A recent press release by RAPAPORT revealed that the dynamics of the precious gem industry has turned sluggish as of August this year due to seasonal influences and general uncertainties associated with consumer demand even as prices of polished stones continue on a downward trend.
Recent sales trends linked to the diamond market were mixed due to the direct impact from lab grown diamonds coupled with economic challenges which has retailers and wholesalers to buy selectively. Prices for 1-carat stones with reflective ratings between D and H and IF to VS2 diamonds slipped by 1.1% in August this year, whereas the index fell by 2.7% for diamonds for stones categorised under 0.30 carats, 0.7% for stones within the 0.50 carat categories, and by 0.9% for stones within the 3 carats spectrum.
The declines have been gradual that started in July when RAPI (RapNet Index) removed diamond listings from China due to Chinese wholesalers and dealers lowering prices of natural diamonds while at the same time increasing transactional fees due to conversion of currency. The removal by RAPI resulted in an increase that was technically amounting to 1.3 percentage points for sizes mentioned.
At the end of August, Rapaport moved to decrease prices on the list that in essence reflects a steady decline in asking prices within the market. As for the Indian market, extended vacations in August have also had an impact on retail inventories that were already high which was among the reasons as to why producers such as Petra Diamonds and DeBeers postponed rough sales as the entire industry tries to reduce supplies.
As for the Asia Pacific markets and Australia the ‘lab grown diamond boom’ has eased as consumers realised the drastically falling value of lab grown gems indicated the director of Simon West Fine Jewellery based in Melbourne, Simon West. According to West, in the first quarter of this year, sales of jewellery and engagement rings that feature lab grown diamonds has decreased whilst the demand from consumers preferring to buy natural diamonds has notably increased.
He added that lab grown diamonds only represent an approximate 5 % of sales and that the company sells the product, but hardly promotes jewellery with lab grown stones. Similarly, diamond wholesalers such as Maulin Shah also share the same view on lab grown stones indicating that the falling prices of lab grown stones makes it infeasible to increase inventory as prices are expected to fall even further than they are currently. Given the higher margins of natural diamonds and the improving demand for naturally mined stone, retailers are refocusing on promoting natural stones instead.
The industry is in essence stabilising as the demand curve shifts back to natural diamonds, however as indicated by Brett Low who is the director of Deer Honey, a retailer based in Queensland, the lab grown market will continue to grow. Low believes that the lab grown market segment as the primary consumers of this segment are between the ages of 20 and 30 due to the current perceived environmental benefits of lab grown stones and obviously the price.