The March Hong Kong show that took place last week was not a game changer for the diamond industry.
If anything, the show signaled business as usual, which lately, hasn’t been great, and trading just about met dealers’ low expectations, according to the Rapaport news service.
There was business to be done. Visitor traffic was a bit light, but there was demand for specific categories of diamonds. Prices held relatively stable at their current low levels and there was neither urgent buying, nor panic selling. Buyers were hesitant as they suspected prices might soften further, but sellers generally held their prices firm even if they compromised a bit to close a deal, the site reported.
Therefore, it was a fairly neutral show with mixed sentiment that was indicative of the various factors currently at play in the diamond industry.
High among those factors is uncertainty about the Chinese jewelry market. The show immediately followed the all-important Chinese New Year Spring Festival, and many hoped it would provide an opportunity for jewelers to replenish inventory they sold during the busy retail shopping period.
However, exhibitors noted that the event came a week or two too soon after the festival. Many of their Chinese clients didn’t attend as they were still on vacation, or had only just got back to work. They didn’t have time to assess their inventory after the holiday or plan what they need for the coming half year.
Chinese New Year
That’s not to say that Chinese buyers were completely absent, or that they don’t still intend to buy. The next few weeks may be more telling, especially since reports about jewelry retail sales during the Chinese New Year were fairly encouraging for the diamond trade.
Chow Tai Fook and Luk Fook Holdings, two of the larger jewelers in the region, this week reported that their respective same-store sales of gem-set jewelry rose by more than 60 percent year on year in Mainland China during the Chinese New Year season. Hong Kong sales were weak all around and gold sales dropped from last year’s highs.
However, with strong sales of gem-set jewelry the data signals that demand for diamond jewelry continues to be driven by China’s growing middle class — which is typically Chow Tai Fook and Luk Fook’s target market.
That trend has filtered to the diamond trade and there was good demand at the show for under 1-carat, H-M, SI diamonds, suitable for the mid-income group.
Diamantaires agreed that the market in China is maturing and observed that there has been a shift in demand from VVS-VS goods to SI-quality diamonds in the past number of years. That trend is continuing and there was good demand, and some scarcity, for SI-clarity diamonds at the show.
In contrast, demand for large, expensive diamonds above 3 carats was weak. Reports suggest that luxury sales were soft during the Spring Festival as the government’s campaign against corruption and conspicuous consumption has affected open displays of wealth and spending.
