By most accounts, the first quarter of 2014 was positive for the diamond industry. Polished prices rose, turnover increased and liquidity improved, after a challenging year in 2013. Rough prices also increased and continue to challenge profit margins and liquidity.
[two_third]However, at least in the short term, profit margins improved as polished sales garnered higher prices and were made predominantly from goods manufactured from rough bought during the fourth quarter of 2013 – when rough prices were reduced. While diamond manufacturers have enjoyed the reprieve, they question whether current higher rough prices are sustainable and suspect that their profit margins will be squeezed again when new rough enters the market as polished in two to three months.[/two_third][one_third_last]
” Profit margins improved as polished sales garnered higher prices.”
[/one_third_last]
Therefore, concerns remain about profitability as further rough price increases are expected in the second quarter. In fact, rough producers may take the current positive sentiment as a catalyst to raise prices already in April, with the De Beers sight taking place next week.
