Diamond demand down 12.5% in 2012 as India and China weaken.
Rapaport Group chairman Martin Rapaport has said that diamond buyers should say no to high prices in 2013 after certified polished diamond prices dropped 12.5% in 2012.
The RapNet Diamond Index, a service run by Rapaport, said that the price drop was led by global economic weakness causing growth to stall in China and declining demand in India following what it called “poor government policy”.
The Rapaport Research Report released this month claims that demand for diamonds was steady in the US throughout 2012, something it credited with sustaining the jewellery industry, but said that consumer spending softened in December as consumers lost confidence in the face on tax hikes.
In December, the RapNet Diamond Index said that price of 1ct polished diamonds was flat. Meanwhile 0.3ct, 0.5ct and 3ct diamonds showed slight increases, the first monthly increases since March.
The group has said that rough trading remained quiet in 2012 with improved demand for non-De Beers goods, which it claims continued to offer better value than De Beers rough. It said that manufacturers, which gained slightly better profit margins in December, expressed concern that De Beers and Alrosa might raise rough prices in the first quarter as the mining companies continue to limit supply.
Rapaport said that forecasts for pending diamond price increases are premature and warned that the jewellery trade should be careful not to inflate prices by buying diamonds on credit, adding that “bank credit that enables firms to buy diamonds at unsustainably, artificially high prices must be stopped”.
Rapaport said: “Given expectations that the fiscal cliff will reduce demand for luxury products due to higher taxes, increased unemployment and reduced government spending, responsible companies should refuse to buy diamonds at prices that do not allow for healthy profits. Buyers should just say no to high prices. The real value of diamonds must be based on real money from real buyers.”