Diamond Market Liquidity is impacted by recent actions and decisions of Indian Government.

Indian Reserve Bank orders all foreign currency holders to ‎convert 50% of their balances to rupee in reckless attempt to control plunging rupee. ‎Recent irresponsible government actions include retroactive taxation and penalties, ‎import taxes on gold and diamonds and on/off excise taxes. Out of control Indian ‎government now posing serious threat to diamond market liquidity. Petra Diamonds 3Q ‎revenue +87% to $98M, production +126% to 622,509 cts. Blue Nile 1Q revenue +4% to ‎‎$83M, net income -94% to $154K. U.S. 1Q polished imports -7% to $4.8B. Hong Kong’s ‎‎1Q polished imports +9% to $4.3B. Belgium’s April polished exports -7% to $943M, rough ‎imports +20% to $1B.‎


Global Markets

United States: There is mixed sentiment in the wholesale market as trading has slowed ‎slightly in the past few weeks. Still, trading is taking place with many overseas buyers ‎looking for goods. Wholesalers who stocked up on inventory during the past few months ‎are in better shape than companies who need to source goods currently as scarcities are ‎prevalent. While retailers are engaged in Mother’s Day promotions, bridal continues to ‎dominate sales. ‎

Belgium: Trading has been relatively quiet with political and economic uncertainty in ‎Europe influencing the mood among buyers. There is demand for goods, particularly for ‎‎1.00-carat and 1.50-carat, commercial quality diamonds. Suppliers have noted a ‎shortage of SI clarity stones. Rough trading is cautious following last week’s Diamond ‎Trading Company (DTC) sight as manufacturing profit margins remain tight. ‎

India: Polished trading is restrained due to the ongoing summer vacation and continued ‎volatility in the rupee-dollar exchange rate. Domestic buyers continue to experience tight ‎liquidity, while very few overseas buyers are seen in the market. Overall demand is ‎weak, particularly for lower piqué goods. The local gems and jewelry industry is relieved ‎with the government’s cancellation of the excise duty on jewelry, but consumer demand ‎is not expected to pick up significantly in May since it is generally not a busy month for ‎weddings. Local rough trading continues to be weak. There is sufficient rough supply but ‎manufacturing levels continue at levels below capacity. Select trading is observed in ‎rough goods which yields polished of I color and lower.‎

Israel: Polished trading continues to be affected by the money laundering investigations ‎that allegedly took place in the bourse during the past three months. Dealers are cautious ‎about who they do business with. Still, there is activity and good demand for 1.00-carat, ‎‎1.50-carat and 2.00-carat stones with G-H color and VS-SI clarity. Some have noted that ‎it is not easy to fill requests due to shortages in the market. Dealers are focused on ‎preparing for the JCK Las Vegas show hoping that steady U.S. demand will boost trading ‎in the second half of the year. ‎

China: The wholesale market is stable but dealers remain cautious mainly due to the ‎weakened economic outlook. There has been some slowdown in activity since the May ‎Day weekend as many trading partners in India are on vacation and many retail buyers ‎still have inventory remaining from the holiday. Buyers are increasingly price sensitive. ‎There is steady demand for 1.00-carat, G-H, SI1 certified polished diamonds. ‎

Hong Kong: Wholesale trading has slowed in the past month due to a weaker outlook for ‎the Chinese economy. Suppliers are trying to push prices higher but they are meeting ‎resistance from buyers, particularly on round diamonds. There is continued strong ‎demand for fancy shape stones and well cut fancy shapes sell relatively easily. Local ‎retail sales are also relatively slow. ‎

-Diamonds.net

India Pays Higher Prices for Same Rough Diamonds

The value of India's rough diamond imports and exports increased sharply in November, however the volume was largely unchanged from last year, based on provisional figures published by the GJEPC.

India's net rough diamond imports in November totaled 8.8 million carats worth $1.02 billion. This is a 6% decline in volume yet 42.1% rise in value compared to November 2010.

The value of India's gross rough diamond exports leaped 48.7% to $1.17 billion in November. The volume of exports made a less dramatic increase, up 2.4% to 11.2 million carats.

