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Diamond
Prices Decline in October
PRESS RELEASE, November 1, 2016, New York…
Diamond markets were quiet in October with wholesale businesses closing for the
respective Chinese, Jewish and Indian holidays. Trading slowed as larger U.S.
holiday orders were already filled and dealers shifted to accommodate specific
requirements from their retail customers.
The RapNet Diamond Index (RAPI™) for one-carat, RapSpec-A3+ polished diamonds
fell 2.3% in October. The index dropped 4.3% in the first ten months of the year.
Market sentiment improved after the September
Hong Kong show but polished trading remained sluggish and inventory levels
relatively high. Rough demand softened as rough prices firmed in October and
Indian diamond manufacturers scaled down operations before closing for
Diwali.
While rough demand slowed in October, mining companies continue to register
strong growth compared with 2015 when demand slumped due to low manufacturing
profitability and high polished inventory. De Beers sales volume rose 90% in
the third quarter, while ALROSA’s increased 69%.
Manufacturing profits remain tight due to sluggish polished demand, while rough
trading was relatively strong in the third quarter. India’s rough imports
soared 54% to $4.2B in the third quarter, a record for the period, while its
polished exports grew 15% to $6.1B.
The industry’s focus shifted to retail as Diwali, Christmas and the Chinese New
Year provide important jewelry selling opportunities in the major consumer
markets. We expect moderate U.S. jewelry sales growth this Christmas, relative
stability in China but weakness in Hong Kong, while reports signal steady gold
sales in India during Diwali.
However, holiday jewelry sales are unlikely to stimulate a sustainable rise in
diamond trading and polished prices are expected to remain under pressure for
the rest of 2016 and into 2017. That should cause rough prices to soften in the
long term. With sufficient stock in the midstream, the diamond trade continues
to re-align its inventory with lower levels of demand while there is still an
overhang of supply from previous years.