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Change in diamond indices for the previous month
  1. 0.30-0.39 Carat Rounds D-M IF-SI213.63-0.12 (-0.9%) 0.30-0.39 Carat Semi Rounds D-M IF-SI29.64-0.12 (-1.2%) 0.30-0.39 Carat Squares D-M IF-SI28.130.06 (0.7%) 0.50-0.69 Carat Rounds D-M IF-SI220.700.09 (0.4%) 0.50-0.69 Carat Semi Rounds D-M IF-SI215.740.44 (2.9%) 0.50-0.69 Carat Squares D-M IF-SI213.04-0.21 (-1.6%) 0.70-0.89 Carat Rounds D-M IF-SI227.050.11 (0.4%) 0.70-0.89 Carat Semi Rounds D-M IF-SI220.850.22 (1.1%) 0.70-0.89 Carat Squares D-M IF-SI216.940.10 (0.6%) 1.00-1.49 Carat Rounds D-M IF-SI252.11-0.23 (-0.4%) 1.00-1.49 Carat Semi Rounds D-M IF-SI235.000.04 (0.1%) 1.00-1.49 Carat Squares D-M IF-SI227.420.85 (3.2%) 1.50-1.99 Carat Rounds D-M IF-SI264.94-1.36 (-2.1%) 1.50-1.99 Carat Semi Rounds D-M IF-SI252.211.08 (2.1%) 1.50-1.99 Carat Squares D-M IF-SI245.551.31 (3.0%) 2.00-2.99 Carat Rounds D-M IF-SI292.17-1.57 (-1.7%) 2.00-2.99 Carat Semi Rounds D-M IF-SI269.87-0.50 (-0.7%) 2.00-2.99 Carat Squares D-M IF-SI258.50-0.33 (-0.6%) 3.00-3.99 Carat Rounds D-M IF-SI2141.00-0.53 (-0.4%) 3.00-3.99 Carat Semi Rounds D-M IF-SI2104.54-1.59 (-1.5%) 3.00-3.99 Carat Squares D-M IF-SI291.021.02 (1.1%) 5.00-5.99 Carat Rounds D-M IF-SI2230.68-1.01 (-0.4%) 5.00-5.99 Carat Semi Rounds D-M IF-SI2185.951.79 (1.0%) 5.00-5.99 Carat Squares D-M IF-SI2156.150.06 (0.0%) 10.00-14.99 Carat Rounds D-M IF-SI2399.28-0.58 (-0.1%) 10.00-14.99 Carat Semi Rounds D-M IF-SI2340.740.67 (0.2%) 10.00-14.99 Carat Squares D-M IF-SI2341.510.67 (0.2%) 20.00-29.99 Carat Rounds D-M IF-SI2561.61-1.16 (-0.2%) 20.00-29.99 Carat Semi Rounds D-M IF-SI2459.870.00 (0.0%) 20.00-29.99 Carat Squares D-M IF-SI2459.840.00 (0.0%)

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Mercury Polished Diamond Prices: Slight Price Declines in March

Mercury Polished Diamond Prices: Slight Price Declines in March

The polished diamond price increases that characterized the start of the year have largely ended. With few exceptions, prices of diamonds in all categories headed down in March, ending the positive run that began with the consumer rush in the US in late December. It continued throughout January and February, and ended on the back of the gem trade show in Hong Kong that fell below expectations.

The March declines, if continued into April and May, will continue the trend of polished diamond price declines that started in mid-2014 and continued almost uninterrupted until December 2017. The direction that prices will take in the next couple of months is important, because it will signal one of two understandings of the consumer market: if the price declines in March are temporary and start rising again in April and May, we will know that the extended price decline hit rock bottom, and the diamond industry will have a good understanding of what consumers are willing to pay.

If, however, prices continue to decline in the coming months, this would indicate that prices are still too high, and the diamond industry, from polished wholesalers to rough diamond miners, will continue to contract until the new price base is found.

The one category where polished prices increased in March was the 0.30-0.39-carat size range of rounds. According to the Mercury Diamond Global Tracker™ (MDGT™), an index of polished diamond transaction prices, prices of rounds above this size up to 10 carats have declined.

Price Index Edges Down

The MDGT™ averaged 114.71 in March, declining 0.2% compared to February, and following two months of increases, rising 0.28 in January and 0.08% in February. Prior to that, the Mercury Index mainly declined for several years. Polished diamond prices peaked in April 2014, when the index reached 142.3. Since July 2014, the index has exhibited a steady decline with a few notable respites through the 44-month period.

On a year-over-year basis, the index declined 2.2% and has been declining steadily on for more than three years. The last time the index showed an upward year-over-year trend was in November 2014.

Since its peak in April 2014, the MDGT™ index has fallen 19.4%. In effect, polished diamond prices have eroded by nearly one fifth of their value. b2ap3_thumbnail_1_20180416-074253_1.png

MDGT™ is based on the transaction prices of diamonds weighing 1-30 carats, collected and used for the Mercury Diamond™ Price List. It provides wholesale polished diamond prices based on transaction prices in the wholesale market, and its primary purpose is to serve the wholesale market. 

