Platinum demand remains resilient despite price

New York—Despite platinum's rising price, which averaged $1,304 per ounce last year—36 percent more than in 2006—retail sales and manufacturing volumes of platinum jewelry in 2007 remained fairly resilient, boosted primarily by the high-end and bridal sectors, according to Johnson Matthey's annual platinum report for 2008.

Global demand for new metal in the jewelry industry actually dipped slightly in 2007, the metals consultancy said, falling 55,000 ounces to a total of 1.59 million ounces, yet demand from both the trade and consumers alike stayed strong for the majority of the year.

Platinum jewelry demand in Europe increased by 7.7 percent to a total of 210,000 ounces in 2007, and net demand for new metal from the Chinese jewelry sector increased by 20,000 ounces to a total of 780,000 ounces.

China remains the largest market for platinum jewelry, according to Johnson Matthey, with Chinese manufacturers buying 2.6 percent more of the metal compared with other markets. In the last year especially, platinum demand in China was particularly supported by the production of novelty platinum items and memorabilia manufactured in preparation for the 2008 Beijing Olympics.

In North America, however, where the economic slowdown has been accompanied not only by higher platinum prices but also by pressure on local manufacturing from imported jewelry, purchases of platinum by jewelry manufacturers declined by 5,000 ounces in 2007 to a total of 240,000 ounces.

Looking forward, Johnson Matthey expects platinum prices to remain volatile, though the high prices haven't yet been felt in the jewelry industry this year. The outlook for jewelry demand in 2008 is more dependent on price than previously, Johnson Matthey said in the report, but the high-end and bridal sectors will remain insulated from price changes.

While perhaps the biggest story regarding platinum for 2007 was supply—which fell by 4 percent in 2007—Johnson Matthey said there is still the possibility that supply for 2008 will increase. Among the biggest issues concerning supply in the last year were strikes and wage negotiations at mines in South Africa, plus a Lonmin smelter shutdown in the country, and general issues concerning improved safety and the acquisition of skilled staff.

Italian bran Io Si. jewellery

Gold and precious stones combine to exotic effect in a new range of jewellery from Italian bran Io Si.

Launched this week by Middle East jewellery house Damas at the Basel Fair 2008, the range features pendants, earrings and rings in gold and gemstones.

Amethysts, green zavorites, diamonds and pink, yellow and orange sapphires can all be embedded in yellow and white gold settings.

Tawfiq Abdullah, chairman of Damas Jewellery, commented: "Io Si's jewels exude a strong, sculptured artistry that's both eye-catching and exotic."

The brand exemplifies the glamour and culture of its homeland, Italy, Mr Abdullah said.

Founded in 1907 in the United Arab Emirates, Damas sells brands including Tiffany, Perreley and Montega and its network spans a number of continents.

According to Mr Abdullah, the ring collection is famous for its reflected equilibrium, with the distinctive forms of the upper section reproduced in miniature in the lower section.

IGI, Brinks Collaborate to Bring Services to Shanghai Diamond Exchange

Shanghai, China: The International Gemological Institute (IGI) and its strategic partner, Brink’s Far East Ltd., today jointly announced the initiation of IGI certification services exclusively for Shanghai Diamond Exchange (SDE) members.

Under a collaboration agreement, SDE members who send their diamonds, gemstones and jewelry to IGI for analysis, grading and certification, will receive complimentary shipping services provided by Brink’s, from its SDE counter to the IGI Hong Kong lab and then back to the SDE, point-to-point.

Initially, there will be a weekly turn-around service, the frequency of which may be increased, dependent on demand patterns.

“In response to the increasing demand for IGI Reports in mainland China and at all levels of the diamond pipeline, we felt it imperative to offer our clients easy access to our services. We provide SDE members the opportunity to certify their goods at IGI, with the added benefit of free shipping from Shanghai to IGI Hong Kong,” said Marc Brauner, CEO of IGI Hong Kong.

Encouraged by the recently reviewed China import taxation laws that state diamonds that remain within the SDE can be shipped to Hong Kong and back to China without being taxed again, IGI and Brink’s opted to launch the same strategy the partners used with Israeli diamond companies shipping gemstones between Tel Aviv and IGI Antwerp daily for more than 10 years. Due to IGI/Brink’s collaboration agreements, no shipping or insurance costs were charged.

“We are very excited about the prospect of actively contributing to the growth of China’s diamond trade,” said Sally Lee, senior manager of the China business development unit at Brink’s. “SDE members will benefit from Brink’s world-class professional shipping services when choosing to certify with internationally recognized laboratory, IGI; this will save them money—and time—which is absolutely vital to the trade.”

In addition to its global network, Brink’s has five operational addresses in Hong Kong, and offices in Beijing, Qingdao, Shenzhen and Shanghai, where, as a member of SDE since 2002, its service counter is right inside the exchange.

Brauner added, “We have been monitoring the development of the Chinese market for many years and are acutely aware there has been rapid growth of the SDE membership since the announcement was made to reduce value added tax (VAT) to four percent for the diamond trade – in July 2006. This opportunity has come to us at a time when we must respond to the market. ”

New GemeFancy identifies diamond color

GemeWizard Inc. is offering a free three-month trial of its new color-assessment program for fancy-colored diamonds, GemeFancy.

According to a release from GemeWizard, GemeFancy is a color-assessing and communication application that allows users to accurately identify, describe and communicate all the colors visible in fancy-colored diamonds, and to place them within the Gemological Institute of America's (GIA) Fancy Diamond color range.

