Improved US sentiment counteracts cautious diamond demand from China.
Diamond trading was described as steady last month according to Rapaport’s latest monthly diamond trading report.
Most of last month’s activity was focused on preparations for the Las Vegas trade shows where diamond trading was reportedly "OK" according to Rapaport, but not booming.
Buyers were said to be selective and resisted attempts by suppliers to raise prices. Wholesale jewellers reported better sales which spurred slightly improved confidence throughout the trade.
The latest figures show that demand was flat in May for 1ct stones, while demand for polished stones closed in India and the Far East.
According to Rapaport, polished trading slowed in May as dealers prepared for the Las Vegas shows. Indian cutters and dealers were on their annual vacation while Far East markets were seasonally slow with no significant retail festivals to boost demand.
Demand from China has become relatively cautious so far this year as its political landscape goes through a transition period, resulting in slower economic growth. As a result, Hong Kong trading is described as stable but cautious with exports decreasing by 10% year-on-year in the first quarter of 2013.
US polished trading continues to grow at a steady pace with rising imports and exports. Trading at the Las Vegas shows was said to be "in line with expectations" as commercial quality SI and lower clarity goods showed good sell through, with demand across the board for triple EX stones, continuing the trend witnessed in the past six months. According to Rapaport, triple EX stones are selling at between 5% to 8% premiums to non-triple-EX goods. There was also good demand for off-sizes such as 2.5ct and 3.5ct G to J, SI1 to SI2 stones.
Rapaport states that demand for large, high-end, unique stones "remains hot", as well as that for fancy intense colour diamonds and fine-cut fancy shapes.
Looking at the stats, US imports of polished diamonds in the first quarter were up 7% year-on-year. Belgium’s polished exports in May were up 8%, while India’s exports jumped 37%. In Japan, imports of polished diamonds were up 20%.
With a view to rough trading, the secondary market slowed considerably at the beginning of May as sightholders reacted to De Beers price increases. A change of assortments to include a larger proportion of better-quality goods from the Victor mine in Canada further contributed to the increase in box values.
De Beers management reported that rough prices have increased by an average mid-single digit percentage so far in 2013. Similarly, ALROSA reported that its rough prices increased by about 5% this year. The Russian company noted steady demand and has not activated its option to sell goods to the state treasury, Gokhran, this year.
Rapaport describes rough demand as "relatively stable" with increases in trading driven by price hikes rather than a rise in volume. Belgium’s rough imports and exports have increased 6% by value respectively, while by volume they have declined by 1% in the first five months of the year.
Diamond manufacturing levels remain below capacity, particularly as Indian factories were closed during the May summer vacation period. Manufacturing is expected to increase slightly in the third quarter.
At a retail level diamond trading at the Las Vegas shows was reportedly cautious. Wholesale jewellers were said to be more upbeat, reporting steady orders from their retail customers.
Overall, US retail sentiment improved in May and throughout the shows as consumer confidence increased on better employment numbers and rising wealth. Furthermore, the major publicly-listed jewellers such as Tiffany & Co and Signet registered a strong first quarter, though mostly in the US rather than Europe.
According to Rapaport other markets have been less upbeat. The outlook for China’s luxury goods sector has softened as the pace of economic growth has slowed. India’s domestic market is being pressured by the weak rupee, while Indian and Chinese consumers continue to buy gold jewellery instead of diamonds. After gold prices dipped in May India’s gold imports rose to around 162 tonnes, which was twice the average level.
The Indian government raised the gold import duty from 6% to 8% in an attempt to contain the country’s large current account deficit by curbing gold imports.