1 ct. RAPI -0.7% in 2Q
(NEW YORK) – Polished diamond prices fell in June and sentiment softened after relatively weak Las Vegas and Hong Kong shows. Steady U.S. demand is supporting the market but overall demand is sluggish. Brexit, the U.S. election and continued weakness in China’s luxury sector are fueling uncertainty.
The RapNet Diamond Index (RAPI™) for 1-carat, GIA-graded diamonds fell 0.5 percent in June. RAPI for 0.30-carat diamonds dropped 1.6 percent, while RAPI for 0.50-carat diamonds slid 0.4 percent. RAPI for 3-carat diamonds declined 2.4 percent.
RAPI for 1-carat diamonds fell 0.7 percent in the second quarter, reversing some of the gains made in the first three months of the year. The index rose 0.7 percent in the first half of 2016.
Diamond markets slowed in the second quarter with selective buyers pushing for deeper discounts. Polished inventory continued to rise and prices came under pressure, while rough trading remained resilient. There is steady demand for commercial-quality SI-clarity goods, while demand is weak for better quality and large diamonds.
Rough trading was steady in June but slowed after the De Beers sight. De Beers sold $560 million worth of rough in June and its sales increased 12 percent to an estimated $3.02 billion in the first half of the year. De Beers and ALROSA kept prices steady on average but prices have started to soften on the secondary market and at auctions. Rough prices must come down in the third quarter for manufacturers to maintain profitability.
Liquidity is tightening as banks are withdrawing from the industry. Standard Chartered’s decision to exit “high risk” diamond lending will result in the industry losing approximately $2 billion in credit, while Antwerp Diamond Bank continues to wind down its $1.5 billion book.
“The diamond industry is being challenged by low profitability, tight liquidity and sluggish demand. It is vital that rough diamond producers maintain price levels that ensure profitability and liquidity in the manufacturing sector during these uncertain times. Producers must increase their marketing spend to ensure generic diamond engagement ring demand from U.S. Millennial consumers,” said Martin Rapaport, Chairman of the Rapaport Group.
The Rapaport Monthly Report can be purchased at store.rapaport.com/monthly-report.