The new system identifies a total of 27 main hues, each of which is modified into 36-42 fancy grades and other color descriptions. The images are described using the standard GIA terminology and GemeWizard's alphanumeric color code.

The system then creates an e-mail message that allows the color information to be transferred to a third party.

Menahem Sevdermish, GemeWizard's founder and developer, said the goal of the new system is to provide anybody handling fancy-colored diamonds a common language with which to communicate hue information.

"By creating the GemeFancy, we have provided the industry with tools to make this dream of a common color language a reality," he said.

The free three-month trial period began on May 5. To access the free trial for three months with no obligations, visit Gemewizard.com/FancySquare.

GemeWizard, a provider of software and hardware for professionals in the colored-gemstone, fancy-colored diamond and jewelry industries, offers an entire suite of colored-diamond identification products, called GemeSquare. The system allows users to describe a gem's color more accurately and to communicate the information to other professionals who are not GemeWizard users.

GemeWizard is slated to display at a booth at the upcoming JCK Las Vegas jewelry show.

HSBC to Open Diamond Banking Branch in Dubai

HSBC announced its support of the Dubai diamond industry, saying it will open a diamond banking branch. The branch will probably be located in the Almas Tower, future home of the Dubai Diamond Exchange.

The Dubai Multi Commodities Centre has been putting lot of effort in bringing banking to the DDE, realizing that without offering a full range of supporting services, the local diamond industry will not grow to become a major diamond trading center.

The DMCC said HSBC’s decision follows an extensive campaign to promote diamond banking activities, adding that HSBC is establishing a diamond banking unit to finance the local and regional trade.

In a release, DMCC said HSBC will offer a range of innovative financing solutions including import credits, working capital and receivables financing, as well as offer factoring services, precious metals hedging, and physical services to meet the needs of the entire supply chain.

The Almas Tower is in final preparations to open later this summer. Many of the floors have been handed over to buyers for retrofitting and most supporting services, such as secure delivery, already arranged.

Diamond India to Hold First B2B Sale of Loose Stones

India’s first ever private B2B sale of diamond solitaires and colored gemstones is being organized in Mumbai June 21– 30t by Diamond India Ltd, a consortium of 58 leading Indian diamond manufacturers, including DTC Sightholders, Rio Tinto’s Select Diamantaires and BHP Billiton customers.

Goods on display will include solitaire diamonds of 1 carat and above in all shapes and colors and a range of precious colored gemstones – blue sapphires, rubies, ruby lights and emeralds of all shapes, sizes and qualities.

The event is a strictly B2B platform and is expected to have participation from major Indian diamond manufacturers and leading companies from Antwerp, Israel and the U.S. The recently formed Indo-Thai joint venture company Prakruti will also be displaying a range of colored gemstones.

Buyers at this by-invitation only event will be from among India’s top 500 retailers. Viewing and sale will take place at DIL’s Mumbai office by appointment only.

“We will be making vigorous marketing efforts to bring in leading retailers from all across the country through advertising on trade platforms, e-mailers, personalized invitations, etc.,” says Praveen Shankar Pandya, Chairman, DIL.

He adds that the organizers will ensure that all items have clearly defined prices and that there will be complete transparency in the process.

Ever since the government abolished the duty on cut and polished diamonds, there has been an increasing interest among international polished manufacturers to sell their goods in the Indian market, which today is one of the major diamond consuming markets worldwide. Indian jewelers report that the demand for large sizes is particularly strong.http.

Diamond market strong despite external pressures

To paraphrase a former director of the Diamond Trading Company (the wing of DeBeers responsible for selling rough diamonds): The demand for diamonds is driven by two factors: greed and vanity. We do not foresee a shortage of either in the future.

There has been some talk of late of rising diamond prices. Part of this is that diamonds, like almost all commodities, are priced in US dollars. As the dollar goes down the price goes up. Most economists would agree that the US dollar is falling relative to the other major currencies. This situation is different from a few years ago, when South African producers were closing mines, some in part due to end of mine life, but also in part due to a strong Rand versus the US dollar.

According to Mr. Laboucan Prolific analyst diamonds will continue to see strong demand. In particular the emerging upper-class of very populous countries (China and India) will continue to be a growing market for luxury goods, one that will outstrip that of the U.S. Even if only 1% of the 2.4 billion people living China and India make it to the high disposable income level to afford luxury goods in the next ten years, that is a new crop of 24 million consumers - a number a little short of the population of Canada.

The problem with diamonds is that they are not just any other commodity. Gemstones are evaluated individually based on a number of characteristics unique to each individual stone. It can be difficult to determine if prices for diamonds are increasing due to this increased complexity. Mr. Laboucan alludes to this by mentioning the fact that companies producing larger/high quality diamonds will always see strong business as such goods are for the “ultra-rich” and immune to economic swings. The market for smaller/lower quality diamonds is more sensitive to economic pressures and is mainly a function of the level of disposable income possessed by the upper-middle class. This brings us back to the emerging middle class in the BRIC countries, the potential size of which could very well dwarf that of North America, and possibly even Europe as well. Should the economies of these countries continue to grow, the above scenario becomes a strong possibility. Even with signs of slowdown in China, other growing countries such as India, Brazil, Russia, South Africa, and Turkey will pull up the slack.

With these fundamentals in mind, a cautious investor should be able to pick the most promising diamond companies now, when they are cheap. Assuming due diligence has been properly performed, strong gains could be reaped in the market within a few years time.