Diamond trading at the Hong Kong Jewellery & Gem Fair reflected a steady, but lower level of Far East demand, mirroring trends in the global market this year. Polished suppliers have accepted that demand has declined in 2012 and were satisfied that some business was done at the show.
As a result, the fair ended for diamond exhibitors on Sunday with sales in line with their rather subdued expectations. The mood among Far East buyers has improved but they continue to purchase only what they need, avoiding any large-scale inventory purchases. There was a lot of price comparisons underway as buyers sought out the right goods at the best price. Indian buyers were looking for bargains at this show but dealer trading was not a factor.
The diamond pavilion, which was located at the AsiaWorld-Expo location, closed on Sunday, September 23, while the show continues for jewelry exhibitors at the Hong Kong Convention and Exhibition Centre until Tuesday, September 25.
Here are some of the trends that emerged at the show via Rapaport News off-record conversations with exhibitors:
General sentiment
• The market is selective and price sensitive. With diminished demand and many diamond exhibitors attending the show – with a lot of goods on display – the competition to sell was strong.
• Buyers were comparing prices between booths, but in the end they bought. The percentage of buyers that came in to buy was high, but the overall volume was low. Business was done at a price and suppliers were prepared to adjust prices slightly down in order to close the deal.
• Buyers are looking for lower price point diamonds. Chinese buyers are looking at SI clarity diamonds and U.S. buyers are strong in SI-I clarity stones.
What’s in demand & What’s not?
• There is steady demand for certified, VS2-SI, H-, Triple Ex diamonds. Suppliers are keeping inventory low in these goods as overall manufacturing capacities are down.
• Demand for VVS goods remains weak with a slight improvement witnessed in demand for VVS, lower color stones. The lower the quality, the easier it is to sell.
• Larger stones above 10-carat sold.
• In parcels, there was steady demand for SI1 and lower clarity goods.
• Among fancies, the market for cushions has softened with a slight oversupply as round manufacturers have shifted to cushions in the past few months when the cushions market was hot.
• Demand is steady for princess, pear, oval and heart shapes and demand for cushions is okay.
• It’s difficult to find nice, fine-cut fancy shape goods.
Rough impressions
• Rough prices remain a concern for manufacturers who claim they still can’t profit from the cutting and polishing process. It’s better to buy polished than rough.
• De Beers announced at the show they will be holding back supply – not able to meet sightholder applications for goods – and reiterated that they have no intention to make further adjustments to price.
• BHP Billiton prices for 4 grainer- to- 8 grainer rough increased by about 4 percent at its recent tender for those sizes.
• Manufacturing capacity is down and there is rising concern that factories will lose their skilled labor, if they haven’t already.
Conclusion
• The September Hong Kong Fair was just an average show for diamond exhibitors but they left relatively satisfied given market constraints. The show did not provide the boost for the season that suppliers hoped for, but reflected an uncertain economic environment. Buyers remain selective, price sensitive and cautious.
• The industry’s focus turns to the retail market as the show failed to stimulate any real excitement for China’s National Day Golden Week that begins next week on October 1.
