Polished Diamond Prices Start Soft in 2017, Inventories Up, All Eyes on Hong Kong

02/03/2017 09:11

Polished diamond prices are still soft at the start of 2017, with Rapaport's RapNet Diamond Index showing prices for the benchmark 1-carat polished diamonds down 1.2%, a trend confirmed by PolishedPrices, while IDEX noted a slight rise in February despite, "the downward path seen from mid-2016." Rapaport writes, "Diamond trading this February was slower than in previous years, with buyers pushing for deeper discounts and suppliers expecting firmer prices at the Hong Kong show", although they note, "Sentiment improved, as dealers anticipate U.S. and Chinese jewelers will start replacing inventory sold during the holiday seasons." While PolishedPrices note, "Polished traders reported steady demand in the dealer market during the past week. Traders will be closely watching the Hong Kong Jewellery trade show this week (February 28 - March 4) for evidence of a recovery in demand in mainland China, as reported by a number of leading jewellery retailers."

Rapaport as well as PolishedPrices agree that, "Manufacturing levels have been ramped up in the cutting centres since the start of the year, raising some caution about a build up in polished inventories" (PP), while the Rapaport Monthly Report – March 2017 notes, "polished inventories are rising as major manufacturers return to full polished production following strong rough buying in January and February. Rough demand was steady." All three confirm, in the words of Rapaport, that, "Profit margins tightened in 2017 as rough prices firmed and polished prices softened." They conclude, "Hopes are high for the Hong Kong show, as jewelers are expected to return to the market. Rough sales are projected to slow as a large volume of new polished supply hits the market in the second quarter. Suppliers hope polished prices will increase, enabling a return to profits. Excess supply may put a strain on midstream inventory if the expected rise in polished demand doesn’t materialize."  

The NYOOZ website covering Surat summarizes: "Sources said that the demand for lower-quality, smaller rough, which was affected after demonitisation in November, rebounded in February. Sentiment remains positive heading into the Hong Kong International Jewellery Show this week - an important barometer of trade confidence. Sales in February were 12 percent lower than a year ago. These goods are now selling at near-double-digit premiums on the secondary market after De Beers sold fewer goods in November and December and reduced prices in January. De Beers prices firmed by about 1 percent on average, sightholders estimated, while premiums decreased for most categories on the dealer market."