In July, diamond prices experienced a notable decline, primarily influenced by sluggish retail sales and an oversupply situation in India. This downturn was further exacerbated by the seasonal summer slowdown that traditionally impacts sales negatively.
The RapNet Diamond Index (RAPI™), which monitors round diamonds ranging from D to H in color and IF to VS2 in clarity, recorded significant drops. The 1-carat RAPI saw a sharp 7.3% decrease, marking the steepest monthly decline for this category since December 2008. Meanwhile, the 0.30-carat RAPI fell by 8.9%, the 0.50-carat index declined by 7.9%, and the 3-carat diamond prices dropped by 5.8%.
The detailed breakdown of the RAPI across various diamond weights highlights the severity of the downturn:
The RAPI for 0.30-carat diamonds stood at 1,098, reflecting an 8.9% drop in July, a 22.6% decline year-to-date, and a 29.0% year-on-year decrease.
The RAPI for 0.50-carat diamonds was 1,762, showing a 7.9% monthly drop, an 11.0% decrease year-to-date, and a 22.8% year-on-year fall.
The 1-carat RAPI reached 4,941, with a 7.3% decline in July, a 17.4% drop year-to-date, and a 26.4% year-on-year decrease.
The 3-carat RAPI was 19,002, reflecting a 5.8% drop in July, a 13.7% decrease year-to-date, and an 18.2% year-on-year decline.
Notably, SIs, or slightly included diamonds, experienced more modest declines compared to the RAPI categories, driven by US demand. Prices for 1-carat, D to H, SI diamonds dropped by 3.2%.
The weak sales environment contributed to an increase in polished diamond inventory, with the number of diamonds on RapNet rising by 2% in July, reaching a total of 1.7 million. This inventory level marked a 9% increase from April 1 to August 1.
Indian diamond manufacturers responded to the oversupply by reducing production in July, aiming to better align their inventory with the current demand levels. However, it will take about six weeks for these production cuts to significantly impact inventory levels.
Demand for rough diamonds remained sluggish. De Beers, one of the industry’s leading players, allowed sightholders to refuse goods at its July sight and offered 30% buybacks for certain categories, resulting in sales estimated at under $200 million.
Luxury brands also contributed to the market’s weakness by purchasing fewer diamonds than in previous years. LVMH, for instance, reported a 5% year-on-year decline in jewelry and watch sales, totaling $5.58 billion in the first half of 2024. Additionally, slow US bridal demand pressured Tiffany & Co., another LVMH brand.
China’s market remained weak due to the slow economy, and consumers there continued to move away from diamonds as an investment. Despite these challenges, India’s jewelry industry is hopeful that the upcoming India International Jewellery Show (IIJS) from August 8 to 13 will signal strong domestic demand ahead of Diwali. However, expectations for the September Jewellery & Gem World (JGW) Hong Kong show remain low amid continued sluggish demand from China.