It is with great sadness that we confirm the news that our founder, Ehud Arye Laniado passed away on Saturday, March 2, 2019. He was 65 years old.
Later this week, the Hong Kong International Diamond, Gem and Pearl Show will open in Hong Kong, signaling the start of another year heavily populated by trade fairs. In a month, Baselworld will take place. In four weeks between the close of the show in Hong Kong and the opening of the show in Basel, no less than four important, yet more regional, trade fairs will take place. Making the effort to attend a show also means considering the time out of the office, including the missed sales opportunities that being out of the office entails. Which raises a question: is it worthwhile? Attending trade fairs, especially as an exhibitor, is costly, and can run into $100,000. To cover the cost, revenues should cover the cost of goods, the cost of attending the fair plus any other sales-related expenses. Considering that in addition to the regular expenses and the loss of business back in the office while we are away, we need to add the trade fair-related expenses, meaning that we need to make a lot more sales than usual to make it worthwhile. How often does that happen? How does one poor trade fair impact the rest of our trade fair revenue?
Consider the following: diamond jewelry sales are not as good as they used to be. The decent margins wholesalers and retailers used to have on diamonds have shriveled. While luxury sales are growing, diamond jewelry sales are losing market share in the category. Consumers are losing interest in traditional diamond jewelry, opting instead for alternatives such as lab grown. Considering all this, my question to the industry is ‘what are we doing to turn this around?’
Prices of smaller goods, one carat and below, completed six months of price increases in January. Larger goods, however, which suffered from price declines late in 2018, continued to decline in January, according to the Mercury Diamond Global Tracker™ (MDGT™). The price changes were just shy of a single point for those that increased in price, while the declines were more dramatic. The continued price increases among rounds weighing up to 1 carat is a positive trend in the market, indicating a rise in demand among retailers. Furthermore, it provides relief for the long-embattled wholesale sector of the diamond pipeline.
The wholesale diamond market was slow in January. This is seasonal and somewhat expected, however in January retailers generally replenish their inventories and prepare for Valentine’s Day, and this happened only to a limited extent. The world’s largest jewelry retailers reported a decline in diamond jewelry sales in December, so the issue may be goods being off loaded back into the wholesale market.
Last week we published our monthly report on the Mercury Diamond Global Tracker™ (MDGT™) for December, showing that prices of most round diamond size ranges between 0.30 carats to 2 carats rose during the last few months of the year. At the same time, our index, which covers a very wide range of goods has declined. It seems puzzling, but it really hides a sad truth about demand for polished diamonds around the world, mainly in the US and China, the two largest consumer markets.
Prices of smaller goods, below one carat, continued to rise in December after increasing in November, responding to rising demand in the consumer market. Larger goods, however, which suffered from price declines in November, experienced a long-awaited revival, rising 1-1.5% in December, according to the Mercury Diamond Global Tracker™ (MDGT™). The MDGT™ index averaged 109.45 in December 2018.
A sharp drop in demand and a rise in inventories characterized trade in December. Polished diamond traders around the globe were feeling blue after retail sales of diamond jewelry failed to meet expectations.
As the year draws to a close, we at Mercury Diamond stopped to take a look at the state of polished diamond prices over the past year. We noticed that prices have been lingering for some time and decided to look at what some of the other diamond indexes in the market show. No surprise here, we all show pretty much the same scenario.
Familiar with the relationship status ‘It’s Complicated’? That is a good two word description of the diamond jewelry holiday selling season so far. As you may recall, diamond jewelry sales were sluggish during the 2017 holiday season, but ended with a last-minute rush by consumers. That happened during the last two weeks of December. Is that what will happen again this year? Maybe. What we do know is that at this point, sales seem lackluster. Mumbai-based wholesalers and traders selling in the US or to American buyers are reporting a slowdown in business. In the past, business peaked in December. This year, they are reporting that that the majority of their holiday business is probably behind them. This year business peaked in mid-November.