April sees slower diamond trading with positive sentiment

Diamond trading slowed in April, marking the start of the traditionally quieter second quarter. Despite lower trading volumes, sentiment was positive due to improving retail expectations in China.

 

At this time, the trade’s focus shifted to the U.S. ahead of the Las Vegas shows. Dealers held off from closing deals, anticipating that Las Vegas would boost activity.

 

The RapNet Diamond Index (RAPI) for 1-carat polished diamonds slid 0.3 percent in April and was down 1.4 percent since the beginning of the year.

 

Amid sluggish polished markets, rough trading remained strong. Manufacturing returned to near-full capacity as the large Indian factories ramped up operations following the November Diwali break. Polished inventory is rising, with the number of stones listed on RapNet having increased 3.5 percent in April and 7.5 percent since Jan. 1.

 

Strong rough markets enabled the major mining companies—Alrosa and De Beers—to reduce inventory as their combined first-quarter sales volume exceeded production by 11.9 million carats. Global diamond production is expected to rise an estimated 12 percent in 2017, as miners have committed to produce according to rough demand.

 

The Rapaport Monthly Report for May notes that the buoyant rough market is not supported by current levels of polished demand. Rough prices firmed 2 per cent to 3 per cent since the beginning of the year, while polished prices softened.

 

A continuation of these trends will put stress on the manufacturing sector, as liquidity and profitability may be eroded. After a period of improved profit margins and responsible trading in 2016, manufacturers must tread with caution, as the polished market tends to slow in the second quarter.

 

The full Rapaport Monthly Report can be purchased at store.rapaport.com/monthly-report.

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