Diamond supply shortages raise prices as the market stabilized in May. Polished diamond supply shortages supported increased prices and dealer demand for certain select items. Indian diamond dealers have reported to be maintaining a lower polished production line. During the summer vacation period manufacturers are either closing factories, extending leaves or lowering production hours. The result of this reduced production is directly linked to the diamond supply shortages raise in price. Furthermore, this prompted the RapNet Diamond Index in the 1 carat category for laboratory graded diamonds to rise 0.50 percent during the period of May 1 through May 22. The RapNet Diamond Index also saw a 0.80 percent increase in price during the same period.
As prices stabilized the diamond market, the general mood was positive although trading and sales remained relatively slow. Focus shifted to filling orders as they came in and there was still very little buying for inventory. Many had hoped the Las Vegas JCK jewelry trade show would encourage retailers to purchase for stock however this was not the case as retailers demonstrated resolve in the face of heavy marketing and pressure to buy.
U.S. independent jewelry retailers are managing to get by with lower inventory levels. They are no longer interested in buying when suppliers are eager to give on memo at the same cost out of desperation to sell. This puts extreme pressure on mid-level dealers because they have no choice but to comply with the new standard or be pushed out by their own clientele. Despite the friction, his causes the retailers are managing to get by on smaller margins. The general mood could be described as wait and see with a focus on the right inventory rather than an overstocked inventory. Despite the less these less than ideal reports demand in the USA has been at least stable.
Diamond supply shortages have affected the far east with grim reports of weak trade and demand plaguing the industry. Polished diamond imports to the U.S. increased 5 percent year on year to $5.73 billion in the first quarter of 2015. Having shown steady growth in the past three years. With that said, even more goods are leaving the U.S.. A 12 percent increase in exports that total at 4.9 billion during the first quarter. Consequently, the imports that stayed in the USA for local trading and consumption fell a staggering 23 percent to $830. Thus suggesting a major contraction during the first quarter. It should be noted that the export of smaller diamonds below the 0.50 carat marker has strengthened considerably by US dealers and furthermore that US dealers are major suppliers of these goods to new markets in the far east.
According to data published by the Diamond Association of Hong Kong, China, imports of polished diamonds below 1 carat from the U.S. increased 15 percent during the quarter. At the same time polished imports fell 2 percent to 4.84 billion, while polished imports fell 6 percent to $1.4 billion during the same quarter. The mood during may in Hong Kong has been one of fear and caution with dealers reporting that global demand has become soft and attribute that to retarding of China’s economic growth. Many suggest this slowing down of China’s diamond demands are twofold; one, diamond supply shortages have affected supply’s and secondly China’s government crackdown on corruption, and conspicuous consumption continues to affect open displays of wealth and luxury spending. Meanwhile, sales of lower quality gem-set jewelry kept steady momentum in sales yet failed to inspire stronger diamond trade and purchase.
Diamond supply shortages have affected the manufacturing sector as well. Manufacturers blame rough diamond prices for the shortcoming of diamond demand. In response to this De Beers lowered its rough diamond prices. A total of 3% during its May sight holders tender. Dealers noted a steep drop in assortments, sizes, and qualities at the May tender. The sight had an estimated value of $470 million. Sight holders had come to expect a smaller assortment of goods to choose from. A number of goods deferred or outright refused was less than in previous years. Manufacturers expect to begin ramping up their polished production levels by the end of June. De Beer’s diamond boxes were trading on the secondary market at very slight premiums. They offered credit terms of up to 90 days.
Diamond Supply shortages are a concern for dealer and manufacturers alike.
http://www.wallstreetdaily.com/2014/09/09/diamond-shortage/
http://www.gia.edu/gem-lab-service/diamond-grading