Diamond Demand Grows

RAPAPORT… Retail sales during October’s “Golden Week” were reported to be slightly increased, compared with the same period in 2006. And as always, well-known brands enjoyed better performance and growth than the less-famous ones. Several popular Shanghai jewelers reported an average increase of around 20 to 30 percent.

“We are satisfied with our performance, which is more or less similar to last year. That’s not bad at all, since people in the industry have worried that this year is not a good time for weddings according to traditional beliefs,” commented one Beijing dealer, referring to the Chinese lunar calendar’s designation of certain years as more auspicious for such life events as births and weddings. “There were not as many weddings as in 2006 in the first half of this year, but new couples seem to forget about the taboo in the second half of the year! And new couples are buying bigger stones than before.” The size of the best-selling solitaire diamond ring is one-half carat instead of the average 20 to 30 points in previous years.

Since De Beers launched its TV promotions in China in the late 1980s, “A diamond is forever” has created a real diamond wedding ring “culture” in China, which has led to a high diamond ring acquisition rate of around 50 percent in major cities. According to a statistic from the Ministry of Civil Affairs, there are about 10 million new couples getting married every year.
Today, diamond wedding rings account for approximately one-third of all diamond sales in China. And wedding jewelry is the major item for holiday jewelry sales. According to a wedding service company, approximately 80 percent of weddings are concentrated during the two Golden Weeks in May and October and the Chinese New Year in January or February.

Diamond wholesale business slowed down a bit after the October holidays, but prices remained at the same level as the previous month.

Shortages in supply continue in the field of good make, better color of I to H and up, clarity of VS and up and in one-quarter carat up, especially in the category of larger than 40 to 80 points and 1-carat goods.

Growing Demand

Steadily growing demand from Panyu, a district of Guangzhou — a southern city next door to Hong Kong — is one of the reasons for the shortage of certain types of goods.

Supported and promoted by the local government, Panyu has become the largest export-oriented jewelry production base in China, with the maximum concentration of manufacturers, most advanced technology and the most mature investment climate. Its jewelry exports in 2006 totaled $1.16 billion, 20 percent of the jewelry exports of the entire country. In addition, Panyu shipped 25 percent of the country’s polished diamond exports. More than 60 percent of Hong Kong’s jewelry exports are manufactured in Panyu.

According to some Indian dealers in the Shanghai Diamond Exchange (SDE), surging demand for diamond jewelry in the Indian domestic market, which falls in almost the some category as “China goods,” will continue shortages in these product categories into the future.

Statistics from the SDE show that by the end of September, total trade volume in the exchange had reached $701 million and the import of polished diamond that sells to the local market had reached $304 million, with a 61.5 percent increase over the same period in 2006.

Gold

Shandong Province announced in September that its mining resource explorers found a megasized gold mine with 51.83 tons of gold reserves in Laizhou City. East Jiaozhou Bay, also in Shandong Province, is the country’s biggest gold resource base, containing 3,400 tons of detected gold reserves. The provincial mining bureau has discovered more than 100 gold mines with 1,000 tons of gold reserves.

China has had a fast expansion in gold production capacity in recent years. “South Africa’s first-half 2007 production fell 7 percent to 134 tons, while China’s output jumped 18 percent to 129 tons, making the Asian nation the second-largest producer,” London-based researcher GFMS Ltd. said in a report.

The Marketplace

• 10-per-carat, good make, VS+/H-I, are selling at approximately $630 to $660.
• 6-per-carat, good make, VS+/H-I, are selling at approximately $830 to $870.
• 4-per-carat, good make, VS+/H-I, are selling at approximately $1,040 to $1,050
• 3-per-carat, good make, VS+/H-I, are selling at approximately $1,250 to $1,350
• 10-per-carat, good make, VS+/I-J, are selling at approximately $560 to $590.
• 6-per-carat, good make, VS+/I-J, are selling at approximately $770 to $800.
• 4-per-carat, good make, VS+/I-J, are selling at approximately $920 to $1,000.
• 3-per-carat, good make, VS+/I-J, are selling at approximately $1,150 to $1,250.
• -1 point, SI/G-I, are selling at approximately $220 to $270.
• -2 points, SI/G-I, are selling at approximately $270 to $310.
• 3 to 7 points, SI/G-I, are selling at approximately $350 to $400.
• 10 points, SI/G-I, are selling at approximately $400 to $480.
• 15 points, SI/G-I, are selling at approximately $500 to $550.