TAGS Dubai Tender Report - August 2024

MARKET OVERVIEW:

Very little has changed in terms of the fundamental issues faced by the rough diamond industry since our last report. Ongoing global uncertainties, coupled with the malaise of the Chinese market, and the effect of LGD on swathes of the American consumer market, continue to take their toll on rough markets around the world.

Following several weeks of religious holidays in India and factory closures, the industry is now approaching the time of year when restocking should be taking place.

This process will continue to be impacted by the equilibrium between reduced rough supply, high levels of polished stocks, and weaker consumer demand in the leading consumer markets.

The announcement by De Beers that it would combine Sights 7 and 8, in effect cancelling the August Sight, coupled with indications from Alrosa that sales would be restricted with no obligation for customers to buy, were broadly welcomed.

De Beers have also offered flexibility in terms of purchase requirements. Other smaller mining houses postponed their monthly sales. Polished prices have continued to soften over the past few months but showed some stability on the announcement from De Beers

The market received positive news that US jewelry sales rose by 6.5% year on year in July. The recent IIJS Show in India also saw strong jewelry demand for the domestic market.

De Beers have embarked on joint promotional campaigns with both Chow Tai Fook, and Signet Jewellers to revive demand for natural diamonds in the Chinese and US markets. In addition, this week they embarked on a similar campaign with Tanishq in India, which has now become the second biggest consumer market. Some manufacturers report the Chinese market is currently only purchasing between 10-15% the previous levels of natural polished diamonds.

TAGS TENDER:

Following the De Beers announcement, there was a much needed injection of confidence.

With many smaller manufacturers only carrying up to 2 weeks rough inventory, they faced the dilemma of factory closure for an extended holiday period or having to find rough to maintain production.

The result was a huge influx of companies to Dubai looking for Outside rough being offered on tenders. During the week there have been several tenders presented in the Almas Tower, resulting in long queues to enter the building.

NOTE. At the time of writing this report and much to the industries surprise, Rappaport Price Index chose to reduce many areas of polished in both Rounds and Fancies by between 2-7% on the morning of 30th August.

At a time when the actions of several producers (De Beers, Alrosa, ODC, Petra) had instilled a degree of stability in the industry, many saw this as totally unjustified and irresponsible behavior.

In Dubai this caused a frenzy of activity as buyers sought to recalculate bids across the numerous tenders reaching their conclusion. This resulted in TAGS and other Tender houses extending their bidding times. TAGS presented its regular Southern African productions, in a full range of sizes.

We welcomed around 150 international manufacturing companies during the week, and on several days had record attendance.Despite the disruption caused by Fridays announcement, we received a high level of bids from manufacturers from all centres.

We presented over 200 Lots and are pleased to report that approx. 80% sold through to more than 50 companies representing all the leading centres.

We were encouraged to see successful sales across the full range of sizes, including some ranges such as 3-6grs, and 2-4cts, which have been in less demand in recent months.

Our next Tender takes place between 16th-20th September.