To better understand recent situations in the fei cui market, Hong Kong Jewellery interviews Sunny Chan, head of laboratory and technology committee of Hong Kong Jewellery & Jade Manufacturers Association (HKJJA), and managing director of Sheentiff Jewellery Ltd.
HKJM: Hong Kong Jewellery
SC: Sunny Chan
HKJM: You were just back from the 53rd Myanmar Gems Emporium (MGE) in July. Can you give an update on the sale and the Burmese jade industry?
SC: In the last MGE, the number of lots of jade reduced to about 6,000 from 20,000 in 2012. Since both the quality of jade and the number of buyers have reduced, total amount of transaction naturally decreased. There were only about 2,000 overseas buyers while Burmese buyers showed more enthusiasm. I believe that both the speed and scale of development of the Burmese jade industry are increasing.
The new government of Myanmar had announced its plan to restrict export of fei cui rough with the aim to promote the development of domestic jade manufacturing, boost local employment and benefit its people. Manufacturing zones are established in Nay Pyi Taw and Mandalay, and semi-finished products will be exported to mainland China via Kunming.
Besides, in the past, some foreign bidders pushed up the price but failed to complete transactions and the stones remained unsold, resulting in misleading price information being circulated in the market. The government could make adjustments in this regard by strengthening control over sales of fei cui rough. Despite that the government has yet to assume full control over rough resources, I believe this policy will continue. A direct impact on the market is the reduction of supply of rough, especially high-quality ones, which can be seen in the last MGE.
HKJM: How has the price of fei cui changed in the last couple of years?
SC: Fei cui rough price and transaction number peaked in 2012. From 2010 to 2012, a large amount of money from mainland China flew into the mining industry including the fei cui industry. Besides, during that period the country encouraged domestic consumption and luxury goods gained popularity. These factors all drove the demand for fei cui.
At that time some buyers had high expectations of fei cui prices, which led to speculations and hoarding of rough. Apart from this, compared to 2012-13, the current total sales amount of the fei cui industry has dropped by at least 30 percent. Goods are moving much slower than in the past and fei cui businesses are experiencing slower cash flow.
Compared to the highest price level, low-priced products experienced deeper decline in price. Finished products worth HK$100,000 to HK$200,000 dropped by over 20 percent. High-end products suffered relatively milder decline because as demand reduces supply also shrinks.
Prices of individual types of finished fei cui products have also changed. For example, compared to the highest prices, the price of omphacite jade dropped by 30 percent and the price of the popular icy jade decreased by 20 to 30 percent while high-quality green fei cui did not suffer much decline.
No doubt this is a generalised view because no two pieces of fei cui are the same so it is hard to draw up a definite market price. Also, during the process from rough to finished product, the value of the same piece of fei cui will change in each stage. Such uncertainty always exists in fei cui. Sometimes you may think a piece of fei cui rough is overpriced yet you may still be able to make a profit with the finished product. This also explains the phenomenon of gambling and speculations of fei cui, which originate in its inherent uniqueness.
HKJM: What problems is the industry facing now?
SC: The foremost concern is cost control. Currently, the entire fei cui market has returned to a more rational stage. Businesses will not blindly engage in expansion like they did in the past. Practitioners must stay close to the market in order to survive. There are much more factors to consider. The supply side also faces ongoing difficulties such as accidents in mining areas, taxes and mining rights.
HKJM: Do you anticipate a drop in fei cui rough price in the future?
SC: The fei cui industry is now experiencing adjustment, which mostly follows the development of the Chinese economy. Since Myanmar implements control over the supply of rough, the price of fei cui rough will not drop drastically though there will be some adjustments. At the same time, as the costs of mining increased due to domestic inflation, the price of rough will not decrease simply because of the poor economic situation.
← Back