Polished diamond prices fall as demand weakens

Insiders claim drop in prices due to reduced demand from China, Hong Kong, other Far East nations; sentiment to remain subdued till December

Polished diamond prices have declined in the range of 3-5 per cent, leaving diamond traders and stockists at Surat jittery. A fall in polished diamond prices has resulted in reduced margins for diamond traders, who have imported rough diamonds at higher prices and now forced to sell polished goods at lesser price.

A recent weekly Rapaport price chart has showed diamond prices in different categories have fallen by over 2.5 per cent.

"This is a bad indication for the diamond units as rough prices have remained high, while polished diamond prices have fallen. Polished diamond prices have fallen for the first time in recent months," said Pravin Nanavati, a former president of Surat Diamond Association (SDA) and a diamond expert. Surat houses around 40,000 small and large diamond units.

Earlier this month, Rapaport's Rapnet Diamond Index (RAPI) showed that prices for certified one carat diamond fell to the tune of 9.6 per cent from July last year.

Polished diamond demand has remained weak during May-June and July. In the short term to medium term, the diamond traders have maintained cautious outlook for the diamond demand.

"Normally, diamond exporters become upbeat with higher dollar against rupee. But fall in polished diamonds has erased most gains from the sale of diamonds. Not much improvement in the situation is visible till December unless there is a fall in rough diamond prices," said a diamond exporters from Surat.

Industry insiders claimed that a drop in diamond prices is attributed to reduced demand from key markets such as China, Hong Kong and other Far -East nations.

"There has been slackness in demand from these markets. We are seeing positive indications from the US and European regions. But weak market situation in China and Japan has adversely affected diamond demand," a diamond trader from Surat said.

Polished diamond prices had remained relatively, stable in the first half of 2013. But prices started falling from May-June period. The demand in Asian region dropped sharply in July, thereby pushing the diamond prices further down.

Interestingly, a recent Kimberley Process annual report for 2012 showed that global rough diamond production by volume has increased by 10 per cent year-over-year. This, according to industry players, is likely to bring down rough diamond prices over a period of time.

Botswana, Russia and Canada remained a top three positions in the global diamond industry in terms of rough diamond production. As per the KP annual report, around 127.962 million carats of rough stones were produced worldwide in 2012, and they were sold for $ 12.64 billion, for an average price of $98.81 per carat.

"We are not aware of the KP report and rough diamond prices have also not shown any downward trend. On the contrary prices continue to remain high making leaving only a wafer thin margin for the diamond players," said Nanavati.