According to the Rapaport Monthly Report, polished diamond trading slowed in April due to sluggish demand at the start of a seasonally quiet period. The document also highlighted concern among diamond traders that consumer demand is weak.
Sentiment deteriorated during this period as the positive momentum from the first quarter failed to remain steady. Moreover, supplies significantly increased due to high rough sales and polished production in the first quarter.
Additionally, the RapNet Diamond Index (RAPI™) for 1-carat, GIA-graded diamonds slipped 0.3 per cent in April. RAPI for 0.30-carat diamonds fell 1.3 per cent and RAPI for 0.50-carat diamonds also declined 0.3 per cent. RAPI for 3-carat diamonds dropped 2.2 per cent. Although RAPI for 1-carat diamonds rose 1.2 per cent in the first four months of the year, it is still down 4.6 per cent from a year ago.
In the first three months of the year, polished inventory levels rose during a period of restocking. At this time, jewellers avoided any unnecessary build-up of inventory and took goods on memo, which put additional pressure on manufacturers’ liquidity.
Selective buyers offered lower prices for goods as new supply came forward in April. Suppliers held prices firm for better-quality RapSpec A2+ diamonds, but were more flexible on their older stock of lower-quality goods. Additionally, demand for diamonds 3 carats and up was weaker.
Moreover, manufacturers’ profit margins were squeezed as rough prices remained high during a period of weaker polished trading. According to Rapaport, demand for rough was healthy even as De Beers raised prices by an average of 2 per cent in April. However, rough demand is expected to slow starting in May, as manufacturing levels are steady. Polished trading is also expected to remain slower this month. During this declining global demand, dealers have shifted focus to the U.S. for the Las Vegas shows that begin May 31.
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