This spring, a number of key indicators of the diamond market began to show a steady revival of trade activity, but the whole picture is yet to become fully positive. The U.S. consumers are sensitive to economic uncertainty and are cautious in purchasing luxury items, which was confirmed by the LVMH’s unexpectedly low performance in the first quarter and the emerging downward trend of jewelry sales for items priced under $2,500 in the USA.
In April, alarming signals coming from the jewelry consumption market enhanced the impact of the tariffs announced by President Donald Trump. The global trade war has already created serious disruptions in the diamond supply chain and can hit the overall demand for polished diamonds that has just begun to recover after several challenging years. Even if India is able to reach an agreement with the USA to abolish the pending tariffs and resume polished diamond exports, the escalation between the USA and China, together accounting for 65% of global diamond jewelry trade, will hit the consumers’ discretionary spending in both countries.
Prices bounced off the bottom
Prices for high-demand polished diamond categories started rising from February for the first time in many months, driven by a reduction in inventories, according to Rapaport. The RapNet Diamond Index (RAPI) for 1-carat diamonds rose by 0.2% in February after falling by 2.3% in January. The index for 0.3-carat diamonds rose by 3.7% after falling by 0.4% in January.
The rise in diamond prices accelerated in March, with the RAPI for 1-carat diamonds rising by 1.4%. The 0.3-carat diamonds were again the best performers, up 6.5%. The index for 0.5-carat diamonds rose by 2.2%. These categories are the basis of demand in the mass-market segment, and the trend indicates a decrease in inventories in supply chains, Alfa Bank notes in its review.
According to the Zimnisky Global Rough Diamond Price Index, rough diamond prices bounced off the bottom in mid-February. By April 26, the index showed a 1.4% increase from the beginning of the year, including a 2.8% increase over the past three months.
The latest data from Indian trade statistics also looks good. Net rough diamond imports to India increased by 40% year-on-year by volume in March and by 79% compared to February, to 12.4 mn carats. However, imports by value were 5% lower compared to a year ago, $1.2 bn, due to the decline in the average price by 32%, to $100 per carat, which indicates an increase in purchases of smaller-size stones at low prices. However, the imports exceeded $1 bn by value for the first time since May last year. In the first quarter, the average price of rough diamonds imported to India increased by 5% (to $103 per carat) compared to the fourth quarter of 2024. Net polished diamond exports from India in March were 1.4 mn carats by volume and $1.1 bn by value, showing a 6% year-on-year growth, respectively.
Rough diamond prices at De Beers’ sights in February and March remained unchanged. For comparison, De Beers had to make a radical correction in December and reduce its price for rough diamonds by more than 10% across the entire range. Rough diamond prices at ALROSA’s trading session in March 2025 were also stable, according to Rapaport’s sources.
There was also a positive trend in diamond trade and in jewelry sales in March in the USA, as analyzed by Tenoris, a company owned by Edan Golan. Revenue rose by 3.7% in March and by 4.6% in the first quarter. That could be a sign of a trend change, Tenoris notes, although this conclusion could be challenged due to economic woes in the USA, the global tariff war, and the economic instability it has caused. Unit sales fell nearly by 7% in March, while the average retail price of jewelry items sold in the USA rose by 11% year-on-year due to the decline in consumer demand for lower-priced jewelry. However, the downward trend of jewelry sales for items under $2,500 does not bode well, Golan says.
Symptoms of a consumption crisis
Amid signs of a revival in demand in the diamond cutting and polishing industry, LVMH’s earnings report is alarming, suggesting that fears of a consumption crisis are not exaggerated.
LVMH, the world’s largest luxury products group that controls Louis Voitton, Tiffany, Bulgari, Dior, and other luxury goods manufacturers, saw its revenue falling by 3% in the first quarter, to €20.3 bn. This figure was in sharp contrast to analysts’ forecasts of a 2% growth. Sales in the USA fell by 3% and by 11% in Asia, excluding Japan where Chinese tourist buyers were active.
Expectations that jewelry consumption by wealthy Americans can help in boosting the luxury sector amid ongoing lower consumption in China have not yet materialized. Moreover, fears of a recession in the USA could put the industry on the brink of its longest downturn in many years.
