Rapaport Magazine

Economic Bulletin

September 2007

By Rapaport
RAPAPORT... State of Consumer Confidence Reflects Market Woes After a strong showing in July, the Conference Board

Consumer Confidence Index showed a marked decline in August. From its height of 111.9 in July, the Index is now at 105.0. The Present Situation Index has declined from 138.3 in July to 130.3, and the Expectations Index is down from 94.4 to 88.2, according to figures released by the Conference Board, which sampled 5,000 households.

Lynne Franco, director of the Conference Board Consumer Research Center, gave a sober assessment: “A softening in business conditions and labor market conditions has curbed consumers’ confidence this month. In addition, the volatility in financial markets and continued sub-prime housing woes may have played a role in dampening consumers’ spirits.”

The luxury goods industries have doubtless felt the influence of a climate where people saying that conditions are “good” decreased from 28.3 percent to 26.4 percent, while those saying that jobs are “plentiful” fell from 30.0 percent to 27.5 percent. The percentage of consumers expecting higher incomes in the months to come was static, at 19.1 percent.

United States Polished Imports Flat

Polished diamond imports into the United States rose 1 percent to $1.32 billion in June. This figure shows a 30 percent drop from May, when imports reached a record $1.88 billion. In June, the United States took in 985,214 carats of polished diamonds, at a price of $1,341 per carat.

Polished exports rose 14 percent to $1.1 billion, while net polished imports — imports less exports — dropped 35 percent to $212 million.

For June, rough imports fell 32 percent to $69 million, while rough exports rose 3 percent to $35 million. Net rough imports — imports less exports — fell 50 percent to $34 million.

The net diamond account for the United States — net polished plus net rough — dropped 37 percent to $246 million in June.

For the first half of 2007, polished imports have gone up 6 percent to $8.79 billion, while polished exports are up 11 percent to $5.26 billion. Net polished imports fell 1 percent to $3.53 billion.

Rough imports for January through June have climbed 5 percent to $423 million, and rough exports were up 32 percent to $249 million. Net rough imports sank 18 percent to $174 million. The net diamond account went up 2 percent to $3.7 billion.

Belgium’s Net Diamond Account Up

July polished exports from Belgium rose 18 percent to $1.106 billion, and polished imports rose 21 percent to $788 million. In July, Belgium’s net polished exports rose 13 percent to $318 million from a year ago.

Also during July, rough imports to Belgium rose 23 percent to $822 million, and rough exports rose 22 percent to $1.160 billion, leaving a net import total in the red of $278 million — down 21 percent from July 2006.

For the same month, the net diamond account — net polished exports minus net rough imports — jumped 16 percent to $596 million.

Year-to-date polished exports from Belgium are up 11 percent to $6.385 billion, and polished imports have risen 8 percent to $5.778 billion. The net polished export figure for January through July 2007 stood at $607 million, or a 50 percent gain from 2006.

Year-to-date rough imports have climbed 10 percent to $5.906 billion and exports have risen 19 percent to $6.833 billion. The net rough imports, while being in the red, were down 137 percent to $927 million. So the net diamond account from January through July stood at $1.534 billion, a rise of 94 percent from the same period one year ago.

Israel’s July Polished Exports Up

Israel’s exports of polished diamonds rose 21 percent to $643.92 million in July 2007, the country’s Ministry of Industry, Trade and Labor reported on August 1. Polished imports rose 27 percent to $380.95 million, pushing Israel’s net polished exports — polished exports less imports — to $262.97 million, up 12.5 percent from July 2006.

The country’s rough diamond imports rose 44 percent to $492.66 million for the month, while rough exports increased 36 percent to $266.78 million. Net rough imports — rough imports less exports — soared 54 percent to $225.88 million.

After reaching a polished export deficit of $87.06 million one year ago, Israel’s net diamond account — net polished exports less net rough imports — moved into the black in July 2007, hitting $37.09 million.

For the year to date, Israel’s polished diamond exports rose 8 percent to $4.23 billion, while polished imports grew 8 percent to $2.34 billion. The country’s net polished exports rose 8 percent to $1.89 billion.

From January to July, rough imports went up 10 percent to $2.9 billion, while rough exports rose 24 percent to $2 billion. Net rough imports declined 11 percent to $895 million.

For the first half of 2007, Israel’s net diamond account decreased 34 percent to a polished export deficit of $996 million.

Japan’s Polished Imports Slide

Marking a shift away from its traditional trading partners, Japan’s polished diamond imports fell 10.7 percent to $72.98 million in June 2007. Imports fell 16.4 percent to $459.99 million for the first half of 2007.

The total carat weight of Japan’s diamond imports fell 23.6 percent to 153,670 carats in June, and by 16.4 percent to 1.127 million carats for the year to date.

Sierra Leone Diamond Exports Up

Sierra Leone is expecting diamond exports to exceed $160 million in 2007, which would mark the highest level since the decade-long civil war ended in 2002, Reuters reported.

The country is on track to reach record diamond exports, a mining official told Reuters. In the first seven months of 2007, the country’s gold and diamond office announced, Sierra Leone exported 448,988 carats worth of diamonds, valued at a total of $102 million. This represents a 32 percent rise in Sierra Leone’s exports from the same period last year.

Sierra Leone exported diamonds worth $125.3 million in 2006, which was a drop of 11.6 percent from 2005, according to Kimberley Process figures.

Anglo American Earnings Up

Anglo American, the holding company of De Beers, reported record underlying earnings for the first half of 2007. These earnings rose 22 percent to $3.1 billion for the six months ended June 30, as earnings attributable to shareholders climbed 15 percent to $3.3 billion and revenues for the period rose 5.4 percent to $19.8 billion. Company spokespersons attributed the showings to strong prices for its platinum, ferrous metals and base metals as well as industrial metals activities.

India’s Gold Jewelry Exports Up

The first four months of the financial year starting in April were a strong period for India’s gold jewelry exports, which rose 31 percent. Arvind Pradhan, executive director of the Gem and Jewelry Export Promotion Council (GJEPC), told reporters that “traders exported heavily ahead of the July 1 deadline for the lifting of U.S. preferential treatment,” with the result that May and June saw the maximum exports.

In the financial year ended in March, India’s exports of gold jewelry reached $5 billion, with about half of those exports going to the United States. Diamond exports from India, figures released by GJEPC, rose to $4 billion in the first four months of the 2007-2008 fiscal year, up from $3.2 billion in the same period a year ago.

Namdeb Rough Sales Down

Namdeb Diamond Corporation’s managing director, Inge Zaamwani-Kamwi, announced strong results for the first half of 2007. Carats are slightly ahead of where they were in the same period last year, a success won by upping land production. Namdeb also attributes the result to “the favorable timing of the in-port periods of the marine vessels.”

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