With increasing globalisation and the growing utilisation of the internet,
opal is becoming more widely recognised and traded. However, some geographic markets are more established, more valuable and hold greater significance than others. The following section outlines the significant foreign markets’ operations. The information was gathered through discussions with industry representatives based in Australia and through market intelligence gathered by Austrade. Unfortunately because of the lack of reliable data, it is not possible to quantify the size of these markets. The other reason why the market is blurred is that opal often travels at different levels of the value chain.
1 USA The USA market appears to be growing at the fastest rate, with reports of 25-30% growth per year. Traditionally, the USA market has demanded white or crystal opal, however with increasing globalisation the market is becoming more educated and demanding all types of opal. The vast majority of opal going to the USA is medium quality which is sold through mass outlets such as department stores. The USA market is also demanding low-grade mass produced, standardised low-medium value jewellery. There were many reports of large department stores demanding a line of goods, but there are currently no players large enough to guarantee supply. In addition to the main market of commercial jewellery, there is also a growing market for designer jewellery in the USA. There is also a significant hobby cutter and jewellery market in the USA, with people wanting rough, low-grade opal to cut and polish themselves and place injewellery. The internet has been a major force in opening up this market.
2 Japan Japan has traditionally been the largest market for high quality, top grade opal. In the past most of the top grade black opal has ended up in Japan. However the downturn in the Japanese economy appears to have had a severe impact on opal demand. Causing a decrease in demand for higher grade opal, with consumers down-trading to medium and lower quality opal. Most opal enters Japan as loose cut stones and the manufacturing of the opal into jewellery is done in Japan. The market covers both loose stones and jewellery. Quite apart from exporting to Japan, there is a large market to Japanese tourists in Australia which seems to drive the export market.
3 Europe As a whole Europe represents a significant market for opal, with opal currently being sold in the UK, France, Switzerland, Germany, Italy, Greece and other countries to a lesser extent. Unfortunately minimal market knowledge is available about the opal industry in Europe. As with any industry in Europe, each country appears to have a different approach and value chain with regards to opal. It is assumed that opal enters the market either directly from Australian suppliers or via Hong Kong companies. There are prominent trade fairs in each of the major European countries.
4 Germany Germany appears to be one of the major countries in Europe trading in opal. Opal either enters Germany directly from Australia or through Hong Kong. Large amounts of rough opal are exported to Germany where it is processed and then re-exported to other parts of Europe. The end consumer demand is not high for opal with approximately 10 percent staying in Germany with the rest distributed to other countries within Europe. Cut opals, doublets and triplets generally enter Germany via Hong Kong, due to the lower labour costs involved with the processing. In Southern Europe, opals are often referred to as a "stone of bad luck". This is mainly due to the tendency of some opal to crack. As a result the use of opal in jewellery is limited due to its low shock and scratch resistance levels. Germans have a positive image of opal as a unique and different stone. All of the industry representatives contracted by Austrade felt that with increased promotion and marketing opal demand would increase; as has occurred considerably with Australian South Sea Pearls.
5 Hong Kong The Hong Kong market plays a pivotal role in the opal industry. It appears that the bulk of low to medium grade opal, particularly South Australian opal is either being processed in Hong Kong or in China by Hong Kong based companies. “Opal ranked first among Hong Kong’s exports of worked gemstones in 1999, totalling US$5.13 million, falling just 0.94 percent from 1998.” (Austrade Shanghai.) It is most likely that the unofficial figure for opal into Hong Kong is considerably higher. The bulk of the opal that enters Hong Kong leaves as processed opal although there is a significant total tourist duty free market. As has been highlighted, the Hong Kong and China connection is very important to the opal industry as it provides an outlet for low grade opal which otherwise would not have a market. The low labour costs make it economical to process this low grade opal.
6 China Most of the mining fields produce large amounts of lowgrade opal, particularly in South Australia. In Australia, the labour costs outweigh the value of the finished product in the lower grade opal making it uneconomical to process here. There are large amounts of opal that is too low in value to process in Australia. The other factor that has lead to the success of the Hong Kong companies, is their ability to supply calibrated stones. Low grade finished stones are machine manufactured producing a low cost piece of jewellery suitable for the main outlets such as department stores. South Australian low grade opal is well suited to the manufacturing of doublets or triplets, where a thin slice of opal is glued to a dark background. These stones tend to be of a lower value and used for cheap jewellery. The majority of South Australian opal is bought by buyers in the rough form and sold in the rough form to valueadding companies, generally in Hong Kong. This group of buyers appear to control and sustain the market, as no one else can process the low-grade opal profitably. There are a small number of local buyers who buy rough opal and value add to sell in their own retail stores or to sell to retailers. There are a number of South Australian companies selling small amounts of rough and cut opal on the web. The majority of rough opal appears to be sold to hobby cutters and jewellers in the USA. Official figures show that little opal enters China. It is highly likely that opal is entering China through Hong Kong. Chinese consumers are generally not familiar with opal product as there has been little or no promotion or marketing of opal in China. However, it is expected that interest in opals will grow being driven by rising living standards. Total jewellery sales in 1999 reached a record high of US$9,700 million, which represented a 10 percent increase over 1998. Sales in 2000 exceeded US$10,000 million. There are now more than 20,000 jewellery retail stores and outlets in China. The average profit margin of the stores is 40 percent, with specialised jewellers working off as high as 70-80 percent margins. Consumption of stone based jewellery reached US$400 million in 2000. The Chinese market is expected to continue to grow rapidly in the future as the level of disposable income increases.
7 Australian domestic market Opal is Australia’s national gemstone, but Australians are relatively ignorant about opals and their qualities. A very small percentage of opal is sold to Australian consumers, the majority of opal sold in Australia is bought by tourists. Tourists like to take home a something unique from Australia. The market for opal in Australia mainly confined to the capital cities and main tourist destinations with outlets in hotels and tourist precincts. A wide range of opals of various types and qualities are sold to visitors to Australia. Coober Pedy has the most significant tourist trade relative to the other opal mining fields. There are many retail outlets in the town catering to the significant tourist trade. Other towns have retail outlets, but they are very much a side interest to a main business.
Posted at 07:39 pm by trisdepoof
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