539.47 -2.0%
Dow Jones 19,941.96 19,792.53 149.43 0.8%
FTSE 7,040.68 6,947.02 93.66 1.3%
Hang Seng 21,636.20 22,059.40 -423.20 -1.9%
S&P 500 2,265.18 2,253.28 11.90 0.5%

Rapaport Weekly Market Comment December 29, 2016

U.S. consumer confidence jumps to 15-year high in December with rising expectations for 2017. Retail stores struggle with cautious holiday season spending, while mobile drives strong ecommerce growth. Amazon reports record holiday sales, including 10,451 carats of diamonds. Hong Kong sees Christmas tourist rush but luxury spending restrained ahead of Jan. 28 Chinese New Year. Diamond trading quiet with Indian manufacturing slow due to demonetization liquidity crisis. The Rapaport Group wishes everyone a happy, healthy, prosperous and peaceful New Year.

RapNet Data: December 29

Diamonds 1,229,589
Value $7,595,322,759
Carats 1,277,454
Average Discount -30.60%

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

January 11-18 Wed-Wed

Rapaport Single Stone Auction

New York & Israel

View Details

January 17-25 Tue-Wed

Rapaport Melee Auction

New York & Dubai

View Details
February 1-8 Wed-Wed

Rapaport Single Stone Auction

New York & Israel

View Details
QUOTE OF THE WEEK
Small diamonds are roughly 80% of your production and 20% of your revenue – and the demand for the large diamonds remains robust. The diamond market is fine.

Patrick Evans, CEO of Mountain Province Diamonds, talks to Reuters about the impact of India’s demonetization policy on the market.

MARKETS 	  

United States: Polished trading quiet as wholesalers and dealers take vacation between Christmas and New Year. Verdict still out regarding holiday jewelry sales as slow(ish) season salvaged by last-minute shopping rush…

Belgium: Polished and rough trading very quiet with most dealers on vacation during the Christmas to New Year period. Antwerp bourses closed until January 9…

Israel: Diamond trading quiet with many dealers taking vacation over 8-day Chanukah holiday. Businesses focused on structuring finances to meet new tax requirements…

India: Polished trading slow. Some improvement as Antwerp-based Indian dealers travel to Mumbai during Belgium vacation period…

Hong Kong: Retail relatively busy over Christmas to New Year period. Notable rise in tourist traffic but Chinese visitors spending less time and money in Hong Kong than previous years…

Click here for deeper analysis

HAPPY NEW YEAR 	  

THE YEAR IN REVIEW 	  

The Year Trust Returned to the Diamond Trade

When considering the most influential story of 2016, we looked at potential developments as much as those that occurred in the past 12 months. Among the many milestones, controversies and inspiring stories that headlined during the year, the most significant will surely be the one with a lasting influence on the trade...

Click here to continue reading
Trump Effect: Diamond Trade Optimistic For 2017

As 2016 draws to a close, Rapaport News took the opportunity to speak with leading industry experts about the past year and their expectations for the next 12 months...

Click here to continue reading

INDUSTRY 	  

Consumers Gain Confidence after U.S. Election

U.S. Consumer confidence rose 4% in December with a post-election surge in optimism for the economy, jobs and income prospects, the Conference Board said. The group’s benchmark index increased from 109.4 in November to 113.7 in December, its highest level since August 2001, according to Bloomberg. Confidence was driven by higher expectations for growth that outweighed a weaker view of the present economic situation, the group explained.

Committee to Tackle Misconduct in India

A new committee has been set up to deal with misconduct in India’s diamond industry. The Trade Disciplinary Committee will comprise a 21-member panel which will handle cases of fraud, non-disclosure of synthetics, false inscriptions on gems and jewelry and other ethical breaches. It will comprise representatives from each of the Gem & Jewellery Export Promotion Council, the Bharat Diamond Bourse and the Mumbai Diamond Merchants’ Association.

India’s Cash Policy Delays Surat Jewelry Fair

The Southern Gujarat Chamber of Commerce and Industry postponed the annual Sparkle International gem and jewelry exhibition as India’s demonetization policy prevented visitors from attending the show in December. The 9th edition of the fair will now take place in Surat from January 19 to 22. The Indian government’s decision last month to invalidate INR 500 and INR 1,000 currency notes has sapped liquidity, hitting cash-focused industries such as the gem and jewelry trade.

RETAIL & WHOLESALE 	  

Amazon Diamond Sales Shine this Holiday

Amazon said it sold 10,451 carats of diamonds this holiday season, equivalent in volume terms to six and a half of Queen Elizabeth II’s Russian Kokoshnik tiaras. Customers bought 2.5 million watches, equating to one timepiece every 1.5 seconds, a grizzly bear’s weight in gold and the weight of a rhinoceros in silver. Amazon did not release sales figures but claimed the season was its best ever.

