Why the diamond midstream is feeling “stuck”


The midstream of the diamond industry is feeling a bit glum right now, Rapaport senior analyst and news editor Avi Krawitz said during a seminar on “Surviving a Turbulent Diamond & Jewelry Market,” held as part of the JCK Las Vegas educational program on May 30.

For the moment, U.S. jewelry sales remain healthy, Krawitz said, with many retailers enjoying solid sales. Last year, annual jewelry sales grew an estimated 4%, and J.C. Penney and Macy’s both reported that jewelry had sold well. He added that the best independent jewelers seem to be doing better than the majors.

Yet many dealers and manufacturers in the middle of the pipeline maintain they have little to be happy about.

Some are slightly nervous about the overall economy and worry they will be hurt by the rapidly escalating tariff disputebetween the United States and China, which will result in 25% duties on a wide range of jewelry products.

The trade war between the United States and China “is affecting sentiment about the economy,” Krawitz said. “People don’t know how this is going to play out in general.

The tariffs won’t have a big effect on polished diamonds, as China doesn’t import many diamonds into the United States, he said. However, many U.S. retailers could be affected by the increasing economic slowdown in Hong Kong and China.

Even the increase in jewelry sales has been a mixed blessing for manufacturers, since most of those sales are on memo. That increases pressure on midstream players, who are also having trouble getting financing from skittish banks.

He pointed out that over the last two years, there has been a steady increase of inventory of RapNet, and that RapNet now hosts 20% more inventory than last year. Some categories of goods clearly hold more appeal than others.

Demand has become very narrow, and very specific, in terms of what people are looking for,” Krawitz said.

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Source JCK Online