LVMH showed the most significant decline in its Fashion and Leather Goods division that accounts for almost half of the group’s sales and over 75% of its profits; the sales in this division were down 5%, although stable figures were expected. In contrast, sales in the Watches & Jewelry division that includes Tiffany and Bulgari, did not decline and remained at the level of a year ago, at around €2.5 bn. But this result is disappointing as it means that the positive dynamics of the fourth quarter of 2024 when LVMH’s jewelry and watch segment recorded a 3% growth did not continue.
Swiss watch exports, another important indicator of luxury consumption, returned to a positive zone in March, showing a growth by 1.5% year-on-year after a 8.2% decline in February, according to the Federation of the Swiss Watch Industry’s data. However, the quarterly figure is down 1.1% from a year ago. Key Asian markets posted disappointing results, with China and Hong Kong down 11.5% and 11.3% respectively in March, and Singapore down 1.8%. Only Japan showed a slight increase of 1.1%.
Jewelry sales are often an early economic indicator on the threshold of a recession, because economically sensitive consumers immediately tighten their belts and cut their discretionary spendings, especially on jewelry, Tenoris notes, citing the slump in jewelry demand in 2007, before the Great Recession. In this regard, the decline in jewelry unit sales in March in the U.S. market and the sharp rise in their average price are alarming signs. It should be mentioned that Swiss watches face the same issue: unit sales decreased by 3.8% in March while prices were up 1.8% in the category of watches above 3 thousand francs, which is the most important for demand in a luxury segment (that accounts for 80% of income from wristwatch exports).
The current very specific change in demand (an increase in the average price is not due to increased production costs or a consumers’ desire to buy more, but due to decreased sales of lower-end goods) may be a warning sign of a downward trend in economy, Tenoris warns. The process has a significant impact on diamond jewelry revenues. With the exception of bracelets and rings purchased to celebrate milestone anniversaries, all jewelry subcategories in the USA have seen a decline in unit sales, and revenue from ready-made diamond jewelry has fallen by 7%, Golan writes.
Local reasons for the slowdown and a positive outlook
Diamond miners are in a position that does not imply changes in the sensitive area of end consumption.
According to ALROSA, the main reason for the current slowdown is the accumulation of polished diamond inventories by cutters and polishers during several years after the COVID-19 pandemic. This was followed by the U.S. sanctions imposed in the spring of 2022 and the EU ban on the imports of rough diamonds over 1 carat, effective since March 2024. Fearing a shortage of rough diamonds, India’s diamond cutters and polishers began stockpiling rough diamonds. But later on, against the backdrop of demand stabilization after the post-pandemic surge, they reduced their purchases to cut and polish the rough diamonds they have and sell off their inventories. As a result, global rough diamond sales fell to $15 bn and $12 bn in 2023 and 2024, respectively, from $19 bn in 2021-2022.
Bringing inventories to normal levels is facilitated by a reduction in diamond production, which diamond miners were forced to do to adapt and reduce their losses, according to ALROSA. De Beers reduced its diamond production by 22% in 2024, and plans to reduce it further by 8% this year. As a result, global diamond production over the next few years is expected to be 30% lower compared to the pre-pandemic levels.
ALROSA has kept out of this trend for now, since the effect of placing the company’s low-profit alluvial mines and its Verkhne-Munskoye deposit (together accounting for 3% of the group’s total diamond production) on temporary care and maintenance will have an effect on the production figures in 2026 only.
The limited diamond production by global diamond miners, except for ALROSA, gave its first results, Pavel Marinychev, the company’s CEO, stated in April.
“We see that recently, there have been the first small attempts to recover the [diamond] market. For the first time in almost three years, prices for polished diamonds in certain categories have started rising,” he said.
Marinychev expects the market recovery - the global analysts predicting to be completed by 2027 - to happen earlier.
ALROSA cites the statistics on the market’s recovery from previous crises; for example, the rough diamond price index increased by 1.8 times by 2023 after August 2020.
Jan 09=1.0 for a white graph, and Aug’20=1.0 for a blue graph. Months start from the ‘cycle bottom’
The collapse of prices for lab-grown diamonds that have been falling by an average of 20% over the past 5 years, makes it more profitable for retailers to deal in natural polished diamonds having stable prices, ALROSA’s CEO notes.
