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Israel
By Deena Taylor
Activity in the Israel Diamond Exchange (IDE) was quiet in April as the Passover holiday and the country’s Independence Day celebrations interrupted business. Many traders welcomed the break, however, after slow early-April trading signaled that business was unchanged from the same weak levels that began with the start of 2015. First-quarter data from Israel’s Economy Ministry only confirmed market weakness and showed a significant drop in the country’s polished diamond exports. Israel’s polished exports declined 30 percent year on year to $1.61 billion for the quarter. By volume, Israel’s polished exports fell 24 percent to 622,679 carats. Polished exports to the U.S. remained stable and the country was Israel’s top export market for the quarter, even though overall exports fell slightly year on year, to $623.1 million. According to Israel’s Diamond Controller Shmuel Mordechai, unrealistic, high rough prices are not proportionate to polished diamonds nor reflective of general market conditions, resulting in negatively impacted trading in the country. Rough diamond imports to Israel fell 23 percent to $826.82 million for the quarter, while the volume of imports fell 20 percent to 2.168 million carats. “Compared to a year ago, I don’t think 2015 will be better,” Mordechai said. “We thought 2008 was a disaster, but after a short time, people started to act like survivors and adapt to the situation that existed at that time. Since April 2014 — almost a year exactly — it’s not been clear when the market will pick up.” Mordechai further contended that Israel’s market needs to become more sophisticated in order to survive. He insisted that given such weak market conditions, diamantaires should evolve the way they conduct business so that they can stand out from the competing trading centers.
Despite the weak trading environment, bourse leaders did attempt to give the trade a shot in the arm by hosting the second International Rough Diamond Week from April 12 to 16. Event organizers said the week was a great success, with all five participating companies reporting that their tenders and auctions were oversubscribed, with waiting lists longer than expected. Arnon Yuval, IDE deputy president and chairman of the Rough Diamond Week hosting committee, said the event provided “the opportunity to buy at prices that are appropriate for the market and to examine many different kinds of goods.” Local manufacturers who spoke with Rapaport Magazine applauded the bourse’s efforts to bring rough diamonds directly to the trading center in support of their intention to buy goods locally. However, some manufacturers indicated that they still preferred to trade polished, rather than spend money manufacturing rough.
“Rough is much stronger than polished and it’s not a normal situation,” noted a diamantaire who requested anonymity. “Once you finish making rough into polished, you need to sell, but you can’t sell polished stones at the same price so you end up losing on each stone. That is the problem.” He also noted that one of the positive aspects of the Rough Diamond Week was that it saved time and travel expenses since flying to destinations in Africa and other rough sourcing centers negatively impacts profit margins. Avner Sofiov, the chief executive officer (CEO) of Tzoffey’s 1818, held two rough tenders during the week. He agreed with trading floor sentiment, stressing that Israel is a natural place to hold such an event. “We bring the mine here so that buyers can come and examine goods in a secure environment and you have no expenses,” he said.
On the bright side, trading in fancy shapes seemed to be stable during April. Shachar Devash, the owner of Onyx Diamonds Israel, a specialty manufacturer of square-cut diamonds, explained that fancy shapes in 40-pointers up to caraters in lower qualities are faring much better than rounds. One of the reasons, Devash contended, is that the decline in polished prices on rounds has not had the same impact on prices or demand for fancy shapes. Nonetheless, demand for fancy shapes has dropped slightly. “Demand is not so high. It’s lower than it used to be,” Devash said. “On the other hand, it’s not easy to attain goods because there is less production, so prices for fancy shapes remain steady at the moment, more or less.” Devash noted that buyers do seem to be looking for lower-quality goods in fancy shapes. “It has to be lower-quality goods today; buyers who bought H in the past today want to buy I or J goods. Whoever bought D stones now buys G or F, because that’s what sells.” However, Devash was optimistic that dealer confidence will eventually be restored to the market. “I believe that in the next three months, we will see an improvement in sales, because buyers see that prices have gone down and are now stable,” he concluded. Article from the Rapaport Magazine - May 2015. To subscribe click here.
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