Editor’s Note
This analysis highlights a deepening divide in the natural diamond market, where demand is increasingly concentrated at the high end while smaller stones face sustained price pressure. Understanding this polarization is key for industry stakeholders navigating current trends.
In the jewelry industry, the natural diamond market in November presented a stark picture of polarization. According to the latest report released by Rapaport, prices for small-sized natural diamond rough stones saw significant declines, continuing the downward trend of recent months. In contrast, prices for large-sized natural diamonds remained stable or even increased, further concentrating on the high-end market.
The RAPI price index showed varied performance across four weight categories. Price declines for 0.30-carat, 0.50-carat, and 1.00-carat natural diamonds accelerated compared to the previous month. Specifically, the 0.30-carat category fell by 6.0%, the 0.50-carat by 5.1%, and the 1.00-carat by 2.6%. Compared to the same period last year, the performance of these three weight categories was even weaker: 0.30-carat diamonds were down 11.2%, 0.50-carat down 20.3%, and 1.00-carat down 8.2%. In contrast, 3.00-carat natural diamonds, while showing a smaller increase than the previous month, still recorded positive growth. Compared to last year, they were down only 0.4%, demonstrating the most stable performance.
Price fluctuations also differed based on diamond quality. Taking the 1-carat round diamond category with SI clarity as an example, its price index change was -1.7%, a smaller decline than the -2.6% for the IF-VS2 clarity category. This indicates that quality factors significantly influence prices within the natural diamond market.
A horizontal comparison with the IDEX price report for the same period shows that the composite price index for natural diamonds fell by 1.72% in November, significantly more than the 0.48% drop in October. Weak underlying market demand and persistently high inventory levels have led to a continuous decline in overall prices. Compared to the peak in March 2022, natural diamond prices by the end of November had fallen by 45%, indicating a severe market situation.
Looking at different segments of the industry chain, upstream, De Beers Group maintained stable rough diamond prices at its sight and allowed clients full flexibility to refuse allocations, providing some stability to the market. Midstream, activity in India’s diamond cutting and polishing sector slowed, with rough diamond imports plummeting 45% in October, reflecting the current market slump. However, there are bright spots downstream. Rapaport views the US market as stable and the Indian market as positive.
Regarding market intelligence, the importance of diamond traceability is becoming increasingly prominent. News continues about African countries vying for equity in De Beers, with Namibia also expressing interest in acquiring a minority stake. Among polished diamonds shipped from India to the US, natural diamonds are now rarely seen in categories below 2 carats. While demand for diamonds in the Chinese market remains low, overall jewelry sales have shown signs of stabilization. However, jewelry demand and diamond demand are relatively independent; changes in the jewelry market do not directly equate to changes in diamond demand.
In this complex and volatile market environment, the high-end value of natural diamonds is becoming more pronounced. Large-sized, high-quality natural diamonds, with their scarcity and unique appeal, have become favorites in the high-end market. For consumers seeking ultimate quality and unique experiences, natural diamonds remain an irreplaceable choice. Looking ahead, the natural diamond market will continue to evolve amidst this divergence, with the potential of the high-end market being particularly promising.
