Diamond markets were quiet in October with wholesale businesses closing for the respective Chinese, Jewish and Indian holidays. Trading slowed as larger U.S. holiday orders were already filled and dealers shifted to accommodate specific requirements from their retail customers.

The RapNet Diamond Index (RAPI™) for one-carat, RapSpec-A3+ polished diamonds fell 2.3% in October. The index dropped 4.3% in the first ten months of the year.

RapNet Diamond Index (RAPI™)
October YTD
January 1 – Nov. 1
Changes at Nov. 1
RAPI 0.30 ct. -0.5% -0.2% 6.4%
RAPI 0.50 ct. -1.6% 1.9% 5.4%
RAPI 1.00 ct. -2.3% -4.2% -2.8%
RAPI 3.00 ct. 1.2% -8.7% -9.3%

Copyright © 2016, Rapaport USA Inc.

Market sentiment improved after the September Hong Kong show but polished trading remained sluggish and inventory levels relatively high. Rough demand softened as rough prices firmed in October and Indian diamond manufacturers scaled down operations before closing for Diwali.

While rough demand slowed in October, mining companies continue to register strong growth compared with 2015 when demand slumped due to low manufacturing profitability and high polished inventory. De Beers sales volume rose 90% in the third quarter, while ALROSA’s increased 69%.

Manufacturing profits remain tight due to sluggish polished demand, while rough trading was relatively strong in the third quarter. India’s rough imports soared 54% to $4.2B in the third quarter, a record for the period, while its polished exports grew 15% to $6.1B.

The industry’s focus shifted to retail as Diwali, Christmas and the Chinese New Year provide important jewelry selling opportunities in the major consumer markets. We expect moderate U.S. jewelry sales growth this Christmas, relative stability in China but weakness in Hong Kong, while reports signal steady gold sales in India during Diwali.

However, holiday jewelry sales are unlikely to stimulate a sustainable rise in diamond trading and polished prices are expected to remain under pressure for the rest of 2016 and into 2017. That should cause rough prices to soften in the long term. With sufficient stock in the midstream, the diamond trade continues to re-align its inventory with lower levels of demand while there is still an overhang of supply from previous years.