Round diamonds below 0.9 carats in weight saw significant price movement to the negative, while items above that weight were more positive, according to IDEX's weekly price round-up. There was a brighter story for prices of fancy cut diamonds, however, particularly for diamonds weighing 0.3-3.99 carats in the medium to better color range. There were price declines for stones in the 4-4.99 carats range, especially in higher colors.
With demand for polished diamonds weak around the world, and stable at best in the United States, the organizers of the 33rd edition of the September Hong Kong Jewellery & Gem Fair forecast only very minor increases in exhibitor and visitor/buyer numbers. UBM Asia says it expects around 3,700 companies and 60,000 visitors/buyers to take part in the September 16-20 show for loose diamond exhibitors at the AsiaWorld-Expo (AWE), and the September 18-22 show for finished jewelry at the Hong Kong Convention & Exhibition Centre (HKCEC).
De Beers is slashing the prices of some goods at its latest sight, that runs from August 24 to 28, by as much as 10.7 percent, according to a report by Rapaport. Bloomberg News reported earlier this week that the miner had cut prices by as much as 9%. In addition to the price cuts, De Beers is permitting sightholders to defer pre-agreed purchase commitments in the face of weak demand globally for polished goods.
With the market volumes remaining low through the summer break, prices continued to drift down throughout the week, with the overall index recording its lowest value since December 2010.The main polishedprices index opened 2.0% down from the previous week on Monday at 127.6 points. The overall index is currently 13.2% lower than this time last year, and has lost 6.5% since the start of 2015. Mixed qualities managed to stay in positive territory over the past week, with 1.0 carats gaining 1.4% and 0.5 carats adding 0.1%.
Janet Yellen, the Chair of the U.S. Federal Reserve, and Zhou Xiaochuan, the head of the People’s Bank of China, are making or about to make decisions that are likely to have a big impact on diamond jewelry demand and, therefore, rough and polished prices. Xiaochuan has been overseeing the depreciation of the Chinese currency, the yuan, and Yellen is reportedly set to start raising U.S. interest rates this year. As Avi Krawitz writes, this could hardly come at a worse time for the global diamond sector.
The prices of round diamonds fell again over the past week, especially in goods weighing 0.7 carats and less and larger items in lower colors. There was more positive news, however, regarding prices of fancy cut stones, particularly diamonds weighing 3 carats and less.
Evert P. Botha writes in Jewellery Business Magazine that Canada's currency woes - the loonie has depreciated over 20% against the U.S. dollar since July 2014, nearing an 11-year low - and the effective banishment of European Gemological Laboratory (EGL) International as a result of overgrading practices has led to "a new kind of normal" regarding diamond prices in Canada.
The overall polishedprices index saw a volatile week, finishing on a higher note compared to the previous week, despite some benchmark categories hitting a 2015 low. The main polishedprices index opened 0.8% up from the prior week on Monday at 130.2 points. The overall index is currently 11.5% lower than this time last year, and has lost 4.6% since the start of 2015. Fine 0.3 carat diamonds reported the biggest gains, adding 8.8% to the prior week, whilst Fine 0.5 carats added 1.5%. Mixed one carats were the largest loser among the benchmark ranges, falling 2.1%.
Diamond business analyst Ehud Laniado looks into the major challenges facing manufacturers. "The diamond sector is considered a lucrative one by the public, enticed by the allure and profitability that diamonds represent. However, the diamond industry midstream currently suffers from very low profitability, constantly verging on loss, while the upstream and downstream of the diamond pipeline maintain wide margins. An industry pipeline based on a marginally profitable sector squeezed in between two profitable ends is not sustainable," he writes.
Industry analyst Avi Krawitz writes about the Indian diamond industry following this week's India International Jewellery Show (IIJS). "We got a sense this week that liquidity has improved in India’s diamond sector. It’s not that credit taps are flowing once again; they aren’t.
With the exception of 0.45-0.49 cts D/SI3-I2, all round cuts below 0.69 carats saw negative movement, particularly in the better colors and clarities. The medium range between 0.70 - 1.24 carats were largely positive, while larger goods had much less movement, with the exception of 5-carat stones and larger, which saw positive changes in the medium clarities and better colors. Prices of fancy-cut diamonds also changed more than in previous weeks. The changes were overwhelmingly positive, especially in the medium and better clarities.
The overall polishedprices index recovered from a mid-week slump, which pulled prices drastically lower, ending the week on a positive note. The overall index is currently 11.8% lower than this time last year, and has lost 5.3% since the start of 2015. Commercial 0.5 carats and 0.3 carats contributed heavily to the mid-week slump in the index, finishing in turn 1.0% and 3.5% lower than the prior week. Smaller Fine qualities also kept the index depressed, with Fine 0.5 carats falling 4.2% and Fine 0.3 carat diamonds dropping 2.6% over the previous week.
