Our survey of the market this week has found that while demand for polished diamonds is improving, the number of transactions remains lower than usual for this time of the year. In response to high inventories, we are seeing new buying and selling behaviours in the market – from manufacturers buying run of mine diamonds, to traders self-financing and offering longer payment terms.
All in all, it’s been a turbulent and rather unusual year when it comes to the price of diamonds. Those in the trade know this, but when it comes to the question of how diamond pricing actually works, consumers often remain in the dark. And in a market where consumers don’t have reliable tools to assess a diamond’s price, can we really expect them to confidently buy the highest priced diamond jewellery? This past Christmas, the figures show we couldn’t and they didn’t, but more of that later.
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.