The diamond market showed mixed and even contradictory trends in June. While the US market was relatively strong, China was uncertain, and oversupply worries began to kick in.
The main event of the month was the JCK Las Vegas show, one of the biggest industry gatherings since before Covid-19. Sentiment at the fair was positive, indicating that the trade was in a good mood going into the second half of the year.
“The traffic was fantastic,” said Bhavik Gandhi, president of New York-based wholesaler and manufacturer Om Color Diamonds. “From sales to meeting new contacts, it’s been great. The market is very good. Prices are holding [up well].”
Still, consumers felt the impact of inflation and rising interest rates, while sales to China were slow even as the country eased its lockdowns. Many traders also found themselves with more diamonds in their safes, and it was unclear whether the American market would remain strong enough for the rest of 2022 to absorb this inventory.
“There’s been some impact on the industry and on higher-ticket [items] from the stock-market decline in the last couple of months,” added Sam Sandberg, chairman of jewelry brand A.Jaffe and president of The Plumb Club, an alliance of jewelry suppliers.
Buyers eager overall
The supply situation was confusing for the industry. On the one hand, some 30% of goods — those from Russia — were essentially unsellable in the US because of the war in Ukraine. On the other, it was an open secret that Alrosa diamonds were still making their way into the supply chain. Meanwhile, De Beers was selling large quantities of rough at its sights.
Dealers also noted a degree of sluggishness in the lower and middle ends of the US retail market, as people were spending more on food and gasoline. In June, shopper confidence fell to its lowest level since February 2021, according to The Conference Board, which provides business data.
“Looking ahead over the next six months, consumer spending and economic growth are likely to continue facing strong headwinds from further inflation and rate hikes,” predicted Lynn Franco, the organization’s senior director of economic indicators.
But the overall picture was optimistic, said Vipul Sutariya, director of sales and marketing at India-based polished manufacturer Dharmanandan Diamonds. At JCK, buyers were genuine in their search for merchandise, he reported. “They are seriously looking for the supply, and everybody’s [anticipating] that there might be a supply constraint, because some of the pipeline doesn’t have access to the rough from Russia. Even though inflation is high, demand for diamonds remains strong.”
Prices stabilizing
Polished prices were slow during the month, with the RapNet Diamond Index (RAPI™) for 1-carat diamonds falling 1.2% between June 1 and 23. RAPI for 0.30-carat stones slipped 0.5%, and the index for 0.50-carat goods decreased 1%. In the 3-carat category, prices dropped 0.4%.
However, the declines were less severe than in March, when the Ukraine invasion shook the market. “Diamond jewelry demand continues to perform well in the key US market, and this was reinforced by positive sentiment following the influential JCK Las Vegas jewelry trade show held in mid-June,” said De Beers CEO Bruce Cleaver following the company’s June rough-sales cycle.
The rough market was robust overall. Trans Atlantic Gem Sales (TAGS) reported a “high level of interest” from customers viewing goods at its June tender in Dubai. “For the time being, prices offered have not become overly speculative as we saw in the early part of this year, and remain realistic when considered against current polished values,” the company said.
Article from the Rapaport Magazine - July 2022. To subscribe click here.