Softer demand for polished diamonds in 2019 led to a drop in polished prices, yet the year ended on a positive note according to two of the three leading diamond-price indexes, Rapaport's RapNet and PolishedPrices, while Idex saw no improvement in December.
The RapNet Diamond Index (RAPI™) for 1-carat diamonds slid 0.2% in December, 0.7% in the fourth quarter and 5.3% for the full year. Following steep declines earlier in the year, in the fourth quarter the index for 0.30-carat (+8.7%) and 0.50-carat (+3.4%) stones made solid gains, trending up by more than a percentage point in December. For the year as a whole, RapNet reports the price of 0.30-carat stones fell 7.5% while that of 0.50-carat gems fell 4.9%. PolishedPrices reported less of a decline for the year but calculates its prices according to a wider range of goods. Looking at just the Fine category (goods better than I color and VS2 and above), 1-carat diamonds slid 2.5% for the year, while 0.50-carat goods fell 2.1% and 0.30-carat stones lost 8.2%. They report that the overall index lost 3.3% over the year.
When the dust settles on 2019, retail sales are expected to decline by up to 2% in US dollars and remain stable in local currencies. According to the Global Diamond Industry Report by Bain & Co. and the AWDC, the softer demand for polished diamonds was driven by two major factors: geopolitical and macroeconomic tension lowered consumer confidence and thus demand, and an increase in e-commerce created efficiencies in the supply chain that decreased the need for inventory on hand.
The geopolitical impact was mainly a result of the trade tension between the US and China as well deteriorating consumer confidence overall. In the US, a slowdown in Chinese tourism also negatively affected sales. In addition to the U.S.-China trade war and Hong Kong protests, Rapaport News also points to the oversupply of polished stones that plagued the industry all year long and rippled throughout the diamond pipeline. They further note a change in consumer patterns: "Multi-channel jewelry shopping and online diamond trading gained momentum. That gave buyers access to larger inventories and more information about the goods, enabling them to cherry-pick the best-quality stones and leaving the trade with large quantities of less desirable merchandise." Rapaport joins Bain & Co. in seeing some reason to be optimistic in the years ahead, and both join the chorus of calling for more robust marketing to stimulate demand.
Image: Shruti Mehta @DiamondsandAntwerp