Recent Industry Trends
International
01. De Beers renewed a 10-year sales agreement with the government of Botswana (official website of De Beers)
On July 1, De Beers announced on his official website that he had signed a new partnership agreement with the Government of the the Republic of Botswana. Both parties have reached a new sales agreement on the production of Debswana raw diamonds, which will continue until 2033 and extend the Debswana mining license for 25 years to 2054. The agreement focuses on the value of four key areas: l Industry leadership: significantly expand Botswana's leadership in the diamond value chain. During the agreement period, Botswana's share of supply will be increased to 50% through Okavango Diamond Corporation (ODC).
Starting from the new contract period, ODC will receive 30% of Debswana's production, gradually increasing to 50% in the final year of the contract, ensuring a sustainable transition path for both parties.
Debswana's future: promote long-term capital investment to ensure that Debswana will become one of the world's leading diamond producers and the largest private employer in Botswana in the coming decades.
Economic diversification: Botswana's economic diversification is accelerated by the establishment of a multi billion dollar Pula Diamonds for Development Fund. De Beers' initial investment is 1 billion Botswana shillings (about 75 million dollars), and further contributions in the next 10 years will reach 10 billion Botswana shillings (about 750 million dollars), aiming to create considerable added value for Economy of Botswana's economy.
Employment in Botswana: create tens of thousands of new jobs for Botswana's expanded diamond industry and emerging industries, focusing on supporting the growth of knowledge-based economy.
Al Cook, CEO of De Beers Group, said: "For De Beers, it is an honor to renew the partnership with Botswana for half a century. This partnership is highly valued by the world because of its lasting role in creating economic development and growth. Our transformative agreement reflects the aspirations of the country, ensures the future of our Debswana joint venture, and reaffirms De Beers' long-term leadership. The agreement represents us It is committed to providing investment for Botswana's diamond production, Botswana's diamond value chain, Botswana's knowledge economy, and especially Botswana's people. "
Although the partners are advancing and executing formal sales and mining agreements, the terms of the recent sales agreement (which expired on June 30th) will continue to be valid.
02. IDEX Price Report: Round Diamonds Decline and Irregular Diamonds Perform Better (IDEX Online)
On July 1st, the IDEX official website released the latest price report:
The price of round diamonds maintained a long-term downward trend in June, but the performance of irregular diamonds was significantly better than before, with price increases in certain sizes dominating. Since reaching its peak in February last year, the overall price has been declining. The global economic recession and the widening price gap between Synthetic diamond and natural diamonds have severely hit diamond production. The demand for low-cost diamonds is increasing, while the demand for round diamonds is decreasing. Indian manufacturers are chasing prices below 0.75 carats to maintain factory operations and avoid layoffs.
Signet, the largest jewelry retailer in the United States, lowered its full year forecast by about 7% last month and announced plans to close about 150 out of 2800 stores as the "engagement gap" began to take effect. In the goods inspection meeting in June, De Beers' original diamond sales fell by nearly a third to $450 million, due to continued caution and depressed market sentiment. The IDEX finished diamond index also recorded its largest monthly decline since falling in March last year -3.04%.
Main change range (red falling, green rising)
Round drill
0.18-0.22 Carats D-G/SI3-5-6%
0.23-0.29 carats D-G/SI3-4.5-5.5%
1.00-1.24 Carats D-G/VVS2-SI1-1-5.5%
1.25-1.49 Carats D-H/IF-SI2-1-5%
3.00-3.99 Carats D-G/VS1-SI2-0.5-4%, I-N/VVS1-2+1-3%
Irregular drill
0.50-0.69 Carats D-G/VVS1-VS1+1.5-5.5%
1.00-1.24 carats D-F/IF+1-2.5%, D/VVS1-SI1-1-2.5%
4.00-4.99 carats E-G/IF-VS2-1-4%, L-N/IF-VS1+1.5-4%
03. UK Gem Diamonds Discovered the Second Original Diamond Over 100 Carats This Year (IDEX Online)
British diamond producer Gem Diamonds has discovered the second diamond of the year with a weight of over 100 carats at the Letseng mine in Lesotho.
