Celebrating Chinese Buyers Kill Hong Kong FairSeptember 27, 12
The September Hong Kong Jewellery & Gem Fair closed without providing the kind of high demands for loose diamonds that everyone had secretly hoped for. So what did happen at the show, and why was demand lower than anticipated? Traders arrived at the fair knowing exactly what they wanted to buy, with almost no one stocking up for inventory. With such specific demands and buying, price was the sole factor, and buyers shopped around before purchasing.
The situation is a direct outcome of the runaway demand in the first half of 2011. At that time, Indian gold jewelry retailers started to offer diamond jewelry. More importantly, in
Low Inventories, Low Demand
So if inventories are low, why is demand not rising? In
Without heavy demand from
Many Chinese buyers prefer buying after the vacation. Hence, the low demand from
With both Indian and Chinese buyers essentially out of the picture, the
In one of my taxi rides to the show, I shared a cab with two metal suppliers. A few minutes into the ride, and after introductions, one of them asked, "If diamonds look so similar, basically the competition is price, isn't it?" Wham, he nailed it! It's now all about price.
With hundreds of suppliers exhibiting, naturally, it was the bigger firms that sold more. If price is the issue, selling large volumes means businesses can still generate a sizable income. In addition, the larger firms are more sensitive to bank credit and are motivated to sell. Mid-sized and smaller firms are less flexible and expressed less satisfaction from the fair's results.
Buyers were mainly interested in VS-SI goods, leaning more towards the top DEF colors. Lower clarities – SI-I1 goods in HIJ colors were also in good demand, however, both ranges faced serious price resistance by buyers.
Larger goods, +3 carats, items that are harder to come by, were in good demand whereas 1-2 carat goods – with more uncertainty over their price – were open to price wars between buyers and sellers.
And the path from here? Further price sensitivity may be seen for items that were in lower demand. At the same time, if wholesalers hold out and don't budge will likely see Chinese buyers succumbing to their inventory pressures and willing to pay the price come mid-October.
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