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Growing the Jewelry Sector

Israel July Market Report
Jul 1, 2010 7:46 AM   By Avi Krawitz
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RAPAPORT... Israel’s domestic jewelry market may not have the volume to compare with the U.S., India and China, but it is showing signs of growth. According to Itzhak Bendor, managing director of the Israel Jewelry Manufacturers Association (IJMA), the surest sign of the growing trade is that new stores are opening again in the country and requests for space by jewelry retailers are increasing in the malls and business centers.

“We don’t have official statistics to provide a real measure of the local jewelry sector but it seems the market is strong,” Bendor said. “There is a waiting list of retailers to open new stores.” Another sign of a healthy trade is that large delegations of buyers are traveling to international suppliers to buy for the local market, he explained.

Bendor added that many of the local jewelers have been in a stronger position than exporters through the past year because Israel’s economy remained relatively stable through the global recession. The country’s gross domestic product (GDP) rose 0.7 percent in 2009, according to the Central Bureau of Statistics (CBS), and the Bank of Israel expects the economy to expand by 3.7 percent in 2010.

Regardless of the growth in the domestic market, local jewelry manufacturers, designers and wholesalers remain largely reliant on the export market as their support base. With this in mind, the seventh annual Jovella Jewelry Exhibition was scheduled to take place in Tel Aviv on July 6 to 7, with approximately 150 exhibitors from Israel and abroad filling the floor space. Prior to the show, organizers expressed confidence that they would outpace the 2009 event, which was attended by approximately 11,000 visitors. Bendor said he expected a 10 percent to 15 percent increase in visitor traffic this year.

Trading Gold for Silver

The Israel Diamond Institute Group of Companies (IDI), a cosponsor of Jovella, noted that Israeli jewelry design has grown in stature and is becoming renowned for its creative designs, up-to-date fashions and excellent quality.
“Part of its appeal is due to Israel’s great fusion of cultures and traditions, combining exotic with state of the art, and ethnic with cosmopolitan,” IDI explained. These factors helped Israel’s jewelry exports reach $300 million in 2009, with the majority going to the U.S., but also to Russia, the U.K., Hong Kong, Canada, Belgium, Italy, Spain, France, Japan and other locations.

Bendor noted that certain current trends in jewelry worked to the Israeli industry’s advantage in the past year of the global recession. “There has been a trade-off from gold to silver and Israel has always been strong in silver jewelry,” he said. “We saw strong growth in silver and a decline in gold.” Israel has also developed a niche in the mid-to-high price range, which Bendor attributed to its jewelry’s “unique design and quality.”

Diamond Trade Stable

This year’s Jovella exhibition will include a larger diamond pavilion, featuring diamond jewelry, even though Israel’s diamond industry is predominantly export-focused. After being hit by the recession in the early months of 2009, Israel’s polished diamond exports increased 82 percent year over year to $2.55 billion in the first five months of 2010. Rough exports rose 118 percent to $1.31 billion through the same period.

The statistics are supported by a growing confidence in the Israel Diamond Exchange (IDE) as signs of a global recovery take shape, especially in the U.S. after a positive JCK Las Vegas show. Even if trade in the Israel bourse was not booming in the past month or two — many manufacturers and dealers were traveling and the bourse was closed for the Jewish holidays — business has been stable.

Ronny Kropveld, chief executive officer (CEO) of ADR Kropveld Diamonds, manufacturer of the Passion Cut,™ which the company says improves the brightness of a diamond by adding 24 extra facets to the stone, cited high rough prices and the strength of the Indian market as the most influential factors in the industry. Rough continues to rise, Kropveld explained, and you can’t replace the stones you sold at JCK at the same prices.

Kropveld noted that the Indian market is able to adapt to changing rough prices more easily than other markets, while noting that the U.S. is “not at all in tune” with the rough. “There is a difference in prices between the Far East and the U.S. and also a difference with the manufacturing centers,” he explained.
“The market is increasingly influenced by India, which is buying both rough and polished for resale,” Kropveld said. “They have the financing flexibility that other markets like Israel don’t have. They are able to hold onto their goods until they get their price. We can’t do that.”

The Marketplace

• Trading is stable, with growing optimism after a successful JCK Las Vegas show.
• Demand is good overall for SI piqué goods.
• There has been improvement in demand for traditional U.S. stock of 0.30-carat to 0.50-carat, SI piqué goods.
• Demand is good for 1-carat and 1.5-carat, I+, VS+ diamonds.
• Demand is improving for larger stones above 3 carat.
• Fancy shapes are dominated by princess, cushions and pears.
• Manufacturers’ margins are being squeezed by rough supply shortages and high prices.
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Tags: Avi Krawitz, Avi Krawitz, Belgium, China, Economy, Hong Kong, IDI, India, Israel, Israel Diamond Exchange, Israel Diamond Institute, Japan, JCK, Jewelry, Jovella, Manufacturing, Russia
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