The company described it as an impressive 163.91 carat yellow diamond.
Last year, the recycling rate of large diamonds was lower than the average, with 4 diamonds over 100 carats, compared to an average of 8 diamonds per year since 2008. So far, two have been discovered this year. In March, a 122 carat D-color II white diamond was discovered.
Revenue for the entire year of 2022 decreased by 6% to $189 million. Gem Diamonds, which owns 70% of the shares in Letseng Mine, is selling 100% of its shares in another mine in Botswana, Ghaghoo, to Botswana Okwa Diamonds under Vast Resources. The mine has been in a sealed state since 2019. Last year, the highest price for Letseng diamonds was $34170 per carat, with one 42.98 carat white diamond sold for $1.469 million. The transaction price of the other three diamonds also exceeded $1 million.
04. Retail downturn: Diamond prices continue to decline (Rapport News)
Due to weak demand in the US retail market and pressure on the midstream market, the market continued to slow down in June. Jewellers avoid inventory purchases, only purchase specific orders, and show a preference for consignment. Due to a decrease in sales and profit margins, manufacturers have maintained relatively low bare diamond production. Due to the decline in prices, dealer activity has slowed down. Synthetic diamond have also seriously damaged the natural diamond market, especially large-sized diamonds and Engagement ring, which became more obvious in June. The sluggish performance of the Chinese market, economic slowdown and depreciation of the renminbi have affected demand in mainland China. As expected, the sales at the Hong Kong JGA June exhibition were light.
In June, the RapNet Diamond Index (RAPI) for 1-carat finished diamonds ™） It fell by 2.4%. On July 1st, it was 6901 o'clock, and at the beginning of the year, it was 7537 o'clock. RAPI has also decreased in other sizes and continued to decline in the first four days of July. The prices of 0.5 carat and 1 carat diamonds with better quality have decreased by more than 23% year-on-year. Finished diamond inventory remains high, but remains stable due to low production. The factory in India has been extended
The closing time for the summer of May and maintaining controllable production after resuming operations. The number of diamonds on RapNet decreased by 1.5% in June and to 1.75 million on July 1st. However, the decrease in supply cannot offset the decrease in demand. The demand for rough diamonds above 0.75 carats is weak; Due to the continued demand for smaller natural bare diamonds in the market, cutting companies are focusing on smaller diamonds to maintain factory operations. Due to market conditions, Petra Diamond and Transatlantic Gem Sales Company (TAGS) cancelled the June auction. According to the GJEPC report from India, raw stone imports in May decreased by 19% year-on-year to $1.17 billion. Synthetic diamond continue to affect the sales of SI1 to I2 natural diamonds, because they provide consumers with the option to buy naked eye clean diamonds at the same or lower cost. Although falling prices and profit margins have prompted enterprises to leave the Synthetic diamond field, De Beers launched Synthetic diamond Engagement ring under the Lightbox brand, which has increased the credibility of Synthetic diamond. The high-end market remains the main strong buyer. Higher interest rates in the United States have increased the wealth of the wealthiest Americans. Due to the economic downturn, disposable income has decreased, and the middle and low-income groups have begun to restrict consumption. This in turn reduces the demand for products ranging from 0.3 to 3 carats. The expanding domestic retail market in India is one of the few areas that has shown significant growth.
