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Diamond Trading Quiet Amid Tight Profits

Polished Prices Soften in July

Aug 6, 2019 5:18 AM   By Rapaport
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RAPAPORT PRESS RELEASE, August 6, 2019, Las Vegas … Diamond-market sentiment was weak in July due to tight profits and liquidity. The pressures facing cutters and dealers resulted from high rough supply at inflated prices during 2017 and 2018, even as polished prices were softening.

The RapNet Diamond Index (RAPI™) for 1-carat polished fell 0.9% during the month. The index was down 4% since the beginning of the year and 6.1% over the past 12 months.

RapNet Diamond Index (RAPI™)
July Year to date
Jan. 1 to Aug. 1
Year on year
Aug. 1, 2018, to Aug. 1, 2019
RAPI 0.30 ct. -2.7% -14.6% -22.2%
RAPI 0.50 ct. -2.2% -6.8% -9.7%
RAPI 1 ct. -0.9% -4.0% -6.1%
RAPI 3 ct. -1.6% -13.5% -16.4%

The midstream is being squeezed and is bearing the risk of holding inventory: Miners are maintaining high rough prices, while jewelers are holding fewer goods in inventory and taking more on consignment. Over the last decade, manufacturers focused on raising credit rather than profit as miners pushed rough supply, but now the lack of profit has led banks to cut lending.

Rough sales plummeted as sightholders rejected goods at prevailing prices. De Beers’ $250 million July sight was its smallest in over three years. Polished inventory remains inflated, even as manufacturers reduced production an estimated 30%.

Polished trading has been quiet, with US jewelers assessing their holiday-season requirements. Far East demand is cautious due to US-China trade tensions and currency devaluation. Meanwhile, political protests have negatively impacted Hong Kong wholesale and retail sales.

Dealer trading has also declined, with manufacturers going directly to retailers in a bid for better profits, as outlined in the July Rapaport Research Report. The industry needs a vibrant middle market, but dealers are hesitant to buy while prices are falling and polished is in oversupply.

To restore profit, the trade needs to reduce rough prices, as well as raise diamond-jewelry demand through marketing. Greater profitability will improve midstream liquidity, and the focus will shift toward boosting consumer spending rather than credit. In turn, a profitable midstream will restore polished price growth.

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Rapaport Media Contacts: media@diamonds.net
US: Sherri Hendricks +1-702-893-9400
International: Alex Shine +1-718-878-5138
Mumbai: Prashant Bhojani +91-97694-66855

About the Rapaport Research Report: The Rapaport Research Report provides subscribers with in-depth analysis of key issues affecting the diamond market. It presents exclusive analytics of diamond prices for a variety of categories, based on sales and inventory data from RapNet® – The Diamond Market.

About the Rapaport RapNet Diamond Index (RAPI™): The RAPI is the average asking price in hundred $/ct. of the 10% best-priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet® – The Diamond Market. www.RapNet.com has daily listings of more than 1.5 million diamonds valued at over $8 billion. Additional information is available at www.diamonds.net.

About the Rapaport Group: The Rapaport Group is an international network of companies providing added-value services that support the development of ethical, transparent, competitive and efficient diamond and jewelry markets. Established in 1976, the Group has more than 20,000 clients in over 121 countries. Group activities include Rapaport Information Services, providing the Rapaport benchmark Price List for diamonds, as well as research, analysis and news; RapNet, the world’s largest diamond trading network, with over 15,000 members in 97 countries and daily listings of more than 1.5 million diamonds valued at over $8 billion; Rapaport Laboratory Services, providing GIA and Rapaport gemological services in India, Israel and Belgium; and Rapaport Trading and Auction Services, the world’s largest recycler of diamonds, selling over 500,000 carats of diamonds a year. Additional information is available at www.diamonds.net.

Image: A De Beers employee grading a diamond in Surat. (Ben Perry/Armoury Films/De Beers)
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Tags: Alrosa, De Beers, diamond, diamonds, Jewelry, Rapaport, RAPI, RapNet, RapNet Diamond Price Index
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