November diamond trading falls below expectations

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Latest Rapaport report says outlook for festive period is mixed.

The latest Rapaport diamond trading report for polished and rough diamonds outlines an upswing at the end of November, spurred by demand from China and the US.

According to the report, polished trading was mixed in November with a steady improvement toward the end of the month after quiet activity during the Diwali festival.

Demand remains selective with strong demand for commercial quality goods, particularly stones of .30ct to .50ct, H to J colour and SI1 to I2 clarity, with an upswing spurred by steady US and Chinese demand.

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Shortages of polished goods became apparent toward the end of November due to low-level manufacturing during Diwali and delays in releasing stones from laboratories to Indian clients. According to Rapaport, polished prices were "basically stable" throughout the month, with good demand reported for commercial quality fancy shape diamonds and strong demand for fancy colour diamonds.

With a view to the rough diamond market, trading improved as De Beers reduced prices at its November sight. Dealers reported better value in De Beers boxes on the secondary market during sight week and after.

Demand at the rough tenders was steady and prices improved, with particularly good demand for diamonds larger than 10.8cts. Manufacturers resumed their operations after the Diwali break with smaller units taking extended vacations due to the difficult conditions prevalent in India. According to Rapaport, overall output remains below capacity.

With a view to retail trade, India’s jewellery retail sales were relatively slow during Diwali due to government-imposed constraints in the gold market. Rapaport reports that gold jewellery demand continues to spur growth in China and among the major Hong Kong-based jewellers, supported by steady sales of gem-set jewellery.

The diamond trade is now very much focused on the Christmas season in the US and Europe, with initial reports from Thanksgiving weekend falling slightly below expectations with average spending among consumers lower than last year.

In China, Chow Tai Fook, Chow Sang Sang and Luk Fook Holdings report strong growth due to Chinese consumer gold rush, with global gold jewellery demand grows 5% volume in the third quarter.

Rapaport also states that jewellery sales expected to rise between 2% to 4% in the fourth quarter, though it does not state whether this is in the US or globally.

In summary, Rapaport says the diamond markets improved in November spurred by the Christmas shopping season. However, trading volume fell below levels seen in previous years and expectations for the holiday are mixed. Christmas and Chinese New Year demand should be enough to sustain the industry during the next two months and support polished diamond prices, at least for popular commercial goods.

 

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