DIAMOND MARKET OVERVIEW
The renewed euphoria traders are reporting in rough, following the holiday break seems to be having some influence on the polished markets. In better qualities and larger goods up to 10 carats, traders said higher prices were being paid citing tightening supplies. The main focus in the weeks ahead is on the level of returns from the main US market, and on the rough market where prices continue to rise ahead of polished. News from US retailers Tiffany and Signet, which both reported higher holiday sales growth and raised their earnings projections, has helped improve sentiment. Although some players are cautious, saying that despite US retail sales growth in December, retailers are holding considerable quantities of polished on consignment. Overall, the upward trend in polished at wholesale seems to be continuing, partly helped by healthy demand in the Far East and tighter supplies being felt in certain categories. But the discrepancy between polished and rough prices remains a concern, especially for manufacturers. The main PolishedPrices index ended the week virtually unchanged compared to Mondays opening at 114.6 points.

ROUGH MARKET
Traders cited an overall increase of around 8% at the BHP Billiton’s January spot tender. A similar or even bigger increase in the area of 10% is expected at next week’s DTC January sight. While some traders said there were not enough goods available in the secondary market, others said they expected a flood of goods coming on to the market this month that could lead to an easing in prices. Market players will be closely watching the amount Russia will sell this coming week. The DTC sight is expected by some to be up to $500 million.

CORPORATE AND EVENTS
Tiffany raised its annual earnings forecast and said holiday sales rose after wealthy consumers started spending more, Bloomberg reported. Revenue from Nov. 1 to Dec. 31 rose 17% to $799.1 million, New York-based Tiffany said in a statement. Sales at U.S. stores open at least a year climbed 12%, with gains of 16% in November and 10% in December. A year earlier, revenue fell 21, and sales at U.S. stores sank 35%. Sales at Tiffany’s main New York store increased 20%. Jewellery sales have picked up as rich shoppers regained confidence following a rebound in stock markets and an improvement in home values, the report said. Tiffany increased its per-share profit forecast for the year ending Jan. 31 to as much as $2.12 from a Nov. 25 projection of at most $1.98.  Retailers’ sales at U.S. stores open at least a year rose 1.8% in November and December from a year ago, the International Council of Shopping Centers.

Rio Tinto Diamonds announced today that production at its fully owned Argyle mine in Australia was 33% lower than the same quarter of 2008. The mining conglomerate said diamond markets recovered during the fourth quarter, but remained below prior levels. At Diavik, in which Rio Tinto has a 60% stake, fourth quarter carat production fell 41%, compared to the same quarter of 2008, as the mine reduced operating levels in response to weaker market conditions.

IMPORTS AND EXPORTS
Belgian polished exports in December rose 13% by volume and 18.5% by value in December, compared to the same month in 2008, according to figures published by the Antwerp World Diamond Centre Diamond Office. December polished exports totalled 687,791 carats, or $779.5 million in dollar terms.  Polished imports rose 5.5% by volume to 563,879 carats in December, compared to December 2008. By value, imports for the month totalled $640.8 million, an increase of 1.6% on prior year period.

Rough diamond exports jumped 264.0% last month, from December 2008 to 11.96 million carats by volume. By value exports jumped 176.5% to $851.7 million. Rough diamond imports rose 46.1% by volume and 100.3% by value, compared to December 2008.  For 2009, rough diamond imports dropped 22.9% by volume and 39.2% by value.