US and Far East Holiday Diamond Sales during the end of the December in the polished market improved considerably. The majority of these orders were Christmas gifts and helped curtail a slow start to the month however many of the wholesale and retail vendors remain conservative when purchasing diamonds for stock. Both manufacturers and polished diamond dealers were relieved that there was an uptick in sales however many expressed frustration with regards to low profit margins.
High prices for rough diamonds are likely to continue as well as tightening of credit from banks. Reports circulating around the industry suggest that many banks lending to the diamond and jewelry industry are planning to tighten their credit policies in 2014. ABN AMRO reduced its financing of rough purchases from all sources from 100% to 70% effective January 1. The result being that manufacturers will now have the finance 30% of their purchases from their own capital.
Diamond Prices
This is likely to have a large impact on diamond prices as liquidity issues continue for the foreseeable future. During the month of December, some polished suppliers saw relief in that rough prices remain stable as well as an slight increase in list prices from RapNet. The RapNet diamond index for 1 carat certified diamonds increased by . 4% during the period of December 1 through December 23. The RapNet index also increased for .30 carat as well as .50 carat diamonds.
In the United States, most of the diamonds sold are commercial quality goods. With strong demand for certified industrial quality in the range of SI 3 to I2 clarity's. Consumers have been gravitating towards lower price points. This due to budget constraints and these goods have been in demand. Analysts noted that the season was characterized by discount shopping and promotional items, similar to that witnessed in the 2008/2009 holiday season during the worst economic depression since the 1930s.
Economic basis
The trend witnessed during the December 2013 diamond holiday sales season demonstrated that consumers were cautious about their spending habits. The Conference Board's Consumer Confidence Index report which indicated that consumer confidence fell to 70.4 in November from 72.4 the previous month. Experts explained that consumers felt that the job market has strengthened but the economy has not picked up to the point where they feel safe spending a considerable amount on gifts and other items. Furthermore, consumers also expressed greater concern about long term job safety and earning prospects suggesting that the holiday season may not produce the desired sales.
Economic forecasters focused on the improving job market as a signal that the US economy is recovering and that growth is to be expected as a result. Unemployment fell to 7% in November according to the Labor Department, the lowest level in five years. Experts noted that the decline was a result of increased need in the labor force. The better job numbers encouraged the Federal Reserve to allow a tapering down of its stimulus program. The Federal Reserve will reduce its monthly bond buying from 85 billion to 75 billion and pledged to keep interest rates low for the time being.
Far East demand
The United States is the number one diamond purchasing country. And is a source of stability in the global industry particularly with regards to emerging markets such as China. Especially when the holiday diamond sales season begins. China however, is pushing forward with economic reforms that is threatening to mute expectations for economic growth in 2014. The most recent data suggests that the Far East diamond trade continues to grow. In 2013 polished imports to Hong Kong increased 15% year-to-year to $4.78 billion dollars; while their exports of polished diamonds also rose 15% to $3.09 billion according to data published by the Diamond Federation of Hong Kong.
Net polished imports, representing a number of goods that state in the region for consumption. Increased 16% to $1.69 billion during the quarter. Looking forward to a new year diamond dealers are hoping to build off the momentum. The 2013 Christmas season and directly into the Chinese new year festivities which begins January 31. Up until recently demand from the Far East was price-sensitive and with a focus on smaller diamonds of high color and clarity, however many consumers are finding themselves being able to afford larger diamonds, a positive trend.
Stability for rough
ALROSA, the world's largest diamond producer said it expects the rough diamond market to maintain stable prices throughout 2014 with a potential gradual growth and prices by 2 to 3%. The company also expects that its production will stay online with 2013 at about 36 million carats yearly. Hoping to increase its profit during the holiday diamond sales. Mining companies and manufacturers alike report that global diamond production increased throughout 2013; with reports suggesting these companies are holding relatively large surpluses of rough diamonds.
This suggests these companies are simply hedging their bets against future price increases. While others say they generally need the goods to fulfill demands. As one diamond industry insider explains "rough is still expensive relative to polished. So you either reject the goods or buy and hold it in inventory until polished prices increased." While 2013 was not a considerably profitable year, for now, many buyers and sellers are content with the current mood within the industry. What is needed is stability for the rough prices.
info@1800loosediamonds.com
Holiday Diamond Sales, a gift idea.