Diamond prices continued to decline in September as an oversupply in the market pressured prices downward, according to the latest RapNet Diamond Index (RAPI™) data.
The month saw significant price reductions across various diamond categories, with the overall market yet to stabilise.
RAPI Declines in All Categories
The RAPI for 1-carat diamonds, reflecting round, D to H, IF to VS2 stones, fell by 4.1% in September. Similar trends were observed across other diamond sizes, with prices of 0.30-carat and 0.50-carat diamonds dropping by 4.0% and 4.2%, respectively. Meanwhile, 3-carat diamonds experienced a more modest decline of 2.5%. Year-to-date, the RAPI for 1-carat diamonds has fallen by 21.6%, highlighting ongoing challenges in the market.
Lower-quality diamonds saw a gentler decrease, with 1-carat, D to H, SI diamonds slipping by 3.5%. Fancy-shaped diamonds also experienced less significant declines compared to round stones, demonstrating the varied impact of market conditions across diamond categories.
Market Forces Impacting Prices
The price reductions come as the industry grapples with oversupply issues. Indian manufacturers, a key player in the global diamond cutting and polishing market, have responded by reducing their purchases of rough diamonds and slowing polished production to address the imbalance between supply and demand. While polished inventories have begun to decline, insiders predict it will take several weeks for these inventories to return to more sustainable levels.
In contrast to the price drops, shortages of certain high-demand items are expected in the near future as a result of the slowdown in production. These shortages could potentially stabilise prices in specific categories, but overall sentiment remains cautious.
Regional Trends and Retail Environment
Regionally, the global diamond market continues to face mixed conditions. The US retail sector remained relatively stable as jewellers refrained from aggressive restocking ahead of the holiday season, instead focusing on memo stock arrangements. Caution was evident among wholesalers and retailers, with many opting to hold off on significant purchasing decisions amid the ongoing price volatility.
In India, the domestic jewellery market has provided some support, particularly for diamonds under 1 carat. However, in China, retail demand for diamonds remains weak. These trends were reflected at recent trade events, including Hong Kong’s Jewellery & Gem World show, which saw slow trading activity due to the absence of many Chinese buyers. Sentiment among diamond dealers was similarly muted at the Vicenzaoro fair in Italy, although exhibitors showcasing finished jewellery reported more positive outcomes.
Rough Diamond Market Sees Reduced Activity
The rough diamond market also experienced a significant downturn, with India’s net rough imports plummeting 47% year on year in August to $642.3 million, marking the lowest level since November 2023. Belgium’s diamond trade also suffered, with combined rough imports and exports falling by 33% year on year in September.
Despite the challenges, major rough diamond producers such as De Beers and Alrosa have opted to maintain price stability. De Beers allowed deferrals of purchases at its September sight while keeping rough prices firm, a strategy Alrosa echoed by announcing it would hold prices steady for the time being. This approach signals the miners’ intent not to exacerbate the market’s oversupply by flooding it with additional rough diamonds.
Industry Outlook
As jewellers look ahead to the holiday season, the continued decline in diamond prices poses both challenges and opportunities. While lower prices might benefit consumers, cautious restocking by retailers suggests an uncertain short-term outlook for the diamond trade. However, as supply adjusts to meet demand, the market could see gradual improvements in inventory levels, potentially easing some of the current downward pressure on prices. For jewellers, the key will be navigating these fluctuations while managing inventory and pricing strategies carefully in response to both local and global trends.