“It has become profitable to sell natural diamond jewelry items in stores again - and this is very good news for us. People always ‘vote’ with their money, including owners of jewelry stores,” the CEO of ALROSA says.
ALROSA relies on a forecast that assumes an increase in sales of natural polished diamonds by 2% to 4% annually by 2033. This is facilitated by measures to promote natural polished diamonds, and large companies and industry associations have already announced their marketing initiatives aimed at boosting demand for polished diamonds.
Natural polished diamond sales (+2% - 4% annually)
According to the company’s forecast given in April during the Company’s Corporate Forum of Enterprising Workers (Khozaktiv 2025), the market for personal luxury goods, including diamond jewelry, would continue to grow steadily to reach $480 bn by 2030 from $363 bn in 2024.
According to De Beers, demand for rough diamonds remained subdued in the first quarter, as the midstream continued to replenish the inventories cautiously due to surplus of polished diamonds.
“While polished diamond prices showed signs of stabilization by the end of the first quarter of 2025, sightholders seem to remain cautious in the near future amid the ongoing macroeconomic uncertainty and under the influence of the U.S. tariffs,” the company said in late April.
Trump’s tariffs
The tariffs imposed by the U.S. president include a 10% duty on polished diamond imports, as well as variable ‘retaliatory’ duties depending on the country of origin. For India where over 90% of the world’s rough diamonds are cut and polished, the tariffs will be 26%. Although the USA has suspended the effect of the ‘retaliatory’ tariffs for 90 days, a 10% basic duty is already in effect and will remain in force. As the world’s largest buyer of polished diamonds, accounting for about half of the global demand, the USA consumes 30.4% of India’s annual polished diamond and jewelry exports estimated at $10 bn.
The new USA’s import duties turned out to be higher than expected, and India’s polished diamond exports, already suffering from sluggish demand in China, can fall sharply, Reuters writes. Weak consumption in China has already resulted in a 14.5% drop in India’s exports in the 2023-2024 fiscal year. India is expected to be hit particularly hard now, since the country of origin of final products - polished diamonds - is considered the country where they were cut and polished. Indian jewelry industry officials hope for a long-term bilateral agreement with the USA, otherwise, the $32 bn industry could face tough times in the future.
“Uncertainty is problematic”, says Paul Zimnisky, an independent diamond analyst. “When people are uncertain, they are hesitant to buy, hesitant to invest. I think there will be some impact on consumer discretionary items like luxury, like diamonds.”.
“The overall lower consumer sentiment on the background of higher uncertainty reduces the outlook for sales growth amid rising prices. This is true for both key jewelry markets - the USA and China that is the USA’s main adversary in the trade war,” states an Alfa Bank review.
After President Trump announced the new global tariffs, diamond shipments through Antwerp, one of the world’s busiest centres for polished diamond trading alongside Dubai, decreased to about a seventh of normal levels,” Karen Rentmeesters, CEO of the Antwerp World Diamond Centre (AWDC), told the FT. “It’s disrupting the industry. Everything literally ground to a halt.” Rentmeesters said it made “no sense” for diamonds to be included in US tariffs, and compared the turmoil in the industry to that caused by the coronavirus pandemic. Rentmeesters estimated that daily shipments were just a seventh of normal levels.
New York-listed Signet Jewelers (SPB: SIG), the world’s largest diamond jewelry retailer, informed its suppliers that it would not pay for any new tariff impacts on existing purchase orders, meaning it would require its overseas suppliers to pay the duties. In a letter seen by the FT, Signet also urged its suppliers to ship existing orders into the US as soon as possible, “with a focus on April and May”.
The industry also faces a unique challenge because a critical part of the supply chain - the certification process - is in the USA. The normal process of bringing diamonds into the USA for certification to be made by the world’s largest certification agency, the Gemological Institute of America (GIA), is now under threat, the FT notes. Pritesh Patel, Chief Operating Officer at GIA, said that GIA was bolstering its services overseas across its eight international offices, including Dubai and Hong Kong, to mitigate the impact of the tariffs. GIA is studying whether diamonds brought into the USA purely for certification could get an exemption from tariffs through a free-trade zone. “The tariff brings a lot of uncertainty to this entire supply chain end-to-end,” said Patel.
Sergey Bondarenko for Rough&Polished
