Fancy cuts are in demand as rounds increase in price, says Rapaport.
Polished diamond prices were stable during April but trading remained weak due to Easter, Passover and the jeweller tax strikes in India, says Rapaport.
An increase in diamond import tax has greatly affected India, and the country is under new pressure. Rapaport says the protectionist 2% polished diamond import tax has “drastically reduced” Q1 polished imports in India by 71% and exports by 42%.
Demand in the consumer markets was stable during April but wholesalers and retailers continue to maintain low inventory levels for polished diamonds.
Buyers are focused on commercial-quality diamonds and there is continued improvement in demand for fancy shape diamonds as price conscious consumers shop for fancy cut stones as their prices are often lower than round brilliant cut stone.
In April, the RapNet Diamond Index for 1ct polished diamonds fell 0.2%, while the 30 points (.30ct) category increased by 0.4%. The half-carat category (.50ct) rose 0.5%, and at the larger end, demand for diamonds of 3cts increased 1.2%.
During Q1 of 2012 the overall demand index for 1ct diamonds fell 2.9% according to Rapaport.
The report said: “Trading remains well below levels experienced in the first half of 2011.
“Rough prices have increased by about 7% during the first four months of the year and continue to firm. De Beers continues to hold back production exerting pressure on the market. There is improving Indian demand for rough but liquidity remains tight and manufacturing profit margins are low.”
Pressure for higher polished prices is coming from high rough prices rather than improving consumer demand. Rough prices are said to be “unsustainable” at current levels with speculation that US and Far East demand may expand.
Rapaport added that while the long term prospects for these markets remain strong, current sentiment and trading levels point to a conservative trading environment for the rest of the second quarter.