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In March, the index declined by 2.2% year-over-year, an increase in the year-over-year decline compared to February when the decline was 2.0%. The index has exhibited a continued deceleration in the year-over-year declines compared to the 2.7% declines in September and October, the 2.6% decline in November, and the 2.4% in December. The higher decline in March is a worrying sign for the future and is hopefully just a temporary bump.

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Although the trend of year-over-year declines started in December 2014 and is long lasting, the deep declines of 2015 are behind us for now. The declines have since tapered down, mainly in 2016, and continuing into mid-2017. However, in the last few months, we have seen the gap expand from 0.5-1% to about 2%.

Historically, polished diamond prices tend to hold strong and even increase in January, as demand from retailers replenishing their store inventories drive prices at a time of shortages. Another trend is a decline in price after the show in Hong Kong. These two cyclical trends are sometimes impacted by unusual market behavior, mainly when demand differs from expectations. When consumer demand during the November-December holiday season is below expectations, prices tend to weaken in January. Similarly, if demand at the Hong Kong show exceeds expectations, prices tend to rise in March.

Despite the trends returning to “normal” – good consumer demand in December, shortages in the wholesale market and the edging down of year-over-year declines – the diamond industry is not yet in the clear. For that to happen, we need to see robust consumer demand throughout the year, and we are still waiting for that. 

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Over the past two years, overall polished diamond prices increased only rarely on a month-over-month basis. It happened once in 2016 and once in 2017. The month-over-month declines have become the norm in recent years, although price changes are more volatile on a month-over-month basis, reflecting seasonal changes neutralized in year-over-year comparisons.

In 2017, prices were especially weak for a four-month stretch. Between May-August, with very few exceptions, prices fell across the board in every category. That was a period not only of vacations, but also of a slowdown in sales and demand that hurt the diamond industry to the point that it took more than a few companies to the brink.

Prices Decline Nearly Across the Board

The MDGT™ index is composed of the price performance of many different diamonds, of many different size ranges, from 1 carat and above. In March, the smaller goods continued to show price increases, while larger goods declined. Thirds (0.30-0.39-carat) rose by 0.3%, posting their fourth consecutive month of price increases, reflecting ongoing preference for smaller goods, even in mid-range and higher priced jewelry items.

Prices of half-carat rounds declined by 0.3%, and prices of 0.70-0.89-carat rounds dropped 1.4% month-over-month. That was the second largest decline during the month, with 3-carat rounds dropping 1.7% month-over-month.

One-carat rounds, the staple diamond item, declined 0.8% in March, after four months of increases totaling 4.9%. Another item that suffered from price declines after a four-month stretch of price increases were 1.5 carats, which lost 1.2% of their value. 

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Underscoring the interest in thirds, they posted a strong year-over-year rise, bucking the general trends of other size ranges. The 0.30-0.39-carat goods leaped 9.1% on a year-over-year basis and 2-carat rounds increased 1.7%. One carats were slightly down, softening 0.2%. Other size ranges are still far below the prices they were able to command just a year ago.

Half carats are down a dramatic 9.6% and goods weighing 0.70-0.89 carats fell 10.3% year-over-year. Ten-carat goods lost 2.2% of their price in the past year. 

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Conclusion

The period of over three years of price declines may not be over yet, however that is not clear at this point. Polished diamond prices inched up in January and February and declined in March. One conclusion would be that the recent increases were temporary, and the March declines are continuing the long-term trend.

At the same time, it is important to remember that March and April tend to be a period of lower demand and could result in price declines. To know if prices are declining as part of an ongoing weakening trend or are just responding to a cyclical trend, we need to wait until late April to get a better understanding of consumer’s willingness to pay more for diamonds.

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About MDGT™ and the Mercury Diamond™ Price List

We have developed a system that collects transaction prices from a wide range of manufacturers, traders and retailers. These many monthly transactions are augmented by constant market research, which backs, double checks, verifies and completes the transaction data. The system covers more than 18,000 polished diamond categories across the 4Cs, including polished diamonds weighing up to 30 carats with clarities ranging from Flawless to I3in colors from D to P and in various shapes.

The price list provides a price for a top stone without any irregularities. There is a separate table of irregularities, which provides the necessary discount or premium to find the exact current price of any particular diamond.

This polished diamond pricing system was reviewed and validated by one of the Big 4 accounting firms, and that firm continues to audit the price list monthly. The pricing system is currently in the process of obtaining a patent in the United States. Traders will not only find the current transaction price of each diamond, but by applying their manufacturing costs, they can also “reverse engineer” to calculate the cost of rough diamonds.

We currently publish the price list monthly, on the tenth of every month. It is also available in the form of a ticker. Take a look at this important alternative, which has the potential to contribute to an important change in the market. Please download the list and test it. We offer it to you with the hope that you will consider using it regularly. 

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The views expressed here are solely those of the author in his private capacity. No one should act upon any opinion or information in this website without consulting a professional qualified adviser. 

Mercury Polished Graph Tool

Mercury Polished Graph Tool

Mercury Diamond Global Price Tracker™

Mercury Diamond Global Price Tracker™
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