Talk of imminent diamond price increases are “premature,” according to Rapaport Corp.’s January 2013 research report, “Questionable Stability.”

It notes that while the diamond market seems to be evidencing increased stability after a rocky year, that does not necessarily mean that prices will eventually head upwards.

“The diamond market ended 2012 with a fair degree of optimism,” it concludes. “Forecasts for pending diamond price increases are premature and the trade should be careful not to inflate prices by buying diamonds with easy credit.”

The report describes 2012 as a year of considerable turbulence for the industry. The RapNet Diamond Index showed that prices for 1 ct. stones fell 12.5 percent for the year. Meanwhile, melee prices rose 2.3 percent in 2012.

The market is now seeing improved demand for 0.3 ct. to 0.4 ct., H+, and VS+ certs as markets shift to the Far East ahead of the Chinese New Year. Prices for green, gray, and brown-tinted diamonds were 10–15 percent below non-tinted.

In the rough market, trading in 2012 was weak, despite slightly better manufacturing profit margins. Manufacturers did, however, see improved value in ALROSA rough supply, though they found De Beers’ goods to be expensive. Overall, they have concerns about possible price hikes by mining companies in first quarter.  

With regard to the economy, sentiment about the United States was mixed. Initial holiday reports reflect disappointing sales, with the negotiations to avert the so-called fiscal cliff dampening consumer confidence. Renewed expectations exist for China as its 2013 economic outlook improves, though diamond buyers there have low inventories and uncertainty as to whether prices have bottomed out.

JCK