Certified Diamond Prices Decline 3.6% in 1H 2012

Certified polished diamond prices fell in June as Far East and Indian demand stalled and industry liquidity dried up as the Indian Rupee collapsed, Rapaport reports. Year on year one carat prices declined 13.7%. Demand in the United States is steady but wholesale buying remains selective as consumer’s trend toward more affordable price points. Rough trading is at a standstill and DTC sightholders are rejecting overpriced De Beers boxes.
In June, the RapNet Diamond Index (RAPI) for 1 ct. certified diamonds fell 1.6 percent. The RAPI for 0.3 ct. stones declined by 1.2 percent and the RAPI for 0.5 ct. diamonds dropped 1.4 percent. RAPI for 3 ct. diamonds fell 1 percent during the month.
During the first half of 2012, RAPI for 1 ct. diamonds fell 3.6 percent with the steepest declines occurring during the latter part of May and through June. RAPI for 0.3 ct. stones dropped 3.7 percent and RAPI for 0.5 ct. diamonds declined by 3.6 percent during the period. RAPI for 3 ct. stones fell 5 percent during the half-year.
According to the just released Rapaport Research Report “Price Pressures,” polished trading has slowed with increasing concern about the global recession. Far East demand is sluggish as wholesale and retail buyers expect further price declines. Indian diamond manufacturers and dealers are under pressure due to high rough prices, the depreciating rupee, high inflation and a declining economy. Liquidity is tight and banks are viewing ‎new proposals with greater caution than before.
Rapaport estimates suggest that DTC sales fell 19 percent year on year to about $2.83 billion in the first half of 2012 as prices rose about 5 percent and the volume of supply dropped. Sightholders are losing money on their De Beers and ALROSA purchases and are refusing boxes. They will continue to do so until rough prices decline, which they inevitably will in the second half of the year.
The second half of 2012 is expected to be challenging for the diamond industry as Far East demand is projected to remain conservative in the near-term while India’s industry crisis may be more prolonged. Polished prices are coming under increasing pressure as global diamond market sentiment is expected to remain weak.