RAPAPORT...
Israeli diamond manufacturers and dealers maintained a
positive outlook for 2012 despite the relative slowdown in activity in the
second half of 2011. While they began the fourth quarter with low expectations,
most reported relatively satisfactory end-of-year sales.
“There has been steady trading and we have seen consistent
demand for the goods that we deal in,” said Nurit Sherman, a manager at I.C.S.
Diamonds, a manufacturer of round and fancy shape diamonds above 1 carat. “We
have felt a bit of a Christmas season but demand has come from all markets,
including from the Far East for the Chinese New Year and from India, which
picked up after Diwali for the wedding season there.”
Mayer Aharonoff, founder of Aharonoff Creations, a
specialist in large stones, agreed that trading is stable and reported fair
demand through December for the better-quality goods in which he deals. He
added, however, that the local trade has become less reliant on Christmas sales
than in past years.
Either way, Israeli diamantaires are still heavily invested
in the U.S. market, where Christmas remains the busiest time of the year for
jewelers. Israel’s polished diamond exports to the U.S. rose 26 percent year on
year to $2.13 billion during the first nine months of 2011, accounting for 36
percent of total exports.
However, government data showed that polished exports to all
markets slowed in the fourth quarter, falling 33 percent year on year to $398
million in October and by 19 percent to $449.4 million in November. Polished
exports remained up 25 percent to $6.79 billion for the first 11 months of
2011. Separate country data was not yet published at press time.
Economic Challenge
Israeli diamantaires acknowledged that trading was below the
highs of the first half of 2011 and recognized that liquidity challenges in
other centers, particularly in India, have aggravated the slowdown. Most
believe that the volatile global economic environment is the biggest obstacle
to growth in the new year, particularly in light of the European debt crisis
and weak growth in the U.S., but also because emerging markets such as China
and India are being affected by global forces.
Aharonoff stressed that caution in the trade was due to the
global economy and not to weak fundamentals in the diamond industry. “We are
optimistic for 2012 and are hoping that the economic crisis in Europe and the
U.S. will ease because the problem has not been a diamond industry issue, but a
general economic one,” he said. “So we need to work within the context of the
economic environment.”
Investing in Diamonds
Leibish Polnauer, president of Leibish & Co., a
specialist supplier of fancy color diamonds, takes a different view, stressing
the investment value of diamonds, particularly fancy color stones, when other
investment markets are volatile. Polnauer explained that the diamond industry
is, in fact, becoming increasingly independent of the global economy.
“For a long time, the financial market had a powerful effect
on diamond trade prices. If the financial market took a hit, the diamond trade
would fall as well,” he explained. “However, people are slowly beginning to
realize that one does not necessarily have to be connected to the other. Regardless
of the overall financial market twists and turns, the diamond industry is
continuing in a positive direction and at a phenomenal pace.”
Others may disagree but Polnauer maintains a bullish
economic outlook for 2012, noting that the U.S. will have incentive to restore
growth, given that it is an election year. Regardless of the economic outcome,
he expects that Americans will gain confidence to spend throughout 2012.
“Countries may go broke, but many individual citizens still remain wealthy,”
Polnauer said. “Diamonds, and especially fancy color diamonds, will always
continue to shine.”
India Calling
Despite its end-of-year emphasis on the U.S., the Israeli
industry continues to work in other markets; in particular, raising its profile
in the Far East and India. The Israel Diamond Institute Group of Companies
(IDI) recently added a third trade show in India to its calendar by hosting 16
companies in the Israeli pavilion at the UBM Mumbai Jewellery & Gem Fair in
December.
In addition, 16 companies will participate in IDI’s pavilion
at the IIJS Signature Show in Mumbai in January. Eli Avidar, IDI’s managing
director, stressed that the group is working to enhance Israel’s trade
connections with the Indian diamond industry through its trade show
participation and via targeted advertising and public relations programs there.
IDI expects that the Mumbai show, as the first major trade
event on the diamond industry calendar for 2012, will be an important indicator
of how the diamond market will fare during the year. The Israeli industry is
hoping it will spur an optimistic year ahead.
The Marketplace
- Steady, last-minute orders came in for the Christmas
season before the focus shifted to the Far East for the Chinese New Year.
- Cautious optimism exists for 2012.
- Demand is good for SI clarity stones.
- Demand is stable for dossier certificates, .30-carat to
.90-carat goods and goods above 1 carat.
- Demand is improving for fancy shapes, with some shortages
reported in cushions and princess shapes.
Article from the Rapaport Magazine - January 2012. To subscribe click here.