Diamond Trading Slows in March

Diamond Trading Slows in March

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1-carat RAPI up 2.8% in 1Q

The RapNet Diamond Index (RAPI™) for 1-carat diamonds slid 0.1% in March. RAPI for 0.30-carat stones rose 0.4%, while RAPI for 0.50-carat grew 1.1%. RAPI for 3-carat diamonds declined 0.4% during the month. RAPI for 1-carat rose 2.8% during the first quarter.

Diamond prices stabilized in March, but sentiment softened after a positive start to the year. Dealers were disappointed with the Hong Kong diamond show, while a major bank fraud involving two Indian jewelry companies impacted confidence as well.

The RapNet Diamond Index (RAPI™) for 1-carat diamonds slid 0.1% in March. RAPI for 0.30-carat stones rose 0.4%, while RAPI for 0.50-carat grew 1.1%. RAPI for 3-carat diamonds declined 0.4% during the month. RAPI for 1-carat rose 2.8% during the first quarter.

Allegations that jewelry tycoon Nirav Modi spearheaded a $2 billion fraud against India’s state-owned Punjab National Bank fueled concerns that lenders would tighten credit to the diamond sector. Other banks have already raised their collateral requirements, and the financial year that began April 1 is likely to see a liquidity squeeze. Some large manufacturers with sizable credit lines are facing greater scrutiny.

Manufacturers are also under pressure from the rough side after De Beers raised prices an estimated 2% to 3% in the first quarter. Cutters are protecting their profits with steady polished prices, and buyers have adapted to the higher rates that emerged in January and February. Retailers are supporting demand by restocking after good US and Chinese holiday seasons.

The Hong Kong show was slower than expected, but the outlook for China remains positive. Consumers have acclimated to Premier Xi Jinping’s rule and are starting to spend again. A shortage of eligible women is leading men to prove their value and spend more on diamonds.

The Hong Kong-driven recovery in the watch industry lifted the mood at Baselworld, but diamonds continue to lose status at the event. New trade shows in Antwerp (Carat+) and Geneva (GemGenève) during May might provide suppliers with better selling opportunities in the high-end European market.

Rapaport expects polished trading to continue slowing in the coming months, as the second quarter is traditionally a quieter period for the diamond trade.

Source: Business Wire India