The head of the World Federation of Diamond Bourses answers question on a wide range of issue of concern to the global diamond industry, including sales, declining profitability, finance, overgrading, generic marketing and the challenges of beneficiation.
As the Indian International Jewellery Show (IIJS) passed its fourth day on Sunday, loose diamond sales remained largely flat. In previous years, transactions typically rise over the course of the show, particularly at the weekend. Visitors to the trade fair had very specific and limited demands. However, gold jewelry manufacturers were seeing strong demand due to the recent decline in the price of gold and were replenishing their stocks of gold jewelry to cope with the demand.
While the polished diamond market in the U.S. is stable, the rest of the world remains very slow. Trading is cautious in Belgium and Israel with dealers on vacation, as are many Hong Kong-based traders
U.S. polished diamond imports showed a 6 percent rise on the year to $1.7 billion in June, according to government data. In volume terms, polished imports decreased by 5 percent to 737,302 carats while the average price per carat jumped 11 percent to $2,319. Polished exports fell 9 percent to $2.7 billion and the volume of exports fell 7 percent to 2.021 million carats. As a result, the average price declined 2 percent to $1,322 per carat.
In its weekly round-up of price changes, prices of round diamonds continue to decline, especially smaller sizes below 0.5 carats with higher colors and clarities. But fancy cut diamonds sized between 0.3-3.0 carats saw the most movement and were generally positive in the middle to better clarities.
"De Beers will deliver a severe cash hit to Anglo American – and its CEO, Mark Cutifani, ought to consider whether a different management approach could have led to better results. In the past, client loyalties were always the company’s “saving grace” during adverse economic times, having clients quite willingly moving stocks from De Beers into their own inventories," writes industry analyst Chaim Even-Zohar in an analysis of the state of the markets.
Industry analyst Ehud Laniado confirms that rough diamond prices are continuing to decline as the market slows down. While some of the decline is due to the annual summer vacation, and some is a continuing price correction in slowing market, there are other factors at work.
Diamond prices declined in July as market sentiment decreased "to levels not seen since the 2008 downturn". Polished prices have fallen as a result of pressure on manufacturers to cut stocks due to lower demand from China and stable, albeit cautious, demand from the American market. The RapNet Diamond Index (RAPI) for 1-carat laboratory-graded diamonds fell 2.5 percent during July, while for 0.50-carat diamonds there was a drop of 4.7 percent and for 0.30-carat diamonds a decline of 6.3 percent.
The firm's index for polished diamond prices increased in July, but analyst Ken Gassman warns that "the single index figure does not tell the whole story. Prices were mixed, and trading was choppy." He said that prices were generally fairly solid for the second straight month.
"There was a wide variation in price trends by size of stone. Diamonds in the 0.5-carat range dropped significantly in price. Further, 4-carat stones also dropped in price. Stones ranging in size from 1 carat to 3 carats posted varying gains on a month-to-month basis."
Price lists have become an increasingly important part of the diamond market over the past 25 years – and the Rapaport list has achieved overwhelming importance. But do, and can, such lists, provide an accurate indication of diamond prices? Are changes to the list carried out too often and are those changes too severe particularly at a time when trading conditions are difficult? Is there a realistic alternative to the Rap list, or will the industry have to live with it?
Rough sales and diamond manufacturing activity are plunging, says the Rapaport news service in its weekly summary, with diamonds below one carat "under severe pressure". The New York Jewelry Week saw poor results, and there are low expectations for the upcoming India and Hong Kong shows as the Chinese stock market bubble bursts. Meanwhile, rough price levels are unsustainable and likely to see a considerable decline.
Round diamond prices continue to drop, especially in the better colors and smaller sizes – below 0.7 carats. There was little movement either positive or negative for goods sized above 1 carat, with just a few isolated changes taking place. The situation was much more positive and stable when it came to prices of fancy cut diamonds this week. There were a few isolated price drops, with the majority of declines being seen in stones above 5 carats, especially in the lower clarities. The main changes in hard figures are available through the link.
In comments that are unlikely to win him many friends in the diamond industry, Gareth Mostyn admits lower diamond prices are taking their toll, but this is not the worst the company has ever seen and demand for De Beers diamonds is expected to remain stable this year. "…things are tough, they’re tough for us and they’re tough for our customers, but I wouldn’t exaggerate the level of difficulty out there. In the final consumer markets, we’re forecasting that demand this year for polished diamonds will be stable roughly in line with where it was in 2014.
For the first time ever, and in a clear sign of the deep problems facing the diamond trade, De Beers is to allow sightholders to defer up to 75 percent of their allocations at its August sight. Sightholders reportedly rejected two-thirds of the goods offered at the July sight. This included deferrals, which lets the clients postpone their purchases for the next sight, or outright refusals of the goods.
