Heading into a New Year

Last week we published our monthly report on the Mercury Diamond Global Tracker™ (MDGT™) for December, showing that prices of most round diamond size ranges between 0.30 carats to 2 carats rose during the last few months of the year. At the same time, our index, which covers a very wide range of goods has declined. It seems puzzling, but it really hides a sad truth about demand for polished diamonds around the world, mainly in the US and China, the two largest consumer markets.

Polished Diamond Price Index: Year Ends With Mixed Results

Prices of smaller goods, below one carat, continued to rise in December after increasing in November, responding to rising demand in the consumer market. Larger goods, however, which suffered from price declines in November, experienced a long-awaited revival, rising 1-1.5% in December, according to the Mercury Diamond Global Tracker™ (MDGT™). The MDGT™ index averaged 109.45 in December 2018.

Goodbye 2018, We Need Something New

As the year draws to a close, we at Mercury Diamond stopped to take a look at the state of polished diamond prices over the past year. We noticed that prices have been lingering for some time and decided to look at what some of the other diamond indexes in the market show. No surprise here, we all show pretty much the same scenario.

The US Holiday Season for Diamond Jewelry: Mixed

Familiar with the relationship status ‘It’s Complicated’? That is a good two word description of the diamond jewelry holiday selling season so far. As you may recall, diamond jewelry sales were sluggish during the 2017 holiday season, but ended with a last-minute rush by consumers. That happened during the last two weeks of December. Is that what will happen again this year? Maybe. What we do know is that at this point, sales seem lackluster. Mumbai-based wholesalers and traders selling in the US or to American buyers are reporting a slowdown in business. In the past, business peaked in December. This year, they are reporting that that the majority of their holiday business is probably behind them. This year business peaked in mid-November.

Mercury Polished Diamond Price Index: Only Smaller Sizes Improve

Prices of smaller goods recovered in November, responding to rising demand. Larger goods, however, suffered from further price declines. The Mercury Diamond Global Tracker™ (MDGT™) averaged 110.1 in November 2018, down 1.30% from October. Polished diamond price increases are a typical cyclical trend in November, as holiday season purchases drive demand. November is historically a period of rising demand for polished diamonds by retailers during the November-December holiday season. In the past few years, demand by jewelry manufacturers peaked in September, followed by a minor slide in October and a rise in November. The question is what goods are in demand, and therefore rising, as opposed to those items that are in lesser demand.

Diamond Prices are Sliding, and that is A Warning Sign

In the past few months, we have witnessed polished diamond prices decline. They are sliding downward at a slow pace, with an occasional small rise before sliding again. So far this year, overall polished diamond prices lost 2.9%, according to Mercury Diamond Global Tracker™ (MDGT™). The majority of the decline took place in the third quarter of the year – 1.3%. Moderate price declines are not usually a source of great concern. What should worry the industry are the forces pushing polished diamond prices downward, the long-term trend, and the implications they may have on the industry at large.

November 2018 Market Report: Less Demand Than Hoped For

From the perspective of the diamond wholesale market, the November-December holiday season is off to a slow start. Traders disappointedly reported a relatively sluggish demand from retailers. Demand, where it did exist, was focused on very specific items, largely focused on top makes. As a result, stock-building aversive traders felt forced to reduce prices on goods in lower demand.

What Happens in Antwerp Doesn’t Stay in Antwerp

If you want to understand the problems of the diamond industry, look no further than the rough diamond trade in Belgium’s diamond center in Antwerp. It is a microcosm that paints a painfully accurate picture. In the first ten months of 2018, Antwerp imported $9 billion worth of rough diamonds. The total weight of those imports was 74.65 million carats, according to data published by Antwerp World Diamond Centre (AWDC). Exports of rough diamonds in January-October 2018 totaled $10.5 billion. The total volume of imports was 98.3 million carats.

Mercury Polished Diamond Price Index: Prices Fairly Steady

After polished diamond prices declined sharply in September, they took an additional step downwards, though it was not particularly significant. The Mercury Diamond Global Tracker™ (MDGT™) averaged 111.55 in October 2018, down 0.17% from September. While demand for loose diamonds remains slow, we believe traders hardened their stance on price as much as possible in anticipation of rising demand. October is historically a period of rising demand for polished diamonds by retailers preparing for the November-December holiday season. In the past few years, demand by jewelry manufacturers peaked in September, followed by a minor slide in October. Every October since 2014, overall prices have declined by a few fractions of a percent. In the last five years this month-over-month decline averaged 0.3%, putting this past month’s price declines on the lighter side. This year was unusual due to a deep price decline in September, which may explain the relatively smaller decline in October. Another issue in the trade-impacting prices is a large inventory, mainly of small size polished diamonds. This oversupply, coupled with the lower demand, has implications for the mid-stream of the diamond pipeline as well as diamond mining companies.

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