I’d like to be able to say that diamond traders and manufacturers are in an enthusiastic and upbeat mood this January as is usually the case at the start of the year. But the reality is they’re not feeling it, and while diamond inventories build up, I predict a tough year ahead.
The rarity of natural diamonds is a factor of the economics of diamonds. What continues to propel diamond prices is a combination of the cost of production, the cost of polishing, demand in the market and limited supply. But is that all there is to it?
Retail sales results from Christmas 2014 are in. Mixed reviews and uncertainty dominate the picture. Against a backdrop of potentially concerning global issues, we are also seeing a growing tension between diamond producers and manufacturers on issues of pricing and stock.
When we talk of the rarity of diamonds, we are not just talking about the finite and declining supply of diamonds found in the earth. We are also talking of the increasing rarity of diamonds in the light of increasing demand for diamonds and what happens to diamonds once they are polished. All these factors combine to make diamonds even rarer.
The mood in the diamond market is hesitant and there is a strong feeling of anticipation in the air. It’s hardly surprising when you consider the recent publication of a decrease in round polished diamond prices, coupled with Indian factories having reduced their production levels to reflect demand and rumours making the rounds that De Beers and Alrosa are set to reduce their prices.