Wholesale polished diamond prices rose in January in response to improved demand and lower wholesaler inventories. The rise in wholesale polished diamond prices started in December, as wholesalers witnessed a late rise in demand from US retailers.
Polished diamond prices rise 1.4%
After a year of slow jewelry demand, subsequently hurting demand for diamonds from wholesalers, US jewelry sales popped up 4.4% in December, according to the US Department of Commerce. Wholesale prices of 1-carat round diamonds rose 3.7% in January, based on manufacturers’ wholesale transaction prices.
On average, wholesale polished diamond prices have increased 1.4%, with only one size range, 0.70-carat goods, posting a decline compared to December 2019. The recent rise in prices caps five years of waning prices that were preceded by tumbling prices between mid-2011 and early 2015.
Not an evolution, but a revolution
In response to the decline in inventory and rising demand, wholesalers have increased their rough diamond purchases, which are expected to fuel manufacturing activity. This could be the start of another vicious cycle of available money followed by exaggerated rough diamond demand, then rising rough diamond prices, and oversupply of polished diamond leading to the inevitable polished diamond price fall.
The diamond industry is going through major changes that cannot be simply described as an evolution. “Revolution” is a term that better describes the changes: a drop in bank financing that has forced a growing reliance on self-financing, a far more streamlined manufacturing process, the exiting of many mid-size trading companies that did not add value, and a growing understanding that sticking to “this is how we always did it” is no longer a viable business mantra.
If this is the start of a more cautious approach, than these vicious overbuying/stuck with oversupply cycles will be averted.
