As the market gears up for business after its traditional summer slowdown, New York’s diamond trade asserts its vital role in the international diamond industry.
With the important diamond wholesale markets like New York, Antwerp and Ramat Gan taking their summer vacations, the world diamond market has been seasonably quiet.
The RapNet Diamond Index for 1-carat stones fell by 0.7 percent in the month of July, 3.2 percent since the beginning of the year, and 7.1 percent year-on-year. The price index for 0.50-carat diamonds dropped by 3.3 percent in July, and went down 12.8 percent year-to-date and 17 percent year-on-year. Meanwhile, prices of 3-carat stones have been stable, registering year-to-date growth of 1.8 percent and up 3.2 percent year-on-year. Since China’s retail market is usually slow too in July and August, industry members are hoping that polished prices would pick up at the September Hong Kong Jewellery & Gem Fair, and US dealers are looking forward to a better fourth quarter.
According to the Jewelers Board of Trade (JBT), the pace of closures of jewellery businesses in the US slowed down by 34 percent in the first half of 2017, when 553 jewellery businesses ceased operations. In contrast, 1,669 establishments were shuttered in 2016, a sharp 54 percent increase over 2015. Most of these companies were retailers. Meanwhile, US imports of polished diamonds fell for the eighth consecutive month in May 2017, government data showed.
Consolidation in the Diamond District
After JCK Las Vegas in early June, New York’s Diamond District wound down for its traditional holiday season, typically two weeks from around the fourth of July; several other businesses were likewise closed for the holidays. The pace picked up again for most companies from July 16, followed by a series of trade shows in New York such as JA New York, JCK LUXURY Privé and the New York Antique Jewelry & Watch Show.
Thousands of diamond, gemstone and jewellery companies operate from buildings on both sides of West 47th Street between 5th Avenue and 6th Avenue of Midtown Manhattan. This whole area houses retailers, dealers, brokers and some small diamond factories that specialise in cutting diamonds of over 1 carat. The US retail market has a lot more independent jewellers and smaller chain stores than mega chains – quite different from mainland China – and 90 percent of the diamonds sold in the US flow through the Diamond District of New York. The district also hosts several international trade organisations such as the World Diamond Council (WDC) and the International Colored Gemstone Association (ICA).
Challenging economic conditions, online B2B networks, new consumption habits of millennials, and changing spending priorities are among the factors that have been reshaping the Diamond District, where the old and the new now co-exist. Fewer diamond brokers can be spotted walking in the streets than 10 years ago. There are also more empty retail counters in the jewellery shopping malls.
The World Diamond Tower on the corner of 5th Avenue and West 47th Street has been the landmark of the Diamond District for years. Its lobby has been renovated and upgraded, and it is still filled with hundreds of diamond and jewellery companies. The building’s old entrance and the jewellery shops in the section facing 5th Avenue have however been combined to house cosmetics store Sephora.
Several old buildings in the district have been bought up by big real estate companies and will be demolished and rebuilt. A new landmark has however emerged in the Diamond District. The state-of-the-art International Gem Tower (IGT) has become the new home of important diamond companies and trade organisations including the Gemological Institute of America (GIA).
Heart of the diamond trade
Among the IGT’s new tenants is the Diamond Dealers Club (DDC). With 1,500 members, the DDC of New York is the largest diamond trade organisation in the US, the only diamond bourse in New York and one of the world’s largest diamond exchanges. Membership privileges include using Club facilities as an office and mailing address, and the right to bring buyers up to the Club to conduct business. Many DDC members therefore routinely use the trading floor as their own office to conduct daily transactions and exchange information – an old tradition that has held strong over the years.
The DDC moved to the IGT this July, ensuring that it stays true to its mission as the “Beating Heart of the Diamond Trade” in New York. At press time, the DDC was occupying a temporary space on the 11th storey while the rest of the floor was being renovated into its new home. Over 150 people use the trading floor at any given time.
In an exclusive interview, DDC president Reuven Kaufman pointed out that while there has been a lot of consolidation on West 47th Street, the New York Diamond District has always been the epicentre of the diamond industry since it is very service-oriented.
“We still see reasonable demand here, and 1- to 2-carat diamonds of SI to I clarity grades are very popular, with a good movement of even bigger diamonds. There are changes in trading habits, but the brokers in New York are still very valuable because they play an extremely important role in the diamond industry. In spite of the development of online B2B networks, the brokers might work out a better price on your behalf, facilitate deals more smoothly and avoid problems when the buyer does not want to meet the seller,” he said.
Kaufman believed that American business remains strong but one always needs a niche to survive. “The old days of trading are gone. We need to add value to our products, so multiple programmes with branded diamonds come into play, making diamonds more sellable. If you only have generic diamonds, you are simply competing with the whole world,” he said.
In response to concerns that only a few diamantaires from China come to New York, Kaufman said that they were working with China to bring US traders to the country.