The Rapaport Group, the global diamonds experts has said the diamond markets will be cautious in January especially in China as the second world second largest economy heads to its new year.
The Rapaport Monthly Report ÔÇô January 2015 noted that the diamond trade continues to be supported by the U.S. with robust economic growth, improved unemployment, rising consumer confidence and a strong dollar helping to lift sentiment.
“Market conditions are expected to remain cautious in January as retailers assess their inventory levels following the Christmas shopping season,” it said.
“Activity in China remains cautious ahead of the Chinese New Year on February 19 as economic growth has slowed and the government continues to curb excessive displays of luxury wealth. The major jewelry retailers in the region have reported high inventory levels ahead of the season as their sales slumped in 2014,” it added.
The U.S still remains Botswana’s biggest market for diamonds as it accounts to about 45 percent of global demand and the revelation will send jittery to Debswana, which is owned 50/50 by Botswana government and De Beers.
“India is also showing signs of improvement under the new government.”
The report also highlighted that diamond markets were also unstable due to an imbalance between rough and polished prices.
“Rough prices remained relatively stable at the De Beers December sight, while sightholders rejected an estimated 20 percent of their allocated supply,” it said.
“A greater proportion of lots remained unsold at spot auctions. Rough trading was slow and prices on the secondary market softened in December, even though most boxes were offered at a loss and on generous credit terms.”
On the price side, Rapaport revealed that there was a correction in prices for 0.30-carat diamonds due to both supply and demand factors.
“Demand from China softened as economic growth slowed. Retailers in China still held large inventories of 0.30-carat diamonds having bought aggressively and driving up prices in 2013,” it said.
“The GIA also reduced its backlog and released a large amount of 0.30-carat to 0.50-carat diamonds from its laboratories in the fourth quarter, resulting in an oversupply.”
The prices for the polished diamond fell in 2014 as demand slowed in China and liquidity dried up, according to Rapaport.