Certified polished diamond prices fell slightly in the first month of 2012, Rapaport reports. Cautious trading activity is expected to continue as polished buyers are waiting for clearer signs of stability before making large volume purchases. Mining companies, manufacturers, wholesalers and retailers are carefully monitoring their inventories but an oversupply of rough from Zimbabwe is throwing the market out of balance.
The RapNet Diamond Index (RAPI™) for 1.00-carat polished diamonds fell 1 percent to 95.95 in January. RAPI for 0.30-carat diamonds declined 3.9 percent to 15.48 and RAPI for 0.50-carat diamonds rose 0.3 percent to 34.49. RAPI for 3.00-carat diamonds fell 0.3 percent to 350.82.
Rough prices at tender were relatively stable during the month. ALROSA cut its prices in January while De Beers Diamond Trading Company (DTC) maintained high values on its boxes by adjusting assortments in its supply. DTC boxes are trading on the secondary market at low premiums.
Zimbabwe has ramped up production at the four concessions in the Marange fields to more than 1 million carats per month. The influx of these goods is expected to impact prices in the short term, particularly for low color, low quality rough. Inventories of rough are expected to grow and liquidity in the cutting centers may tighten as manufacturers hold on to the rough as long as polished demand remains subdued.
Rapaport stresses that the Marange goods are illegal to trade in the U.S. and the Europe Union. Rapaport maintains its ban on Marange goods on RapNet – Rapaport Diamond Trading Network.
According to the just-released Rapaport Research Report, Treading Carefully, the influx of a significant volume of Zimbabwe rough in the market may destabilize the current market equilibrium, while economic uncertainties continue to instill caution in the diamond trade. Trading levels are expected to remain flat in the first quarter as it remains unclear whether Far East and U.S. buyers will replenish inventories during the first quarter or delay their purchases until they gain confidence that prices have stabilized.
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