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Market update – Eyes on the US

Sales of diamonds for Indian Diwali and Chinese Golden Week are down on last year’s results. We’re now seeing a clear shift in diamond buying power from China, South East Asia and India back to the US. 

Buyers using foreign currencies are struggling with the high exchange rate of the dollar. While retailers gear up to reduce prices to attract customers during the Christmas sales season, Asian retailers are reporting poor profits compared to their American counterparts. Meanwhile, mining companies Botswana Diamonds and Alrosa have reported poor results.

Most traders are still confident about American demand for diamond jewelry. While American consumer confidence has declined in November according to the Conference Board Consumer Confidence Index, year on year confidence has increased dramatically. The Index now stands at 88.7 down from 94.1 in October but 25% higher compared to last year when the Index stood at 70.4.

The rough diamond market is still performing well, especially when compared to the polished diamond market that is currently rather slow. This is a cyclical trend that occurs annually after Diwali as Indian manufacturers restock on rough after their holiday vacation.

The current hot items are rough diamonds weighing +10.8 carats specials (yielding 4 carats and larger as polished diamonds). Demand for 5 to 10 carats (yielding mainly 1 to 3 carats in terms of polished diamonds) is mediocre. Demand for 2.5 to 4 carat rough diamonds (yielding mainly 0.75 to 1 carat as polished diamonds) are still weak. Yet some traders are now reporting that when trying to buy these goods they have not been able to find sufficient supply. 

Diamonds of 2 carats rough yielding mainly 0.50 to 0.75 carat as polished diamonds are enjoying very strong demand especially piques goods (diamonds with inclusions that are visible to the naked eye). However, diamonds of 1, 1.25 and 1.50 carats rough yielding mainly 0.20 to 0.30 carats and up to 0.50 carats as polished diamonds are seeing mediocre demand with no change from last week. Melees* (yielding mainly 0.07 to 0.20 carats in terms of polished diamonds) are doing well and smalls (yielding 0.06 and smaller as polished diamonds) are still weak although they are now available at reasonable prices because there is an excess supply of these. Fancy cut diamonds are generally trading more easily than round cuts.

* Melee is a loose term for small size rough of between a quarter and half a carat.

 

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