Diamond prices remained under pressure with slow trading during the August vacation period. Liquidity and profitability tightened during the summer, but suppliers are optimistic that trading will improve ahead of the fourth-quarter holiday season.
The RapNet Diamond Index (RAPI™) for 1-carat diamonds fell 0.6% in August and declined 3.8% since January 1.
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As the Rapaport Monthly Report – September 2017 notes, polished inventory is rising, with steady manufacturing and sluggish demand as dealers prepare for the holiday season. Liquidity concerns deepened following reported defaults by manufacturer InterJewel Pvt. Ltd. and wholesaler Ankur Diamonds.
Manufacturers are under pressure, as rough prices rose an estimated 3% in the first half of 2017 and polished inventory levels continue to rise. The number of diamonds listed on RapNet has risen 22% since January to 1.44 million on September 1.
Rough trading slowed in August after a robust first half, with De Beers boxes selling at low average premiums on the secondary market. Rough demand is expected to slow in the coming month due to the tight manufacturing profit margins and possible oversupply of polished. Indian cutters brought forward their pre-Diwali purchases, since the festival is earlier than usual this year, on October 19.
Suppliers are hoping the September Hong Kong Jewellery & Gem Fair will spur stronger polished trading. Chinese buyers are pushing for higher discounts as they prepare for the October 1 National Day. Dealers are trying to hold prices firm in anticipation of stronger demand as retailers purchase their holiday inventory.
Improved earnings at Signet Jewelers and Tiffany & Co., along with increased industry marketing budgets, have raised expectations for the holiday season. Attention is focused on De Beers’ branding and the Diamond Producers Association’s generic campaigns to stimulate demand and higher polished prices.