Diamond Market Update (April 12, 2012)

By Michelle Smith — Exclusive to Diamond Investing News

The first quarter closed with a sense of improving sentiment in the market, though the aggressive purchasing seen in the early months of 2011 has not returned. Retailers continue to be hesitant to make significant purchases despite the fact that their inventories are believed to be depleted.

Price sensitivity remains strong in the market as consumers are trending toward smaller, lower-quality, and more affordable diamonds. There also continues to be good demand for fancy colors and shapes.

According to the RapNet Diamond Index, Q1 saw prices for one and three carat polished diamonds fall by 2.7 percent for the quarter.

The two percent tax imposed on polished diamond imports is having a negative effect on India’s market, resulting in tightening credit conditions and a year on year decline in imports of about 80 percent. The rupee’s exchange rate volatility also weighed on trade, but rough demand appears to be improving.

Marange diamonds are reportedly plentiful and are apparently receiving a positive reception as prices strengthened during the quarter. Overall, the rough market showed signs of improvement in March.

Further modest improvement is expected in Q2, though concerns about Europe are still contributing to attitudes of caution. Continued steady demand from the Far East is expected as a source of market support, and moving into wedding season, positive bridal and engagement sales are fueling optimism about the US market.