RAPAPORT… The Israel Diamond Institute Group of Companies (IDI) welcomed signs of a recovery in the country’s diamond trade during the first half of the year as activity improved in the second quarter. According to data published by the Ministry of Industry, Trade and Labor, polished diamond exports from Israel by value rose 92 percent year on year to $3 billion, while rough imports more than doubled to $1.82 billion.
“We are not surprised by the statistics, since the Israeli diamond industry is experiencing a pronounced upturn in activity,” said IDI Chairman Moti Ganz. “We are confident that the Israeli industry will continue to grow. We look forward to a return to our previous levels of activity.”
Growth was strongest in polished exports to Hong Kong, which rose 133 percent to $819.6 million during the six-month period, while sales to the U.S. increased 76 percent to $1.21 billion.
Slowdown in 3Q?
While Diamond Controller Shmuel Mordechai reported that the second quarter showed significant improvement over the first three months of the year, others noted that, for them, the market seems to have quieted in the current period.
Doron Itzhakov, manager at Hadad Diamond Company, a manufacturer of 1-carat to 50-carat diamonds in all shapes and colors, suspected that the second-quarter data was inflated by activity surrounding the JCK Las Vegas and Hong Kong shows that took place during the period. He said that, apart from the show sales, June and July were more challenging months for the industry and added that, with the upcoming vacation period and subsequent September Hong Kong show, the “third-quarter statistics may tell a more realistic story.” Those numbers also will be affected by the fact that the Israel Diamond Exchange (IDE) traditionally closes on August 1 for three weeks.
Jacob Zilbershats, founder and president of Cosmos Diamonds, a manufacturer and importer of rounds and fancies of 1-carat sizes and up, forecasted that the next two to three months would continue to be quiet, as is normal for this time of year, until the market starts gearing up for Christmas.
Itzhakov said the summer vacations were just one of a number of factors impacting the slowdown in activity at the moment. “I can’t give a reasonable explanation for the sudden brakes applied to activity, but it was probably a combination of factors,” he said. These include high rough prices, shortages of rough, shortages in the polished market and small profit margins. He further stressed that prices currently seen at rough tenders were not realistic and did not translate to the polished market. “There’s no rough coming to market and prices are high and this influences the polished,” he explained. “It’s causing an increase in the seller’s polished asking prices and the result is that you generally don’t get the price you want.”
Most manufacturers who spoke with RDR agreed that there has been some level of recovery in the U.S., while India and the Far East remain strong and Europe volatile.
Indian Influence
Diamantaires are hoping the August India International Jewellery Show (IIJS) in Mumbai will signal an uptick in trading activity, although just seven companies are participating as part of the IDI pavilion. IDI said interest in exhibiting was high but space was limited, which created a waiting list of Israeli companies. This year will mark the third time that IDI is hosting a pavilion at IIJS.
Ganz stressed that it was important to forge stronger ties with the Indian industry.
“As two of the world’s leading diamond centers, Israel and India can complement each other in both manufacturing and trading,” he said. “We believe in the great potential of this enormous market, which is growing at a very rapid pace.”
IDI Managing Director Eli Avidar added that the institute is looking to strengthen ties between the respective industries at the show after signing memoranda of understandings with the Gem and Jewellery Export Promotion Council (GJEPC) and the All India Gem and Jewellery Trade Federation (GJF) in late 2009 and early 2010, respectively. Israel’s polished diamond exports to India grew by 162 percent year on year, to $113.1 million between January and June 2010.
Israel’s presence in India has grown in importance as manufacturers have become increasingly aware of the competition in the Indian market. Zilbershats noted that the market has become difficult to read because of the Indian influence. The Indians, he explained, have diversified their activity and are manufacturing all sizes today, expanding beyond their previous focus on smaller items. He stressed that Israel needs to focus on manufacturing again to maintain its position in the market.
The Marketplace
• Trading is quiet due to summer vacations.
• Demand is stable from the U.S. for melee to 1.5-carat goods, SI1-I1.
• Demand for DIF goods slowed slightly.
• Demand is good for oversizes in 1.25-carat+ stones.
• Rough supply shortages are being felt in the market and prices are still considered high.
