In 2013, prices for certified diamonds fell amid weakening demand growth in China and India, Rapaport reports. The diamond trade was supported by stable demand from the USA, and the main turnover was small diamonds of the lowest price category. By December, sentiment on the market improved due to good performance of holiday sales in the US and growing expectations for the Chinese New Year. However, liquidity in diamond cutting markets and in the dealer segment remains limited.
The margin of profit is very low, and banks have reduced the volume of crediting purchases of rough diamonds to participants in the polished diamond sector.
In December 2013, the price index RapNet Diamond Index (RAPI ™) for diamonds weighing 1 carat grew by 0.2%, while RAPI for smaller diamonds increased more significantly, continuing the trend, which was strengthening throughout the whole of 2013.
In 2013, RAPI for certified diamonds weighing 1 carat fell by 4.5%. RAPI for diamonds weighing 0.30 carats increased by 10.1%, and diamonds weighing 0.50 carats fell by 0.7%. With respect to diamonds weighing 3 carats, the index fell by 4% in 2013.
The Rapaport monthly report, entitled Improved Sentiment, in January 2014, notes that diamond trade has intensified due to increased demand in the last days before Christmas, which slowed in European and American wholesale markets during the subsequent holidays.
There was a good demand for small diamonds of commercial quality, as American consumers focused on special promotions and low-cost purchases during this festive season. It is expected that this trend will continue as the attention of all market participants is transferred to the Far East region, where the celebration of the Chinese New Year begins on January 31.
Retail sales of jewelry in the Far East were supported by high demand for gold, but it is expected that the major jewelry companies will make great efforts to encourage the growth in sales of diamonds and increase their profit margins.
In the first quarter of 2014, it is forecasted an improvement in diamond turnover due to demand during the Chinese New Year and the replenishment of stocks by American retailers. However, buyers remain conservative, and jewelry retailers are used to manage modest stocks. Diamond markets show selectivity and increased sensitivity to prices. Although the mood has improved, and the outlook for 2014 looks more optimistic, there are a number of problems in the diamond industry.