Chinese Group Buys Italian Luxury Jeweler

Chinese conglomerate Gangtai Group agreed to acquire an 85% stake in Buccellati from Italian equity firm Clessidra. The deal valued the Milan-based luxury jeweler at $282 million (EUR 270 million), or 6.6 times its revenue, Reuters cited a source as saying. The Buccellati family will retain 15% of the company it founded in 1919. Buccellati was reportedly previously slated to be bought by Richemont, owner of the Cartier brand, but a deal was not reached.

Luk Fook Targets Asias Growing Tourism Industry

Hong Kong-based jeweler Luk Fook opened its first stores in Malaysia to tap into Southeast Asia’s booming tourism industry. The retailer launched two stores in popular tourist locations in the capital city Kuala Lumpur. Luk Fook first entered the Southeast Asian market in 2010 with a store in Singapore. The group has 1,470 stores in nine countries, with the majority of its portfolio in Mainland China.

Birks Credits Strategic Goals in New Deal

Birks Group has negotiated new credit terms that it says will enable continued implementation of its growth strategy following a company restructuring. The Montreal-based jeweler’s $110 million credit facility, which was due to expire in August 2017, has been extended to November 2021 at a reduced interest rate. A separate loan has also been extended. Management said lenders recognized the company’s efforts to improve.

MINING 	  

Renard Mine Reaches Commercial Production

Stornoway Diamond Corporation said it achieved commercial production at the Renard mine in Canada a month ahead of schedule and within budget. The operation reached an average processing rate of 4,120 tonnes per day over 30 days, out of a capacity of 6,000 tonnes per day, breaching the 60% target that constitutes commercial production. The milestone marks the end of the project’s capital expense period.

De Beers Puts Snap Lake on Ice

De Beers will flood its Snap Lake mine in Canada’s Northwest Territories in January after failing to reach an agreement with potential buyers. The company plans to preserve the mine until market conditions and technical methods improve such that it can operate the deposit more economically. De Beers also pulled out of a joint venture with CanAlaska Uranium to explore for diamonds in Canada’s Saskatchewan province.
Rockwell Implements Overhaul with Mine Sale

Rockwell Diamonds agreed to sell certain non-core assets to Nelesco 318 Proprietary for $3.2 million (ZAR 45 million) as part of a strategic overhaul by new chief executive officer Tjaart Willemse. Rockwell did not say which assets were included in the agreement. Willemse earlier announced plans to sell the Remhoogte/Holsloot and Saxendrift mines in South Africa in a downsizing program he initiated when taking over as CEO in September.

Kimberley Diamonds Gets Delisting Approval

Kimberley Diamonds, owner of the Lerala mine in Botswana, came closer to being delisted from the Australian Securities Exchange (ASX), a move it hopes will reduce costs and facilitate fundraising. Kimberley applied to be removed from the exchange in November, citing a lack of interest and liquidity in its shares, which it claimed were undervalued. The exchange approved the company’s request, leaving shareholders with the final say.

GENERAL 	  

Kendra Scott Receives Equity Investment

Berkshire Partners bought a minority stake in Kendra Scott Design, highlighting the significant growth the jewelry brand has enjoyed since launching in 2002. Details of the deal were not disclosed but Reuters said it valued the company at $1 billion. Kendra Scott, who founded the company, will remain majority shareholder and chief executive officer. Norwest Venture Partners will continue as a minority investor.

Jewelry Charity Pioneer Clyde Duneier Dies

Clyde Duneier, founder of family-owned jewelry company Clyde Duneier Inc., passed away aged 88. Under Duneier’s leadership, the New York-based company established the Jewelers Charity Fund in 1983. He subsequently worked with Nate Light, former chief executive officer of Signet Jewelers, to launch the ‘Party with a Purpose’ annual fundraising event, which led to the formation of Jewelers for Children.

ECONWATCH 	  

Diamond Industry Stock Report

U.S. stocks fell slightly from recent highs, with J.C. Penney (-6.4%) leading the declines. Among miners, Rockwell Diamonds stock gained 50% on news of its sale of non-core assets. The markets were otherwise stable in a quiet week of trading over the holiday period.

View the detailed industry stock report

Dec 29 (12:24 GMT) Dec 22 (13:24 GMT) Chng.
$1 = Euro 0.96 0.96 0.00
$1 = Rupee 68.02 67.95 0.07
$1 = Israel Shekel 3.84 3.82 0.02
$1 = Rand 13.65 14.07 -0.42
$1 = Canadian Dollar 1.35 1.35 0.00

Precious Metals Chng.
Gold $1,145.90 $1,130.30 $15.60 1.4%
Platinum $899.10 $910.00 -$10.90 -1.2%
Silver $16.08 $15.85 $0.23 1.5%

Stock Indexes Chng.
BSE 26,366.15 25,979.60 386.55 1.5%
Dow Jones 19,833.68 19,941.96 -108.28 -0.5%
FTSE 7,101.91 7,040.68 61.23 0.9%
Hang Seng 21,790.91 21,636.20 154.71 0.7%
S&P 500 2,249.92 2,265.18 -15.26 -0.7%