De Beers must slash rough diamond prices by 10-20 percent in order to restore its own growth prospects and aid diamond manufacturers to return to profitability. "De Beers has been holding out for an expected stoking of demand in the second half of the year," writes Avi Krawitz. "By keeping supply low - enabling sightholders a 25 percent deferral option throughout the year - the company has hoped that manufacturers’ rough and polished inventory levels would be sufficiently depleted to resume buying for the holiday season.
In its weekly round-up of price movements, IDEX reports that round goods, particularly goods of 0.8 carats and below, saw many downward price changes, while fancy-cut goods were stable, especially in smaller items. Changes were mostly positive, but diamonds larger than 4 carats saw price drops averaging 2-4%.
The value of De Beers' July sight is estimated at just $200 million, according to Rapaport News, with the amount of goods left on the table likely to be more than 65 percent of the initial sight value. De Beers reportedly kept overall diamond prices and assortment quality stable.
Industry analyst Ehud Laniado takes stock of the strategies and scenarios available to diamond manufacturers that have lost the desire to manufacture in an unprofitable market. In the light of De Beers' dramatic Sight last week, where some sightholders reportedly declined as much as 60-90% of the offered rough while others turned down their entire allocation, a new reality has taken hold: the past sentiment of buying out of loyalty and an understanding that they will be compensated down the line is gone.
There was relatively little price movement this week in rounds. The most movement was in goods sized between 5-5.99 carats. Prices dropped 1-3 percent for goods in the better colors and clarities, while items in the lower colors but better clarities saw prices increase by the same amount. Smaller and larger fancy-cut diamonds experienced very little price movement, with most increases taking place in stones from 0.5-2.99 carats. Click through to the article to see some of the main changes in this week's IDEX Online Diamond Price Report.
India's diamond cutting and polishing center is seeing an "unprecedented" decline, says Surat Diamond Association President Dinesh Navadia. "This happens quite a time, but after three or four months, the situation usually improves. This time, the crisis has lasted for a long time," he said, adding that rumors that diamond firms are about to go bust are making the situation even worse.
With the Indian diamond industry experiencing difficult trading conditions, companies will be handing out less expensive gifts ahead of the Diwali celebrations. Last year, there were reports of cars, apartments and jewelry being presented to workers leaving for the month-long Diwali holiday which this year falls in November.
Yelena Levina writes at Rough&Polished that despite having KP sanctions lifted, diamonds from Zimbabwe, Angola and now possibly rough exports from the Central African Republic carry "reputational risks" that leads to them being available at heavily discounted prices - up to 50% - and suggests that this could be a contributing factor to the current stagnation of polished diamonds prices. "By and large, diamond cutters in Surat cannot be blamed for their willingness to support their own business. The problem rather lies in the lack of regulation.
Declining sales globally, high rough prices and declining polished prices, fears about the impact of a rate rise by the US Federal Reserve, liquidity problems, and companies sitting on big debts, the Indian diamond industry is facing big challenges.
At least 20 diamantaires in Mumbai's diamond market are sitting on big losses which are trickling down to smaller traders who had business dealings with them and are unable now to recover their money.
The financial crisis started when, despite a slowdown in global polished diamond sales, traders kept buying and processing rough diamonds even as the demand in international market plummeted.
The main headlines this week were that Indian polishing firms turned down a suggested ban on rough imports to underpin high price levels, preferring to maintain job levels and production with lower polished prices. Meanwhile, De Beers is seen keeping rough prices high while allowing sightholders to defer up to 25% of purchases at next week’s sight. Round stones of 0.30 to 0.40 carats are still weak and polishing firms are moving output to 1 carat and larger good.
Dubai’s diamond market has been hit by a global downturn, with prices falling by as much as 25.8% in the past year, according to the RapNet Diamond Index (RAPI). The price of 1-carat laboratory-graded diamonds has declined 15.3% since July last year, including 0.9% in June, according to the index. Diamonds of 0.3-carat have fallen the most, losing 10.6% so far this year and 25.8% in the past 12 months. The popular stone has been trading at “steep discounts”, RAPI said, contributing the loss to “relatively quiet” demand in the US and “cautious” demand in the Far East.
Diamond prices continued to soften in June with many categories trading at deep discounts to the Rapaport Price List. Markets were relatively quiet as U.S. demand after the JCK Las Vegas show was weaker and Far East demand was cautious. Manufacturers are under pressure and continue to lose money on their rough supply. The RapNet Diamond Index for 1-carat lab-graded diamonds fell 0.9% in June. RAPI for 0.30-carat diamonds declined 2.5% and RAPI for 0.50-carat diamonds dropped 2.6%. RAPI for 3-carat diamonds decreased 1.75%.
The overall polishedprices index saw a big drop mid-week, however most benchmark categories recovered in the latter part of the week. The main polishedprices index opened 0.5% down from the prior week on Monday at 133.6 points. The overall index is currently 8.8% lower than this time last year, and has lost 2.1% since the start of 2015. After an exceptionally poor performance in the previous week, Fine 0.3 carats proved to be this past week’s best performer, closing the week 7.6% higher.