Israel Market Report

RAPAPORT...  Israel is maintaining its large presence at the JCK show in Las Vegas in 2008, although some diamantaires doubted that the show would live up to previous years, given the lull in the U.S. economy.

“We have high hopes, but not such big expectations for Vegas,” said Gabriel Arabov, chief executive officer of Amtalai Diamonds, which manufactures large-size polished diamonds. “Our hope is that business will prove better than previous months in the United States and that JCK will boost trade there. I don’t expect that to happen to the extent that we would all like, though.”

Despite the falloff in U.S. sales, Arabov nevertheless stressed the importance of JCK. “You simply have to go, in good and bad years,” he said. “We will at least do some business there. You just can’t abandon this market.”

Tino Barbi, partner in S.E. Barbi Diamonds, a specialist in all popular cuts, who is attending JCK for the first time, said he believes the economic situation was, in fact, a motivating factor to attend this year, as he saw it as an investment opportunity to network and build a customer base in the U.S.

Slight No-Show
Others disagreed, however, and downplayed the importance of JCK for the Israeli diamond industry. Avner Haimoff, chief executive officer (CEO) of Delta Diamonds, which manufactures round and fancy cuts in all qualities and sizes, said his confidence for a successful show was not high, given the state of the U.S. economy. “We’re attending the show through our jewelry division, but not loose diamonds. JCK is not so important for loose diamonds,” he contended.

Some have stayed away from JCK completely this year, believing that the U.S. market is unlikely to improve in the short term and preferring to continue to focus on selling larger sizes and clean goods in the Far East. Moshe Yanay, manager of the Israel office at Brilliant Star Diamonds, a producer of round and fancy diamonds in all colors and clarities, said he would like to see JCK Vegas organizers do more to attract buyers from other countries.

Boosting Smalls
Nevertheless, diamantaires attending the show are hoping it will boost trade in smaller commercial goods, which JCK is known for, and which have been in a lull so far this year. “Vegas attracts a different consumer compared to Basel, because it is stronger for smaller commercial goods, which is where the market has been weak this year,” Arabov said. “So we are hoping the Vegas show will give this segment a boost for the year.”

The Israeli industry is also hoping JCK will reverse the downward trend seen in exports to the U.S. so far in 2008 — polished exports declined 17 percent to $1.04 billion for January through April. But, even with that drop, the U.S. market still accounted for 41 percent of Israel’s polished exports in the first four months of 2008, compared to 53 percent during the same period last year.

Moti Ganz, chairman of the Israel Diamond Institute Group of Companies (IDI), said JCK was still the most important event for the Israeli industry, adding that the economic situation was “spurring Israeli diamond companies to work even harder to meet the changing needs of the U.S. market.”

The IDI Pavilion at JCK in 2008 will feature 38 Israeli manufacturers and a total of 62 Israeli companies are registered as exhibitors at the Vegas show, compared to 65 in 2007.

Yanay was confident JCK would play out positive. “If it’s not a good show, JCK may lose a bit of its glamour and people will start going to other U.S. shows,” Yanay said. “But we’ve never been disappointed by JCK before.”

Political Moves
Israel extended its influence in global industry matters as two of its leaders were elected to prominent positions at the 33rd World Diamond Congress in Shanghai, which included the general assemblies of both the World Federation of Diamond Bourses (WFDB) and the International Diamond Manufacturers Association (IDMA).

Avi Paz, Israel Diamond Exchange (IDE) president, took the helm of the WFDB and Moti Ganz, president of the Israel Diamond Manufacturers Association (IsDMA) was elected president of the IDMA. Paz noted Israel’s “important” role as a leading partner in global economic processes and events, particularly given the diamond industry’s central role in the Israeli and world economies.

Making Space
Israel is also expanding its diamond industry in the physical sense, preparing to add approximately 124,000 square feet of office space to the bourse in Ramat Gan. The project will bring the top ten floors of the Yahalom building into the secure complex of exchange buildings, thus adding to the approximately 861,000 square feet of current office space. The project is expected to be completed by the beginning of 2009. Paz said the development would allow local diamond companies to expand their businesses, as well as provide the space to accommodate international companies that have expressed an interest in operating in the country.

Marketplace 
   • 1- carat stones are seeing new demand. 
   • Demand for small sizes is rising, especially for goods in SI1 to VVS1. 
   • 2-caraters+ are on an up trend after a stable period. 
   • Trade is stable in Hong Kong, with continued good demand for clean
      goods and large diamonds. 
   • More very big diamonds of 10 carats+ have appeared in the market in the
     past few weeks, but they still carry very high asking prices.

Article from the Rapaport Magazine - June 2008. To subscribe click here.