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polished diamond prices on downward trend

POLISHED DIAMOND PRICES CLOSE OUT 2022
ON A DOWNWARD TREND

 

From a price perspective, the polished diamond trade seemed to end 2022 on a downward slope, this despite the fact that major dealers were generally satisfied with the holiday season, although they remained cautious about their short-term prospects, reported the Rapaport news service.

According to Rapaport, polished prices continued to decline in most categories, with the RapNet Diamond Index (RAPI) for 1-carat diamonds falling 1.5 percent in December, and down 10.7 percent for the full year.

The RAPI for 0.30-carats rose 1.2 percent in December, but volume of 0.30-carat, D to H, IF to VS diamonds on RapNet declined around 60 percent during 2022, with lower supply explaining to the upturn in prices in November-December.

Rapaport noted that the midstream held historically high inventory in December, with more than 1.77 million diamonds listed on on RapNet as of January 1. This was the same as a year earlier but 46 percent more than on January 1, 2020. Suppliers thus reduced prices to offload less-popular goods and raise liquidity, Rapaport reported.

Manufacturers, too, kept polished production low, the news service stated, fueling concern for post-holiday restocking, as there have been fewer newly manufactured stones available than usual. Many expect De Beers to reduce its rough prices in January to stimulate demand, especially after prices on the secondary market decreased in the fourth quarter, Rapaport reported.

Polished trading was sluggish due to the seasonal lull, the lingering economic uncertainty, and the slowdown in China.

After the continued price declines of December, dealers remain unsure whether market conditions will carry on the downward trend of 2022 or return to growth in the year ahead, Rapaport stated.

RapNet Diamond Index

Source: Rapaport

A YEAR OF HIGHS AND LOWS

According to IDEX Online, from a price perspective 2022 proved to be a year of highs and lows, with its index hitting its highest point in over a decade, then nose-dived to close the year down 7.5 per cent overall – from 142.86 in January to 132.15 in December.

This was in contrast to what occurred during worst period of the COVID pandemic, aside from the very early months of 2020, IDEX noted. Then, its index was climbed consistently, and, when the lockdowns and travel restrictions were eased, it surged as never before, reaching a peak in March of 156.77.

But in 2022, the combined effects of the war in Ukraine, and a 40-year inflation high in the United States brought the price index crashing down.

But, in effect the sharp price rises had been an illusion, IDEX suggested. When the U.S. Federal Reserve printed an estimated $3 trillion to support the economy during the pandemic, the predictable consequence that prices would shoot up at home and far beyond. This created an anomaly rather than a trend, with in price index in overall decline since mid-2011, albeit with localized peaks and troughs.

LAB-GROWN VOLUME UP, BUT PRICES DOWN

Prices of laboratory-grown diamonds were also down in 2022, but against the backdrop if sharply higher sales volumes, reported diamond analyst Paul Zimnisky, in a report called “Lab-Diamond Sales Grow as Prices Fall.”

According to Zimnisky’s estimates, the global lab-grown diamond jewelry market grew to $12 billion in 2022, up 38 percent year-over-year, as more and more retailers, especially in the United States are adding the product to inventory, including majors chains like Signet Jewelers and Pandora.

IDEX Polished Diamond Price Index
Source: IDEX Online

At the same time, a better-than-medium-quality 1-carat solitaire lab-grown diamond has fallen in price to an estimated $1,400 at retail from $1,750 a year ago –and $1,950 two years ago. For context, a similar quality natural diamond that sells for $5,600 today sold for $6,200 a year ago and $5,900 two years ago, Zimnisky reported.

“The current dynamic of rising demand for lab-created diamonds but falling prices seems counterintuitive for the jewelry industry which has historically sourced primarily non-renewable natural minerals and metals, but lab-diamonds are a manufactured product based on an evolving technology,” Zimnisky said. But, he added, “the price fundamentals are reflective of growing demand but even faster growing supply, supply that is continuously being produced more efficiently.”

Zimnisky noted that declining lab-diamond capital equipment and production costs as well as increases in investment capital availability is resulting in increased production capacity which has boosted supply and pressured prices of lab-diamonds

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