As the year approached its conclusion, the diamond trading sector experienced a slowdown in late December, with wholesalers taking time off during the Christmas and New Year period, according to Rapaport. Amidst sluggish US consumer demand and growing competition from synthetic diamonds, the industry adopted a cautious stance.
Reports indicated that the overall holiday season for the jewelry market was weaker compared to the previous year but fell in line with anticipated trends. Mastercard SpendingPulse data revealed a 2% year-on-year decline in US jewelry sales from November 1st to December 24th. Interestingly, there was a 7.8% increase in restaurant revenues, signaling a shift from product-oriented purchases to experiential spending. Meanwhile, Chinese diamond demand continued to remain lackluster amidst an economic downturn.
Prices of polished diamonds saw an uptick across most categories, largely credited to India’s two-month voluntary freeze on rough diamond imports, which ended on December 15th, helping to reduce inventories. November witnessed a substantial 76% year-on-year decline in India’s rough diamond imports, totaling $314 million. As manufacturers faced reduced pressure to sell due to decreased cash requirements for rough diamond purchases, Rapaport observed that holiday orders provided support to prices for 1- to 3-carat, F-I, VS-SI, RapSpec A3+ diamonds.
In December, the RapNet Diamond Index (RAPI™) reported a 0.1% increase for 1-carat diamonds. Moreover, the index for 0.30-carat stones rose by 1%, while the 0.50-carat RAPI experienced a notable climb of 2.2%. However, prices for fancy-shaped diamonds remained relatively stable or saw a marginal decline.
Despite facing their worst full year on record with declines of 26% and 21% in the 0.50- and 1-carat RAPI categories respectively, signs of improvement emerged from November onwards. This positive trend was attributed to heightened purchases by US retailers for the holiday season and reduced polished production in Indian factories. In the course of 2023, the number of diamonds on RapNet decreased by 8%, totaling 1.6 million as of January 1, 2024.
Some sightholders anticipate potential adjustments in the market, expecting De Beers to reduce rough diamond prices in January to stimulate sales. Rapaport stressed the importance for manufacturers to synchronize their purchases with polished demand to avoid potential oversupply, which could immediately impact polished prices.
Furthermore, January marked the commencement of broader Group of Seven (G7) restrictions on Russian diamonds. With an expanded ban on any polished resulting from Russian rough starting on March 1, Rapaport highlighted the potential significant impact on supply dynamics due to the implementation of these restrictions.
