Certified polished diamond prices softened in February. Far East demand was steady, as evidenced at the Hong Kong International Jewellery Show. However, buyers remain cautious about the first half of 2012 as economic uncertainties persist and diamond trading is restrained.
The RapNet Diamond Index (RAPI™) for 1.00-carat polished diamonds fell 1.8 percent to 94.18 in February. The RAPI for 0.30-carat diamonds rose 3.6 percent to 16.04 and the RAPI for 0.50-carat diamonds rose 0.9 percent to 34.81. The RAPI for 3.00-carat stones fell 2.1 percent to 343.32.
India’s polished trade declined following the sudden government-imposed 2 percent import tax on polished diamonds. The recent stability of the rupee has partially restored consumer and trade confidence. Similarly, Israel’s trading saw some renewed confidence after the taxation and police authorities agreed to suspend, for one month, their investigations into company transactions in the Israel Diamond Exchange. The inquiries stymied polished trading in the bourse through January and February.
Rough trading is weak due to high prices that are impacting cutter’s profit margins. De Beers Diamond Trading Company (DTC) sales so far this year are an estimated 14 percent lower than the comparable period of 2011 while ALROSA sales are up 21 percent. Increased rough supplies from Zimbabwe’s Marange mines have also ensured sufficient rough on the market and are softening prices for lower quality goods.
According to the just released Rapaport Research Report, “Showing Restraint”, the diamond industry continues to operate with caution, avoiding large-scale purchases. While some of the lost confidence in trading was restored in February, the next few months are expected to present significant ongoing challenges to the diamond industry.