(NEW YORK) – The Rapaport Monthly Report stated that polished diamond prices softened in July, continuing the downtrend in the second quarter. Diamond markets were seasonally quiet with U.S. wholesalers taking their annual summer vacation. Overall polished demand remains weak.
The RapNet Diamond Index (RAPI™) for one carat diamonds fell 1.7 percent in July. RAPI for 0.30-carat diamonds dropped 1.8 percent and RAPI for 0.50-carat diamonds declined 0.5 percent. RAPI for 3-carat diamonds fell 1.5 percent.
In the first seven months of 2016, RAPI for one carat diamonds dropped 1.1 percent, down 4.7 percent from its level a year ago.
Buyers are avoiding large volume purchases as prices continue to soften. Demand is selective as retailers take goods on memo rather than buy for inventory. Dealers are concerned about sluggish polished demand, rising inventory levels and narrowing profit margins in the seasonally weak second half of the year.
Throughout 2016, the diamond market has been characterized by cautious polished trading, increased rough sales, lower rough-mining production and restrained consumer demand. De Beers and ALROSA cut their production in the first half and reduced the excess inventory that built up when demand slumped in the second half of 2015. In the first half of 2016, rough sales recovered as diamond manufacturers replenished stock that was depleted during the holiday season.
Polished inventory levels have increased as activity slowed in July. The number of diamonds listed on RapNet rose 20 percent since the beginning of the year.
The market is expected to remain quiet throughout the third quarter. Dealers are hoping the September Hong Kong show will signal a return to normalized activity. However, trading is subdued and expectations are low. Businesses across the distribution chain are focused on realigning their inventory to match lower levels of consumption. To ensure long term demand, the industry must significantly increase its marketing activity ahead of the fourth quarter holiday season.
The Rapaport Monthly Report can be purchased at store.rapaport.com/monthly-report.