The latest Rapaport Diamond Index (RAPI™) revealed a decline in diamond prices, with 1-carat polished diamonds experiencing a 1.2% drop in May. The index, which stood at 7,072 on 1st June, compared to 7,537 at the beginning of the year, also showed declines in other diamond sizes.
The subdued trading observed at the JCK Las Vegas show reflected the prevailing uncertainty in the overall market, Rapaport said. While the finished jewellery section saw relatively stronger activity, the diamond pavilion experienced slower trading. Jewellers, grappling with weak consumer sentiment and increased competition from synthetic diamonds, have curbed their buying and lowered their short-term expectations, it informed. These factors have contributed to the ongoing downtrend of the RAPI during the first week of June.
“There is concern about the state of the diamond market,” said Martin Rapaport, Chairman of the Rapaport Group. “Demand has declined from the highs of 2021-2022 as economic uncertainty has impacted buyer sentiment.”
| RapNet Diamond Index (RAPI™) | ||||
| Index | May | Year to Date Jan 1, 2023, to Jun 1, 2023 |
Year on Year Jun 1, 2022, to Jun 1, 2023 |
|
| RAPI 0.30 ct. | 1,584 | -1.6% | 6.9% | -2.5% |
| RAPI 0.50 ct. | 2,484 | -3.5% | -7.0% | -21.6% |
| RAPI 1 ct. | 7,072 | -1.2% | -6.2% | -23.4% |
| RAPI 3 ct. | 23,801 | -1.1% | -4.1% | -15.7% |
Source: Rapaport Group
The rising demand for lab-grown diamonds has had an impact on the natural diamond market, particularly in the SI2- to I2-clarity range. However, the oversupply of lab-grown diamonds has led to a significant devaluation of their prices.
The polished diamond inventory remains high, with the number of diamonds listed on RapNet increasing by 1.7% in May, reaching a total of 1.78 million on 1st June. The midstream sector is struggling to reduce inventories of lower and commercial quality diamonds. In response to the challenging market conditions, manufacturers have scaled back polished production, while the demand for rough diamonds has also declined.
In an effort to stimulate demand, De Beers has lowered prices during its June sight and expanded its buyback program to include more categories than in the past. Additionally, the company is expected to introduce more flexible supply terms in the second half of the year.
Despite the challenging market conditions, the Las Vegas shows did not significantly impact the overall market. US jewellers are adopting a cautious approach, buying only what they need and avoiding large inventory purchases. The high-end market segment remains strong, supporting demand for large stones. However, middle America is feeling the effects of high inflation and rising interest rates, resulting in decreased orders for 1- to 3-carat diamonds, Rapaport noted.
Martin Rapaport emphasised that the market is under pressure as consumer budgets tighten. Nevertheless, he highlighted that the US continues to be the strongest market for diamond jewellery. Companies that can adapt to shifting consumer habits are gaining market share and showcasing the resilience of the US diamond market.