The Hong Kong show that ended March 7 revealed a diamond industry that is focused on the very short term. Dealers who spoke with Rapaport News were relatively upbeat about the exhibition, but uncertain of market developments in two-to-three months.
Their caution largely stems from restrained demand among jewelers, who were looking to replenish the limited amount of inventory they sold during the Chinese New Year, but not much more than that. Also on everyone’s mind is the large volume of rough that recently entered the market and whether there is sufficient demand to absorb the new polished expected in the coming months.
While Rapaport News was not in Hong Kong last week, our off-record telephone conversations with numerous exhibitors unveiled some noteworthy trends – with the two separate venues that make up the event telling different stories.
To start with the positives, dealers reported a positive sentiment at the Diamond, Gem and Pearl Show that was held from March 1 to 5. Traffic was better than expected and the exhibition was busier than last year’s show. It seems dealers have gained some confidence to close deals – something that was lacking just a few months ago.
Primarily, the show signaled the dealer market is active again after a prolonged period of quiet during 2015.
Suppliers didn’t talk about shortages as much as they had in recent months. If anything, their jewelry manufacturer, wholesale and retail clients have been careful not to over-stock. And, hopefully, diamond cutters and dealers have learned their lesson from 2015, when prices softened as they sought to offload excess inventory.
It seems the market has found some momentary equilibrium between supply and demand, which was reflected in price stability at the show. Demand is cautious, but new polished supply has been reserved for some time. Manufacturers also stood their ground as they’re just not prepared to lose money anymore and are determined to take advantage of the new-found profitability they’re able to garner.