Rapaport Press Release: Midstream Struggling as Diamond Prices Soften

LAS VEGAS–(BUSINESS WIRE)–Diamond markets are under pressure as profit margins have tightened and
the trade war with China has fueled uncertainty. US jewelry sales are
robust, but the midstream is not profitable enough to support a
sustainable supply chain.

The RapNet Diamond Index (RAPI) for 1-carat diamonds fell
0.7% in May and is down 1.7% since the beginning of the year.

RapNet Diamond Index (RAPI)

Year to date
Jan. 1 to Jun. 1


Year on year
Jun. 1, 2018, to Jun. 1, 2019

RAPI 0.30 ct.       -3.7%       -9.4%       -15.8%
RAPI 0.50 ct. -1.7% -2.9% -5.9%
RAPI 1 ct. -0.7% -1.7% -3.4%
RAPI 3 ct.       -4.0%       -9.8%       -13.6%

© Copyright 2019, Rapaport USA Inc. Note:
The price decreases reflected in this report are influenced by the
inclusion of diamonds that were previously categorized below the RapSpec
A3+ standard.

Diamond trading was weak at the JCK Las Vegas show. Demand is selective,
with buyers avoiding inventory purchases. Jewelry retailers are taking
more goods on memo. Polished suppliers are offering technology and
source verification as a value-added service.

There is good demand for 0.60- to 1.99-carat, F-J, VS2-I1 diamonds.
Buyers are insisting on well-cut stones. Polished below 0.50 carats is
slow due to excess supply, weak Chinese demand and tight Indian

Cutters are operating at lower capacity as they try to reduce inflated
inventory. The number of diamonds on RapNet declined 2.6% to 1.5 million
stones in May, but was up 16% from a year earlier on June 1.

Manufacturers are rejecting high-priced rough that has made polished
production unprofitable. De Beers and Alrosa are carefully managing
production and price levels amid this year’s slow rough demand, as
outlined in the May edition of the Rapaport Research Report.

“Diamond demand is relatively good, but the middle markets are in danger
of collapse,” said Martin Rapaport, Chairman of the Rapaport Group. “We
are reaching the point where there is insufficient liquidity to support
the flow of diamonds through the supply chain. If the trade does not
change its business practices and adapt to new realities, the diamond
industry will suffer extreme financial and regulatory disruption.
Manufacturers will stop cutting.”

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Rapaport Media Contacts: media@diamonds.net
Sherri Hendricks +1-702-893-9400
International: Alex Shine
Mumbai: Prashant Bhojani +91-97694-66855

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