The global diamond market was uncertain in June due to the resurgence of Covid-19 and geopolitical tensions, Rapaport reported.
Polished prices firmed for select goods. The RapNet Diamond Index (RAPI™) for 1-carat diamonds rose 1.9% during the month, driven by investment demand for 1-carat to 1.10-carat, D, IF, RapSpec A3+ stones. Prices for lower colors and clarities were volatile.
Sentiment was mixed as US retail gradually reopened following the lockdown period. Steady bridal sales supported the market for 0.50-carat to 2.99-carat diamonds. There was also interest in jewelry for gifting purposes. China continues to improve but there are concerns that clashes on its India border will impact trade between these important diamond centers.
US consumers remain cautious. Unemployment is at 11.1% and some states are shutting down again due to a spike in coronavirus infections. Jewelers are curbing their inventory buying and have enough goods to meet third-quarter demand. They remain focused on e-commerce. The major brands are investing in multichannel platforms.
Dealers are limited to buying and selling online due to travel restrictions. Most bourses have reopened but are seeing low activity. India has extended its voluntary moratorium on rough imports through July as manufacturers continue operating at significantly reduced capacity.
The decline in rough demand is putting pressure on mining companies, Rapaport reported. Smaller producers are willing to drop prices to generate sales and raise liquidity. De Beers and Alrosa are maintaining higher prices and are prepared to sell fewer diamonds during the crisis. Manufacturers are seeing greater profitability in buying rough via tenders than through contract sales.
The trade sees potential for improved demand in the fourth quarter and hopes to gain market share in discretionary spending this holiday season. The industry needs to develop a marketing message that taps into consumers’ values and the emotions that diamonds evoke.