The diamond industry is facing another blow as diamond prices continue to plummet, impacted by a sluggish retail market, according to a Rapaport report. The RapNet Diamond Index (RAPI™) reported a 2.4% decrease in the prices of 1-carat polished diamonds in June, reflecting the ongoing challenges faced by the sector. This decline follows a series of setbacks and uncertainties that have cast a shadow over the diamond market.
De Beers’ 10-year sales deal with the Botswana government was a boost for the industry. Repeated delays, reported disagreements and threats of a breakup had created uncertainty. It remains to be seen how the new contract will affect sightholders, since the new terms grant state-owned trader Okavango Diamond Company a greater share of the country’s rough, Rapaport noted.
The market slowdown continued in June as weak US retail demand put the midstream under pressure. Jewellers avoided inventory purchases, buying only for specific orders and showing a preference for memo deals. Manufacturers maintained reduced polished production levels in response to lower sales and thinner profit margins.
Rapaport informed that dealer activity slowed amid falling prices. Synthetic diamonds also significantly damaged the natural-diamond market, especially larger sizes and engagement rings. Many of these trends were already visible in previous months but intensified during June.
The Chinese market was sluggish. The economic slowdown and depreciation of the yuan affected demand in the mainland. Trading was predictably muted at the Jewellery & Gem Asia Hong Kong show.
| RapNet Diamond Index (RAPI™) | ||||
| Index | June | Year to Date Jan. 1, 2023, to Jul. 1, 2023 |
Year on Year Jul. 1, 2022, to Jul. 1, 2023 |
|
| RAPI 0.30 ct. | 1,571 | -0.8% | 6.0% | -2.3% |
| RAPI 0.50 ct. | 2,398 | -3.4% | -10.2% | -23.0% |
| RAPI 1 ct. | 6,901 | -2.4% | -8.4% | -23.9% |
| RAPI 3 ct. | 23,596 | -0.9% | -4.9% | -15.8% |
© 2023, Rapaport USA Inc.
The RAPI also declined in other sizes and continued to downtrend during the first four days of July. Better-quality 0.50- and 1-carat diamond prices declined by over 23% year on year.
Polished inventory remained high but stable due to low production. Factories in India extended their May summer closures and kept their manufacturing volumes under control once they reopened. The number of diamonds on RapNet fell 1.5% during June, totalling 1.75 million on 1st July. However, the drop in supply was not enough to offset the slump in demand.