Diamond prices stable despite uncertain consumer demand

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The RapNet Diamond Index reports stable polished diamond prices for March 2016, attributed to support from steady dealer trading, although it acknowledged that “the outlook for consumer demand remains uncertain”.

The first quarter enjoyed an improvement as polished prices rose and profitability increased. The index for one-carat diamonds rose 1.4%, extending the uptrend from the fourth quarter. However, this fell 4.6% below its level last year.

The Rapaport Monthly Report revealed that some new polished production sold better than left-over stock. Prices of certain new stock held firm at the March Hong Kong show, but old stock softened as dealers looked to replace difficult-to-sell inventory.

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The positive energy among diamond dealers in Hong Kong was counter-balanced by “frustration at the Basel show, which demonstrated cautious European luxury demand and weak economic sentiment”.

According to the report, demand was good for rare intense pink and blue diamonds, while big-stone demand was limited to bargains.

It predicts that rough demand is expected to soften in the second quarter, as polished production has increased ahead of demand.

“Following De Beers’ price reduction of 7 to 10 % in January, manufacturers’ profitability returned as polished prices improved due to shortages created in the second half of 2015. De Beers rough is in demand as many believe it is currently offering the best value to manufacturers,” the report posits.

It concludes that, “the first quarter of 2016 was relatively positive for the diamond trade. However, trading was largely driven by dealers looking to replenish select inventory to fill existing orders. Jewellers and diamond dealers are carefully managing their inventory, while consumer demand is uncertain.”

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