Global Market Update

Markets turning cautious as rough prices soften in response to tighter credit and uncertain economic conditions. De Beers rough selling at low premiums, and even discounts, ahead of next week’s DTC sight. Arjav rough auction sells 45% by lot. Polished prices soften. Buyers expecting lower prices but may be disappointed as Far East consumers expected to continue buying diamonds in spite of U.S. slowdown. Hong Kong’s 2Q polished imports +37% to $4.5B, polished exports +44% to $3.3B. Gitanjali Gems FY1Q revenues +39% to $573M, profits +57% to $27M. Sarin Technologies 2Q revenues +9% to $16M, profits +8% to $5M. Diamond industry broker Gerald Rothschild dies age 86.

Global Markets

United States: Sluggish economic data and political debate continue to affect confidence as retailers express concern that consumer spending may tighten in the coming months. Wholesalers report that demand has softened in the past few weeks but attribute the quieter market to the seasonal effects of the summer period. They note good demand for bread-and-butter 0.50-carat to 1.25-carat, VS-SI stones, which may be driven by shortages of supply, but demand for larger sizes remains weak.

Belgium: Activity remains quiet as most traders are on vacation until the bourse reopens on Monday, August 22. Dealers who have traveled abroad to buy goods have reported caution in the market, particularly from Mumbai. As a result, dealers remain uncertain how the market will develop when the bourse resumes official operations.

Israel: Trading is still slow as the bourse remains closed for the three-week summer break. Activity is expected to quickly return to normal next week as businesses reopen and begin their preparations for the September Hong Kong show. There is a sense of relief among dealers that the market volatility occurred during the vacation period. Traders appear confident that polished prices will remain stable in the coming month, and believe that the recent declines were a temporary correction.

India: Polished trading has slowed significantly with tightened liquidity and heightened uncertainty. Prices have softened in the past week. Trading was also impacted by the shorter work-week due to a local festival on Saturday and the Independence Day public holiday on August 15. Polished buyers have grown cautious and have opted to wait and see if prices will continue to drop before committing to a purchase. There remains good demand and trading of star and melee goods, 0.02-carat to 0.18-carat stones. The rough market remains quiet as dealers are hesitant to sell-off their inventories while prices are declining. Premiums on DTC boxes are low ahead of next week’s sight and activity on the secondary market is slow.

China: Wholesale trading remains quiet as buyers remain cautious about high prices. Retailers have held back on making large inventory purchases as they expect prices to soften. While August is generally a slow retail period, trading activity is expected to increase in the coming weeks as retailers start preparations for the National Day Golden Week holiday retail season, which starts on October 1.

Hong Kong: Diamond trading is steady but quiet over the summer period. Buyers appear cautious about the market and the impact that the weak economic outlook will have on diamond prices. Still, business activity is taking place, mainly to fill specific orders as buyers continue to avoid large inventory purchases through the summer and in the current price environment.