Growing Optimism

RAPAPORT…

In February, the Rapaport Price List increased twice, first for better-quality diamonds 3 carats and larger, and the next week for smaller, good-quality stones. Wholesalers who spoke with RDR found the changes reasonable.

Polished Prices Strengthen

Adam Mirzoeff, president of East Continental Gems in New York City, said, “It’s just a reflection of the market. It does not translate, for us, into raising our prices. But prices have firmed up. It is showing stabilization of the economy. It is still difficult to find stones and demand just doesn’t seem to be there. We are watching to see what will happen.” Jai Bhansali, vice president of sales at Diagem in Chicago, Illinois, noted, “I was expecting it because of the way things have been going overseas and the rough sales.”

Nilesh Sheth, president of Nice Diamonds in New York City, billed the move as “too little, too late. The prices were firming up for a while. I think it was expected, because of the way rough prices are now. It will go up further because the supply side is tight.”

Moshe Salem, president at M.S. Diamonds and Jewelry in Los Angeles, commented, “We felt the tightening of the goods and the prices. Do I think it’s going to affect the market? I think it’s realistic. When the Rap list goes up, it gives validity to the fact that people can’t find goods. People have a love/hate relationship with the Rap list. But I don’t think it’s a major issue. Emerging markets, the economy, the internet — these are the real challenges.” However, he did observe, “Prices are reaching levels at which it is hard to close deals in the U.S. because demand is soft.”

Rough Prices Still Too High

Derek Parsons, president of British Diamond Import Company in Fort Lauderdale, Florida, recognized, “There does seem to be a limited amount of stones larger than 3 carats. I suspect that the Rapaport list is genuinely reflecting supply and demand. The real story is that rough is artificially high. Polished demand has increased only slightly. Those who are ready to start restocking are not doing so, because they are not willing to pay the prices. They don’t have the demand to need to buy the higher-priced stones. There are still plenty of stones on RapNet and other sources from people who have had them for a year at the old prices. If you’re a mine selling rough in a worldwide bad economy, you’ve got to price the rough to reflect the polished.”

Valentine’s Day came and went with little effect. Bhansali pointed out, “I never considered Valentine’s Day to be much more than a flowers-and-candy holiday in the mind of the public.” Mirzoeff remarked, “As far as diamonds, I can’t say that Valentine’s Day has had an impact.” Sheth conceded that the holiday was “nothing major.” Many felt that Mother’s Day holds more promise in comparison. Bhansali explained that for the upcoming holiday, “You want to make sure you have a little more stock.”

Sales Improve

Overall, diamantaires were pleased with February’s sales. Parsons attested, “It has been a lot healthier in February than it was in January.” Bhansali reported that “Business was a little better than expected. We are not unhappy with sales.” He described the mood as “optimistic,” adding, “I still think the business is good and I wouldn’t consider doing anything else. I would say things are improved. I didn’t think things would be as decent as they are now.”

On the contrary, Sheth called the landscape “not overly aggressive or optimistic. Things will take time to turn around.” Salem noted, “First of all, the market is very volatile. You may go through a couple of days when you have a good run and you may have a week when you don’t get anything. The market is lacking momentum and direction. It is not steady. Goods are still hard to find. But if you want to pay the full price, it is a different story.”

For the rest of 2010, few saw big changes on the horizon. Salem said, “I wish I had a crystal ball. From what I see, the current pace is going to continue. It also has to do with what each of us sees and believes. I think the people who are in charge of our economy are not doing enough or the right thing.”

Parsons contended, “The good businesses have used this time to change their inventory, staffing and have gotten lean and mean. I am amazed that more stores have not gone out of business already. Diamond dealers can get 90 cents on the dollar and eat their inventory, but retail diamond jewelers can’t liquidate so easily. There are going to be a lot of stores closing after March. The trade should be most worried about the people with large lines of credit to the banks. It’s not the mom and pops. The only person who can decide to close my doors is me.”

The Marketplace

• Most diamond buyers are seeking 1-carat goods and off-sizes just below 2 carats.
• G through I colors are popular.
• Clarities are mainly ranging from SI1 to VS2.
• Diamantaires are seeing shortages in high colors in all shapes and sizes.
• There is a growing interest in 1- to 1½- carat GIA Triple EX diamonds in fine makes with no fluorescence.
• Some baby-boomer anniversary buyers have returned to the market, slightly improving demand for fancy yellow diamonds.
• Rounds are the best-selling shape, with square fancies in second place.