There are also some optimistic factors: the US inflation rate dropped to 4% in May, and the Federal Reserve decided to suspend interest rate hikes in June. Financial markets are watching to see if the Federal Reserve will resume interest rate hikes at its next meeting on July 25th and 26th. 05. India's Diamond Trade Slows in May (GJEPC). On June 9th, data from the Gem and Jewelry Export Promotion Council (GJEPC) showed that India's finished diamond exports in May decreased by 18% year-on-year to $1.72 billion, finished diamond exports decreased by 31% year-on-year to 1.7 million carats, and the average export price increased by 19% year-on-year to $1031/carat. From January to May, the export value of finished diamonds from India decreased by 21% year-on-year to 8.46 billion US dollars, the export volume decreased by 16% year-on-year to 9.5 million carats, and the average export price decreased by 6% year-on-year to 893 US dollars/carat. 06. In 2022, Russia's rough diamond exports decreased (Rapport News). Due to import restrictions imposed by governments around the world, Russia's raw diamond exports decreased by 24% year-on-year to 36.7 million carats in 2022. According to statistics released this week by the Kimberley Process,
Despite a 7% increase in Russian raw stone production to 41.9 million carats, diamond production has still decreased. Although the United States and other G7 countries, including the UK, imposed sanctions on Russia for its invasion of Ukraine in February 2022, other countries such as Belgium have been slower in refusing to import goods from Russia. At the same time, the global transaction volume of rough diamonds increased by 24% year-on-year to $16.02 billion. Calculated by production, the production decreased by 0.6% to 118 million carats. The total import volume has decreased by 16%, and global exports have decreased by 21%.
The decline in exports reflects the situation in Russia. The carat number of Botswana's exports fell by 36%, the EU by 29%, and the United Arab Emirates by 14%. The growth of global production is mainly attributed to Botswana, whose production increased by 27% to US $4.7 billion.
DOMESTIC in China
01. The picky young Chinese have become the lifeline of global luxury goods (Bloomberg)
According to PwC estimates, Chinese consumers are already one of the most influential groups in the world, accounting for about one-fifth of the $325.4 billion luxury goods market globally. According to data from luxury online retail platform Farfetch, the average age of Chinese consumers is 29 years, 5 years younger than their peers in other regions. However, their weekly consumption is as high as $800, 30% higher than in other regions of the world. PricewaterhouseCoopers (PwC) said that the ambitious Generation Z will promote China to surpass the United States and Europe and become the world's largest buyer in 2025. Although this has prompted foreign brands to compete for a share in the lucrative market, they face higher risks from the young consumers on which they rely for growth. The youth unemployment rate is soaring, and the economic recovery shows signs of losing momentum. Young consumers are demanding customized experiences rather than mass market products that excite their parents. More than half of China's luxury consumers are post-90s, and 59% of China's high consumption people are millennials or Generation Z.
According to Huaxing Capital, by 2035, the total consumption of Generation Z (270 million people born after 1995) will quadruple that of 2019, reaching 16 trillion yuan (2.3 trillion US dollars).
However, even super wealthy young people cannot completely escape the national economic environment characterized by soaring unemployment rates and uncertain employment prospects.
02. Chinese Consumers Resuming Global Tourism (Hualizhi)
In the 12 months ended March 31, the revenue of Global Blue, an overseas shopping tax rebate service company, rose by 147.4% to 310 million euros, returning to the level of 74% before the epidemic, and the adjusted EBITDA turned loss into profit, recording 78 million euros.
The group pointed out in its financial report that the return of Chinese consumers is the key to sustained performance recovery, and it is expected that the adjusted EBITDA for the 2024 fiscal year will exceed 200 million euros.
03. Shanghai has become the city with the most luxury brand stores in China (Yunhe Urban Research Institute)
According to the "China Urban International Luxury Brand Index" released by the Yunhe Urban Research Institute, Shanghai has become the city with the highest luxury brand index in China, with the most luxury brand stores, followed by Beijing and Chengdu. Hangzhou, Xi'an, Shenzhen, Tianjin, Chongqing, Shenyang, and Wuhan were also selected in the top ten.
The number of top international brand stores in these ten cities accounts for 53.8% nationwide, while Guangzhou ranks 11th.
