Rapaport revealed that diamond trading experienced a lull in late December as wholesalers took time off during the Christmas and New Year period. The industry exercised caution amidst slow US consumer demand and increasing competition from synthetic diamonds.
The overall holiday season for the jewelry market was reported to be weaker than in 2022 but aligned with expectations. Mastercard SpendingPulse reported a 2% year-on-year decline in US jewelry sales from November 1st to December 24th. Interestingly, restaurant revenues saw a 7.8% increase, indicating a shift from product-oriented purchases to experiential spending. Chinese diamond demand continued to remain sluggish amid an economic downturn.
Polished diamond prices saw an increase in most categories, primarily attributed to India's two-month voluntary freeze on rough diamond imports, which concluded on December 15th and helped reduce inventories. India's rough diamond imports for November witnessed a significant 76% year-on-year decline to $314 million. With manufacturers facing less pressure to sell due to reduced cash needs for rough diamond purchases, Rapaport noted that holiday orders supported prices for 1- to 3-carat, F-I, VS-SI, RapSpec A3+ diamonds.
In December, the RapNet Diamond Index (RAPI™) recorded a 0.1% increase for 1-carat diamonds. Additionally, the index for 0.30-carat stones rose by 1%, and the 0.50-carat RAPI saw a notable climb of 2.2%. Conversely, prices for fancy-shaped diamonds remained stable or experienced a slight decline.
Despite facing their worst full year on record, with a 26% and 21% decline, the 0.50- and 1-carat RAPI categories showed signs of improvement from November onwards. This positive trend was attributed to increased purchases by US retailers for the holiday season and reduced polished production in Indian factories. Throughout 2023, the number of diamonds on RapNet decreased by 8%, totaling 1.6 million on January 1, 2024.
Anticipating potential adjustments in the market, some sightholders expect De Beers to reduce rough diamond prices in January to stimulate sales. Rapaport emphasized the necessity for manufacturers to align their purchases with polished demand to prevent an oversupply, which could impact polished prices immediately.
January also marked the initiation of broader Group of Seven (G7) restrictions on Russian diamonds. With an expanded ban on any polished resulting from Russian rough starting on March 1, the implementation of these restrictions is anticipated to significantly impact supply dynamics, as highlighted by Rapaport.