Demand Holds Steady

RAPAPORT… Though U.S. wholesale diamond businesses traditionally shut down during the first two weeks of July following Independence Day, fewer opted to do so this year. Many were closed for only one week, perhaps in response to the increasing globalization of the marketplace. Diamantaires were taking stock of the positive mood after the JCK Las Vegas show and looking ahead.

“After Vegas, it’s kind of a regrouping. We do our inventory and prepare our company,” said Lior Sofer, vice president of Beny Sofer in New York City. “In summer, we are typically getting our estimates ready for Christmas, especially for earrings,” reported Sam Frank, president of Leo Frank & Sons, in Troy, Michigan. “We start defining our end-of-year marketing strategy.”

When asked about a summer slowdown, Moises Mareyna Rosenberg, president of M&M Diamond Imports in Houston, Texas, replied, “I don’t think so. Demand is steady. Now we are living in a worldwide economy and it is wedding season. You get married, you buy a diamond. That philosophy has worked for many years. I hope the industry doesn’t take it for granted.”

Frank stated, “We expect the summer to be consistent. The summer months are slower, but we think the percent increase will maintain.” He added that August in particular is usually subdued due to consumers focusing on back-to-school shopping.

Confidence

“Business has definitely improved,” Sofer attested. “In our industry, confidence is higher and most people are pretty optimistic. So people must be buying.”

According to Frank, “Things are moving. It certainly seems like the economy is getting better and we are consistently selling more diamonds than last year. Every month this year, we’ve been up,”
 
However, wholesalers differed on the source of diamond sales. Rosenberg conceded, “I wish demand in the U.S. would be higher than it is. People are buying here and selling overseas. But who cares where the man comes from, as long as he buys? They are buying the better-quality stones.” Avi Simkhai, director of Kanton Diamonds in New York City, also felt that “most of the goods go to the Far East and India.” He called demand “weak as far as the American market,” though he noted that “people are still getting engaged.”

Fashion Returns

Conversely, Sofer declared that “fashion jewelry is back” for anniversaries and holidays. “We are still cautious by all means, but more positive than last year.” Frank stressed, “It is consumer demand. When my customers are buying more, those are retail stores. I don’t know if it’s pent-up demand.”

It helps that clients have accepted recent price increases. Simkhai explained, “In the beginning, it was a shock that it was slow and prices were rising.” Sofer felt similarly, noting, “It’s difficult, because we are still in a recession, but the diamond industry has progressed out of it and is hoping for a boom.”

Rosenberg remarked, “After the past five years, it is what it is. For such a long time, we got used to the fact that prices were so stable. Now, with the ups and downs, people have adjusted. There’s not that much argument anymore. I tell them, ‘Look at what is happening in China. The U.S. used to dominate, but it’s not happening anymore. You don’t want to pay? Don’t worry, the Chinese will pay.’”

Stocks Shrinking

Several wholesalers noted high prices from their own suppliers. “I can’t bring myself to pay what others are charging,” Simkhai conceded. “I’m sure the stocks of diamonds here are getting lower and lower.” Sofer reasoned, “We need to work in an economy that is still rebuilding itself. We are an America-based company and aren’t buying those goods priced for an overseas market.”

Rosenberg admitted to changing his buying habits. “I used to be like Walgreens: Anything you want, I have. I don’t do that anymore.”

As far as the rest of the summer, expectations were mixed. Ran Amiel, president of New York City’s Globe Diamonds, was reluctant to guess. “We’ll see. Things change very quickly. In my opinion, it depends on what the Indians will do. They have most of the rough. They are the ones moving the prices up. They offer 20 percent more. They say they have a local market. I can’t sell it at those prices here.”

Sofer, on the other hand, was less cautious. “We are hoping to finish the year 30 percent to 40 percent up. Hopefully, in the next two years, we will return to where we were three years ago.”

The Marketplace

• Diamantaires are noticing more calls for 3-carat-and-larger diamonds, which is driving prices up.
• Demand for 2-carat diamonds has improved.
• Most buyers are looking for 0.75-caratto 1.50-carat goods.
• H-J colors and SI1-SI3 clarities are finding good demand.
• Princesses, cushions and radiants are improving, while all other fancy shapes are flat or declining. Better fancy makes can be difficult to find.