The disparity between the increased value and volume of exports is a result of a large overall increase in rough diamond prices over the past year. This is also reflected in the difference in the average value of imports. The average value of gross imports in November was $104.09 per carat, compared with $69.90 p/c in November 2010.

Rough diamond exports have leaped in November. India exported $146.3 million worth of rough, up 166.5% year-over-year. The volume of exports increased 50.1% to 2.38 million carats.

-Israeli Diamond Industry

Online Buyers of Jewelry, Luxury Goods Rise in India

The number of online shoppers in India searching for jewelry, luxury goods and accessories rose 36 percent year on year to 2.1 million in November 2011, comScore reported.

“The online channel is playing an increasingly important role in connecting retailers with potential customers in India,” said Kedar Gavane, comScore director for India. “To take advantage of this growing opportunity, retailers must ensure they are addressing the needs of potential customers, which include attractive pricing and the convenience of ordering online.”

A total of 27.2 million online users in India aged 15 and older accessed the retail category from a home or work computer, representing an 18 percent increase from the previous year. Consumers continue to turn to the web to shop for and purchase items and retailers continue to increase their online visibility through active marketing campaigns, comScore noted.

The company added that among the retail subcategories, coupons were the largest with 7.6 million visitors, a six-fold increase from the previous year. Consumer electronics ranked next with 7.1 million visitors growing 12 percent from November 2010, while 5.8 million online users visited comparison shopping sites, up 25 percent from last year.

“The rapid growth of online coupon sites suggests that consumers in India are looking for deals, highlighting the need for online retailers to adopt effective marketing and pricing strategies for their goods,” Gavane said.

The report noted that Amazon sites led as the top retail destination in India reaching 6.8 million visitors, representing 14.7 percent of the online population. Apple.com worldwide sites saw its audience reach 3.4 million visitors, followed by Samsung Group with nearly 2.8 million visitors. Other top retail destinations included Flipkart.com, HomeShop18.com and Naaptol.com.

-Rapaport

Diamond demand to grow 7%, supply 3%

The rising consumer demand for diamonds in India and China coupled with a recovery in developed countries will result in demand outstripping supply within the next decade, a new report from consulting firm Bain & Co. shows.

Bain & Company released the report, titled “The Global Diamond Industry, Lifting the Veil of Mystery,” on Dec. 2. It was commissioned by the Antwerp World Diamond Centre, the organization that supports the industry in the diamond-trading hub of Antwerp.

In the report, Bain & Company outlines three scenarios for diamond supply-demand between now and 2020.

In the “base” scenario, demand is projected to grow at 7 percent during that time period, while supply increases only 3 percent.

The “higher” scenario pushes those figures to 11 percent and 4 percent, respectively, while in the “lower” scenario, demand is forecasted to grow 5 percent, while supply is flat.

The report lists five possibly disruptive factors that could impact the supply-demand balance over the next decade.

The first is the uncertain macroeconomic outlook, which could place downward pressure on demand. “A severe double-dip recession...could potentially cause a significant slowdown of demand growth for diamonds beyond what is projected in the lower-demand scenario,” the report states. “Particularly troubling and difficult to predict is the potential fallout from the European debt crisis and the continued unclear economic outlook in the United States at the time of the writing of this report.”

Conversely, the development of a significant investment market for diamonds could cause a surge in demand. This is particularly feasible in markets where consumers are concerned with the inflation of local currency and lack of access to financial instruments that act as a hedge against inflation, such as China.

Also potentially impacting the supply-demand balance are growing consumer acceptance of lab-grown diamonds, the discovery and rapid development of a new source of diamonds as well as political instability, the lack of generic marketing and protectionist policies in diamond-producing countries. The report notes that the risk of these developments, however, remains low.

Overall, the report concludes that the outlook for the diamond industry is overwhelmingly positive.

“In the next decade, demand for rough diamonds is set to outpace supply under all considered scenarios, indicating a strong positive outlook for the industry. Several disruptive factors could negatively impact the diamond supply-demand balance, but all of these factors are unlikely to manifest,” it states.

-National Jeweler