DIAMOND MARKET OVERVIEW
The main focus in the diamond market is on the Las Vegas jewellery show, as an important gauge for buying interest from US jewellers and retail chains. Disappointing unemployment data in the US, coupled by a string of negative data in the major economies, from the UK, Germany to Brazil and China is dampening sentiment. In Hong Kong, retail sales reportedly rose at the slowest pace since 2009 as visitors from mainland China have reduced spending. "Less extravagant spending by mainland shoppers is part of the issue," Donna Kwok, a Hong Kong-based economist at HSBC Holdings Plc. (HSBA) told Bloomberg."Local households are also being more prudent because of increasing turbulence in financial markets." Activity in the diamond centres is low due to the global economic uncertainties, traders said. Meanwhile, the downward trend in polished diamond prices, which began last August continued through the month May. The overall PolishedPrices index finished the month of May at 149.7, 2.1% below the level at the end of April.
Rough trading activity is virtually stagnant, dealers said. Most cited the tight liquidity situation and high prices from the main producers as the reason for the sluggish trading conditions. This has also dented manufacturing activity in the main cutting centre India, traders said. The outlook for the June DTC sight is cautious, with some sightholders saying they are expecting to see goods being rejected if the current market conditions persist.
CORPORATE AND EVENTS
Graff Diamonds has pulled its planned Hong Kong listing after receiving orders for just half its $1bn initial public offering less than two days before its deadline – the latest sign of weakness in global equity markets, The Financial Times reported. According to the FT report, a company spokesmen said: “Graff Diamonds Corporation confirms that owing to adverse market conditions it has decided to postpone its planned IPO and listing on the Hong Kong Stock Exchange.
A plan being promoted by Suleiman Kerimov, front man for Russian government officials and other investors, to privatize 51% of Russian diamond-miner Alrosa’s shares, add BHP’s Canadian diamond mines and prospects, and then resell Alrosa shares in an international initial public offering isn’t likely to get off the ground, insider sources say. The 51% sell off scheme is backed by First Deputy Prime Minister Igor Shuvalov, according to these insider sources. “In theory it all might work out,” said an informed source in Moscow. “But in practice it is not entirely clear, because to take 51% of Alrosa you need a very powerful administrative resource. Also, the question is whether the new combined company will be in demand in the market. There is no doubt that it will be commercially profitable. But there is another question - how the market is able to value it. Because today on the market there are virtually no pure diamond-mining companies listed on the public stock exchanges. Typically, there are multi mineral mining companies among the companies that trade on financial markets,” he said. Kerimov’s spokesman, Anton Averin, confirmed Kerimov's interest in the purchase and sale of a control stake in Alrosa. He did not confirm interest in the reported add-on of BHP’s Canadian assets to Alrosa, suggesting that press reports of a Russian bid for them might have been “attempts to manipulate the market.” Averin also acknowledged that Kerimov has bought a 1% stake in Alrosa already. Alrosa declined to comment.
Mountain Province Diamonds has announced that the Gahcho Kué Joint Venture partners, De Beers Canada Inc. and Mountain Province, have approved the initial capital to advance the Gahcho Kué diamond mine at Kennady Lake in Canada's Northwest Territories in preparation for development. "Permitting of the Gahcho Kué diamond mine continues to progress satisfactorily. This has provided the joint venture partners with sufficient confidence to continue to progress the Gahcho Kué project according to schedule," Mountain Province CEO Patrick Evans said in a statement. Mountain Province said it had commissioned an updated independent valuation of the diamonds recovered from the Gahcho Kué project. The valuation was conducted by WWW International Diamonds Consultants Ltd. "The updated valuation indicates that the valuation of the Gahcho Kué diamonds increased marginally from April 2011 to March 2012 with the actual value per carat increasing by approximately 1 percent from $185 to $186. The modeled values also remained essentially unchanged,' the company said. Mountain Province Diamonds is a 49% participant with De Beers Canada in the Gahcho Kué JV, located in Canada's Northwest Territories.