Rapaport Weekly Market Comment

Melee weak
and prices softening as rupee depreciation (-8% in three months to INR 73.53/$1
on Oct. 18) impacts Indian demand. Threat of undisclosed synthetics also
influencing jewelers to avoid melee inventory. US orders and memo for 0.70 to
1.99 ct. diamonds supporting the market. Sears files for bankruptcy,
highlighting need for retailers to innovate, improve in-store and online
customer engagement, and refresh product offering for holiday season. Michael
Hill 1Q sales -9% to $80M. Rough trading cautious, with De Beers prices
estimated -1% at $475M Oct. sight. Rio Tinto 3Q production -17% to 4.9M cts. US
government guarantees Stanbic Bank $125M loan for Botswana manufacturing.

Fancies: Far East demand improving as Chinese
consumers seek fancy shapes at better prices. US and European demand mixed.
Ovals and Cushions are best sellers, followed by Emeralds and Pears. Radiants
improving. Marquises and Princesses weak. Oversizes selling well. Steady demand
for fine-quality 6 to 10 ct. Ovals, Pears and Emeralds, with prices firming for
3 to 5 ct. due to shortages. US supporting market for commercial-quality, medium-priced
fancies under 1 ct. Off-make, poorly cut fancies illiquid and hard to sell,
even at very deep discounts.

United
States: Stable market
as jewelers prepare for the holiday season. Prices for dossier goods firm, with
dealers protecting profit margins after quiet third-quarter trading. Steady
demand for 1 ct., G-J, SI-I1, GIA-graded diamonds. Smaller goods in uncertified
parcels weak. A lot of items going out on memo.

Belgium:
Polished market soft, but dealers optimistic for November
and December. Consistent orders for 0.30 to 1.50 ct., G-H, VS-SI goods. Small
stones slow. Improvement in high-end diamonds above 10 ct. Rough activity
cautious, with De Beers boxes trading at lower premiums.

Israel:
Sentiment weak due to low
profitability and rising inventory levels. US orders stable, with high volume
of commercial-quality goods on memo. Little excitement about Israel
Diamond Week in New York (Oct. 15 to 17). Stable demand for 0.30 to 1 ct., F-J,
VS-SI, RapSpec A3+ diamonds.

India:
Drop in sentiment amid rupee depreciation and Surat
bankruptcy rumors. Small-scale manufacturers under pressure as domestic demand
for under-0.25 ct. goods declines. Steady US interest in SI-I1 diamonds. Fewer foreign
dealers in the market than during last week’s Bharat Diamond Bourse buying
event. Jewelers cautious ahead of Diwali festival as weak rupee inflates gold
prices.

Hong
Kong: Polished sector
quiet and jewelry sales sluggish during shorter week that included the Chung
Yeung Festival. Sentiment mixed, with some concerned about how US-China trade
war and yuan depreciation could impact consumer demand and tourist spending.
Encouraging initial reports about Oct. 1 Golden Week sales and ongoing wedding
season. Tourist arrivals stable during busy holiday period.