Trans Atlantic Gem Sales (TAGS) has summed up the results of May tender in Dubai and came to disappointing conclusions - the rough diamond market is in a sluggish state due to weak demand for polished diamonds.
According to the press release, the seasonal slowdown in April was aggravated by weak demand in the Chinese and American markets, and as of early May the rough market was at complete instability. Polished prices in the higher quality VS+ continued to slide, while SI material, the area hit hardest last year by LGB, are on the rise, maintaining the trend observed since January.
Polished diamond sales were slow in April as high inflation and interest rates affected consumer spending in America. Chinese buyers still prefer to invest in gold rather than diamonds. Another point of concern was a comment of De Beers CEO' (Idex 07 th May) that “many Chinese consumers see no difference between LGD and natural” taking no account for the value proposition. As a result, the rough diamond market is stagnating due to low demand for polished diamonds.
De Beers May Sight saw price reductions in sizes -6grs of between 4-6%, with the higher end of reductions on -3grs material. Prices of 5-10 cts increased slightly, but mainly because of improved assortments. Manufacturers feel the reductions are still insufficient.
Further tension in the diamond market was created by delays in the exit of goods from Antwerp customs in April due to European Union rules concerning sanctions on Russian rough diamonds. Plans to make Antwerp a single inspection point for all diamonds entering the G7 countries faced tremendous opposition from the entire industry. News of a potential bid for Anglo American Corp. and rumors of a possible sale of De Beers added to the state of uncertainty in the industry. Traders' attention is now likely to focus on the upcoming Las Vegas trade show in hopes that it can revitalize the wholesale market ahead of the holiday season.
A range of high quality South African products was presented at TAGS tender in May and the result was mixed, with more than an average volume of goods failing to reach the sale price. Reduced confidence in the rough diamond market combined with a vacation at factories in India were the main factors behind the current crisis.
The factories will reopen at the end of May and it is hoped that there will be some restocking while prices remain stable.
The next tender in Dubai is scheduled for June 11-16.
Hélène Tarin, Editor in Chief of the Asian Bureau, Rough&Polished
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