Diamond Market Update (September 27, 2012)

Some improvement is being seen in rough diamond trade now that ALROSA (MCX:ALNU) and De Beers have reduced volumes and cut prices by around 10 percent.

Though the market was fairly quiet in August, the fall of polished prices moderated. The RapNet Diamond Index reported price declines of less than 1 percent for 0.30, 0.50, 1 and 3 carat weights at the beginning of September. But looking at the year-on-year figures reveals a gloomier picture as all of those categories posted double-digit declines. 1 carat diamonds, for example, are 16.7 percent below price levels from this time last year.

Diamond sellers were hoping the Hong Kong Jewellery & Gem Fair, which ran from September 19 to 23, would provide a positive indication of the times ahead. If graded on that criteria, however, the show would likely be deemed a disappointment as one of the most notable takeaways was that there is demand for inexpensive, low-quality goods, especially from Far East buyers.

That is but one reminder that the market remains sensitive to prices. Another is the strengthening demand for fancy diamonds in the US as the market for round diamonds continues to deteriorate.