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Rapaport Weekly Market Comment

Sep 5, 2019 10:58 AM   By Rapaport News
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Concerns about Hong Kong show remain as protests continue despite withdrawal of extradition bill that sparked them. Luxury jewelers developing China strategy to focus on high-end consumers, who are spending more at home. Weak Chinese wholesale demand weighing on diamond market, with 1 ct. RAPI -0.4% in August. US jewelers considering buying opportunities but delaying holiday stock orders. Signet Jewelers 2Q sales -4% to $1.4B, net loss of $44M vs. $31M loss last year. Polished inventory levels reduced, but still higher than previous years. Manufacturing profit margins tight despite limited rough supply. Rough prices must come down to enable better 2020.

Fancies: Fancy shapes soft, reflecting slowdown in overall demand. 3 to 8 ct., I-K, VS-SI1 moving better than rounds as dealers and consumers shift to lower price points. Well-known brands are paying highest prices, as are buyers with specific requests. Ovals for fashion jewelry moving well, especially 1.50 and 2 ct., G-H, VS and H-K, SI2. Marquises and Princesses weak despite reduced manufacturing. US sustaining market for commercial-quality, medium-priced fancies under 1 ct. Chinese consumers seeking fancy shapes at better prices. Off-make, poorly cut fancies illiquid and hard to sell, even at very deep discounts.

United States: Market quiet during shorter week that began with Labor Day. Dealers hoping for better September ahead of holiday season. Buyers cautious and struggling to profit as prices continue to soften. Jewelers prefer taking memo. Steady demand for 1 to 1.50 ct., G-J, VS-SI engagement-ring goods, with rising interest in ovals.

Belgium: Sentiment weak amid soft trading following summer break. Calls to fill specific orders, but very few buying for stock. Large stones above 3 carats, G-I, VS-SI holding steady. Rough activity slow, with limited supply and low profit margins. Dealers hoping for price reduction at September sales.

Israel: Some improvement after vacation period, but trading still cautious. Uncertainty surrounding the Hong Kong show, although some foresee buying opportunity in weak market. Far East quiet. US stable, but more calls for memo than full orders. Shortage of nice SIs, which are in demand.

India: Slow trading over Jain Paryushan festival and Hindu Ganesh Chaturthi holiday. High gold price and declining currency (INR 72/$1) impacting domestic jewelry demand. Jewelry manufacturers compensating by reducing diamond content. Cutters maintaining low production until October 27 Diwali break, with some smaller units already closing. Polished inventory levels went down in last month, but still higher than previous years.

Hong Kong: Business sluggish as city enters third month of pro-democracy demonstrations. Exhibitors struggling to confirm appointments ahead of September 16 show. Local wholesalers expecting some dealer activity at the fair, but low Chinese buyer attendance. Stable demand for 1 ct., D-G, SI goods. Luxury jewelers focusing on mainland China to capitalize on a shift toward local purchasing among the country’s consumers.
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