Rapaport: Rough Diamond Trade Outpacing Soft Polished Market

Market Analysis
03/05/2017 13:38

Rapaport has issued a press release on the current rough and polished diamond markets, which boils down to the following: "Amid sluggish polished markets, rough trading remained strong." The second quarter of the year is typically a slow period for diamond trading, and April this year proved no different. Nonetheless, Rapaport claims that, "Sentiment was positive despite lower trading volumes, due to improving retail expectations in China, where the jewelry market is showing signs of recovery." The polished trade will now be looking forward to JCK Las Vegas, which will take place from June 5 - 8. The RapNet Diamond Index indicates that prices for 1-carat diamonds were down 0.3% in April, have fallen 1.4% since the beginning of the year and have tumbled 7.4% compared to the start of May 2016. Meanwhile, prices for 0.50-carat diamonds have fallen steadily over the past twelve months (11.4% since May 2016, 6% since January), while 3-carat stones have maintained their modest gains.

Polished inventory is rising, Rapaport writes, with the number of stones listed on RapNet having increased 3.5% in April and 7.5% since January 1. This means that Indian manufacturing has also risen since their holiday period in November. The main takeaway from The Rapaport Monthly Report – May 2017 is that, "the buoyant rough market is not supported by current levels of polished demand. Rough prices firmed 2% to 3% since the beginning of the year, while polished prices softened." This is a troubling trend that puts pressure on the trade from the midstream on down, eroding profitability and liquidity for the manufacturers and squeezing retailers' already narrow margins.