Diamond prices continued to fall in September maintaining a long-term downtrend that started in mid-2011. Apart from the positive first quarter of 2014, when polished prices rose, average prices have been on a consistent, gradual decline. As a result, September marked the end of another weak quarter for the diamond trade.
In fact, the third quarter was arguably the weakest quarter recorded in two years. The RapNet Diamond Index (RAPI™) for 1-carat lab-graded diamonds – D to H color, IF to VS2 clarity – fell 4.7 percent during the quarter. All four categories tracked by Rapaport News – RAPI for 0.30-carat, 0.50-carat, 1-carat and 3-carat diamonds – declined.
The downtrend has not gone unnoticed by the mainstream press. In mid-September, The Wall Street Journal cited the Rapaport Research Report – September 2014, among others, to state that “diamonds continue to lose their sparkle.”
Indeed, the article quoted the author of this column to state that demand has shifted to smaller diamonds as China’s middle class has grown and matured toward new, more affordable categories of diamonds – particularly for 0.30-carat to 0.50-carat stones, which consequently bucked the downtrend in the past year and a half. The third quarter of 2014 signaled another shift in demand – this time away from the 0.30-carat and 0.40-carat diamonds, suggesting just how price sensitive the diamond trade has become.
[two_third]Anecdotal reports suggest that the third quarter decline was influenced by both supply and demand factors, particularly evident in September.[/two_third]
“The apparent slump in prices does not mean that the market is depressed. There is sustainable demand in the U.S. and the Far East, as was evident at the Hong Kong show, but demand has shifted to lower-quality, larger diamonds.”