Synthetic Gem Column
CIBJO and the International Grow Diamond Association (IGDA) sign a Memorandum of Understanding (Rapport News)
Recently, the World Jewelry Federation (CIBJO) and the International Synthetic diamond Association (IGDA) signed a Memorandum of Understanding. The two sides will further cooperate on the development of Synthetic diamond industry standards, operating principles and terminology.
This cooperation means that the Synthetic diamond industry is further integrated into the "international jewelry family", or it will help to widely enhance consumers' confidence in Synthetic diamond and drive the establishment and development of some industry standards.
Market observation:
New phenomena affecting China's jewelry industry After experiencing the negative impact of the COVID-19, China's economy has recovered. However, in some business areas, especially the jewelry industry, it seems to have changed forever. According to insiders, the epidemic situation has repeatedly superimposed epidemic prevention measures, ushering in a new business New normal.
For example, the buyer sentiment described as high savings and low consumption is still prevalent in the main areas of jewelry trade, especially in the wedding market. At the same time, online shopping has become increasingly mainstream. With the emergence of live streaming, the number of consumers purchasing goods through this channel has skyrocketed, "explained Xu Lei, chairman of the Chinese online retailer Diamond Bird
Buyers' preferences for products have also changed. Rings are still a must-have item in the wedding jewelry market, but many companies have observed changes in consumers' choices for daily jewelry wear. Buyers tend to purchase personalized and colorful gemstone jewelry, including color treasures, ancient gold products, and enamel jewelry. Xu Lei pointed out that colored gemstones are a popular category in live sales. At the same time, many diamond retailers are expanding their product categories and incorporating the increasing demand for colored gemstones into their inventory. Colored gemstones also provide diversity and higher profit margins, and can meet buyers with different budgets.
Xu Lei added that most consumers in mainland China directly associate diamonds with love and Wedding ring, so they believe that a diamond can meet the needs of a lifetime. However, with the increasing consumer spending power and demand for daily jewelry, colored gemstones have gradually become the preferred choice for consumers.
Some color gem categories have a large number of supporters in mainland China, including quartz, chalcedony, jadeite, and Hotan Jade. Nowadays, the three major color treasures are gaining more attention. Another popular category is pearl jewelry with a long history, which can be traced back to ancient China. Over the years, consumer education on Caibao has also been improved. The purpose of consumers purchasing Caibao is to invest and collect, as well as wear it daily. With the rise of online sales and live broadcast business, the reputation of commercial colored gemstones among consumers has increased, including spinel, tourmaline, Tanzanite, topaz, moonstone and chalcedony.
Retailers have stated that diamond demand is still lower than before the pandemic, coupled with a significant drop in prices since last year, which has seriously affected diamond dealers and retailers' decisions to rebuild inventory. Wu Peng, General Manager of Jinghua Jewelry, said that several large retailers used to purchase diamonds in large quantities every month, but currently they purchase diamonds every two to three months. Some retailers have even launched price bidding systems for suppliers.
Jinghua Jewelry is affiliated with Jinghua Group, which has 23 stores in Qingdao, Shandong. The group is one of the first members and shareholders of the Shanghai Diamond Exchange. According to Geng Lijun, the president of diamond wholesaler Huabi Diamond (SDE member), recent procurement activities have shown that diamonds with 0.005-0.02 and 0.03-0.07 carats, G-H color, and SI clarity are highly sought after, and prices have significantly increased. This category is suitable for manufacturing low-priced diamond jewelry mainly sold online, and these rice diamonds are also used for high-end jewelry.
We have observed an increase in inventory purchases of diamonds below 1 carat, while demand for diamonds above 1 carat is relatively weak, "added Geng Lijun.
