In June 2023, the RAPI price index of natural diamonds continued its downward trend in May as a whole, with price indices in all four sectors (0.30ct, 0.50ct, 1.00ct, 3.00ct) showing varying degrees of decline. Among them, the monthly decline of 1.00 carats was 2.4%, and the decline since the beginning of this year was 8.4%.
On the other hand, IDEX, another B2B platform and analysis organization, said in its latest report that the overall price index of naked drilling fell 3.04% in June, the largest monthly decline since last March.
The weak retail demand in the United States led to a sustained downturn in the entire natural diamond market in June, which put considerable pressure on the midstream. Jewelry retailers are avoiding inventory accumulation and only picking based on specific orders, while also increasing their dependence on consignment models. Midstream factories maintain low production capacity levels to cope with the decline in bare diamond sales and profits.
As the prices of natural bare diamonds (B2B) decrease, wholesale activities have also slowed down. Cultivating diamonds is significantly disrupting the natural diamond market（ ⚠️ Rapaport did use the word "damage" in the original text of his report), especially in the large particles and Engagement ring. These trends have all appeared before and were concentrated in June.
The weak development of the Chinese market, economic slowdown, and depreciation of the renminbi have all affected the demand for diamonds in the mainland. As expected, the diamond trade situation at the Hong Kong Jewelry Exhibition in June was relatively calm.
▲ Image source：Rapaport
The inventory of bare diamonds remains high, but due to the slowdown in midstream production, the overall inventory level has stabilized. Indian factories have extended their May holiday to better control production after the start of construction. The number of RapNet bare diamonds decreased by 1.5% in June and is currently maintained at around 1.75 million. However, the decline in supply is not enough to offset the impact of falling demand.
In terms of rough diamonds, the demand for 0.75 carats or more is relatively weak, and cutting and grinding factories are focusing on processing diamonds with smaller particles to maintain the operation of the factory. At the same time, the demand for small natural diamonds in the downstream market is relatively stable.
Cultivating diamonds continues to affect the sales of natural diamonds with a purity of SI2 to I2, as consumers can purchase visually clean diamond products at the same or lower prices. Although the decline in prices and profits has led some companies to leave the industry, the practice of cultivating diamond Engagement ring by Lightbox, a brand owned by De Beers, has improved the reliability of diamond industry cultivation to some extent. Similarly, Indian Prime Minister Modi's gift of a 7.5 carat nurturing diamond to First Lady of the United States Jill Biden has also stimulated the confidence of the industry.
The development of the high-end diamond market is still relatively strong. The high interest rates in the United States have increased the wealth of wealthy individuals, while changes in the economic environment have caused middle and low-income groups to limit their spending, leading to a decrease in demand for 0.30-3.00 carat bare diamonds, previously known as "bread and butter". Among many markets, the expansion of the local retail market in India is one of the few regions that has seen significant growth during this period.
Of course, there are still some optimistic factors in the market, such as the US inflation rate dropping to 4% in May, and the Federal Reserve's decision to suspend interest rate hikes in June. Financial markets are paying attention to whether the Federal Reserve will raise interest rates again during its July 25-26 meeting.