At the same time, Chen Zuwei, president of Rosiclo Rare Color Diamond Company, which specializes in color diamonds, observed that after the epidemic, with the support of the recovery of wealthy Consumer confidence 'confidence, the demand for top quality and investment grade color diamonds has recovered. He explained, "The Chinese diamond market is still developing, with blue and yellow diamonds being very popular, and even Argyle pink diamonds and red diamonds attracting considerable attention
New sales channels
Live consignment service is an increasingly common phenomenon in the jewelry trade in mainland China. Retailers temporarily borrow goods from suppliers and display them to consumers through live streaming. After receiving payment from the consumer, the transaction is immediately completed. This model is usually applicable to jewelry with lower prices. Closed store goods have also become a reliable source of goods for buyers, especially those skilled in sorting and evaluating jewelry. During and even after the epidemic, jewelry stores were closed on a large scale. In this situation, purchasing closed goods is considered a wise and practical measure. These goods usually come in various specifications, from diamonds of various sizes, shapes, and grades to bare stones to plain gold or gemstone inlaid jewelry. As closed store products are usually not best-selling products, the challenge for buyers is how to unleash their creativity to generate profits - making them into finished jewelry for sale, removing the main stone for re cutting and grinding, or submitting them for inspection and certification. Buyers can choose to sell bare stones or re set them.
With the resumption of international travel, it is expected that buyers will resume purchasing second-hand products and property jewelry from Japan. Purchasing recycled diamonds and re cutting and grinding them into 3EX diamonds is also a successful business attempt at small-scale diamond cutting and grinding workshops in China.
Face to face business
The industry believes that the return of face-to-face business activities and trade shows will further assist buyers in revitalizing their business. Physical exhibitions are places where buyers discover new products, trends, and services, where they can meet with existing and potential suppliers and reach deals. Another important function of trade shows is to test and establish new price levels.
The Hong Kong exhibition held in March this year witnessed mainland B2B buyers returning to the international market. However, the exhibitors stated that this has not been translated into actual sales, as mainland Chinese buyers are not very receptive to the high price levels of existing goods. Meanwhile, in April 2023, at the first ASEAN Jewelry Expo (JGAB) hosted by Informa Markets, procurement activities increased as price levels slightly decreased. Buyers who participated in JGAB also seized the opportunity to purchase from the source at the famous Tsim Chuwen gemstone market in Thailand.
Industry insiders say that negotiating transactions with overseas suppliers remains a challenge as flights between mainland China and other countries, especially between China and the United States, have not yet fully resumed. At present, there are 24 Direct flight between China and the United States every week, while before the epidemic, there were dozens of flights every day. The reduction in flights also means that ticket prices are expensive. Therefore, we have not been able to see all foreign suppliers coming to China because the cost of traveling abroad is still very high, "said Geng Lijun, CEO of Huabi
On the other hand, due to obstacles in visa travel applications, it is still difficult to travel to India. However, industry insiders remain optimistic about the stable recovery of the market. Mainland jewelers are ready to meet the growing demand. Although the online communication channels we used during the epidemic are still effective, face-to-face negotiations and viewing of goods are still very valuable for conducting business. We are happy to see this aspect restored. There is currently a huge demand to be met
Editor's note: Europe has always been an important consumer in the jewelry market. We saw a 7.58-carat Kashmir sapphire sold for a high price of $1 million at the Christie's Paris Jewelry Auction held from June 9th to 21st, more than double the estimated price of $437000, making it the most expensive jewelry auction in France. The total transaction value of this auction was $12 million, exceeding the highest pre auction estimate of $9.8 million. At the same time, we also see that Bain's latest report shows that the European region performed strongly in the first quarter of this year, especially driven by top consumers. However, the elastic stress test of the European market has not yet arrived at a "critical moment". The end of summer will bring an end to the "luxury shopping paradise" that Europe has won due to the influx of tourists from the United States and the Middle East in the first half of the year. According to current predictions, The growth rate of the European market for the entire year will slow down. Europe has welcomed the first batch of Chinese tourists back in the past few months, and it is expected that the return of this consumer group will be more stable later this year.
Disclaimer: The internal reference content strives to be objective and accurate, but does not guarantee the complete accuracy of the data, nor does it guarantee that the data and content will not be changed in any way. For reference only and does not constitute a direct recommendation for member decision-making. Members should make cautious judgments.