Global polished diamond prices continued their recovery in June, extending a trend that began near the end of 2009. The IDEX Online Global Polished Diamond Price Index stood at an average of 117.2 for the month of June 2010. This was 7.7 percent higher than a year ago (June 2009), and 0.6 percent higher than the average for May.

 

While these percentage increases in polished diamond prices are above long-term historic trends, they represent gains that are reasonable in a recovery cycle, such as the industry is currently experiencing.

 

Two major factors are bolstering polished diamond prices:

 

•           Reports from the U.S. market indicate that the recovery in jewelry demand that began earlier this year is continuing and is sustainable. Specialty retailers such as Sterling Jewelers and Tiffany have reported solid gains in sales. Further, the Department of Commerce reported that specialty jewelers’ sales in April 2010 (the latest data) had recovered to nearly the levels of early 2008, the peak of the most recent bull cycle for jewelry demand.

 

•           Several publicly-held specialty jewelers have raised retail prices in recent months, and they have indicated that they are ready to raise prices further prior to the all-important 2010 holiday selling season. Diamond suppliers are using this move by retailers as an opportunity to raise wholesale prices of polished diamonds.

 

Six-Month Price Trend Remains Positive

After bottoming in 2009 at around 108, the IDEX Online Global Polished Price Index has risen every month since late last year. The graph below summarizes the diamond price index by month for the past two years. As the graph illustrates, prices have risen at a steady, consistent level. This indicates that fundamental underlying demand is responsible for most of the price gains, in our opinion. 

 

  

If suppliers tried to raise prices on a speculative basis, we would see the index lurch up, followed by a fallback. That has not happened in this cycle, and it boosts our confidence that prices are headed higher as the year progresses.

  

Month-to-Month Polished Diamond Prices Post A Gain in June

The IDEX Online Global Polished Price Index averaged 117.2 for June 2010, a modest 0.6 percent increase over the average for May, as the graph below illustrates. June was the seventh consecutive month that polished diamond prices have risen on a month-to-month basis.

  

  

Year-to-Year Polished Diamond Prices Up Sharply

The IDEX Online Global Polished Price Index for June 2010 – 117.2 – was a strong 7.7 percent higher than the average for June 2009, as the graph below illustrates. June was the fifth consecutive month that prices have risen on a year-to-year basis.

 

    

Daily Prices Stable for Polished Diamonds

Around June 11, polished diamond prices spiked, only to retreat until about June 20-24, when they advanced again. Following that advance, polished diamond prices pulled back modestly for the balance of the month. While we are highlighting these intra-monthly moves, they are very modest in the big picture. Overall, polished diamond prices are moving higher. We view this as evidence that the rising polished diamond prices are likely to hold. We further believe that prices are building a solid foundation, which will provide a springboard for higher polished diamond prices later this year.

 

The graph below summarizes daily price movement of the IDEX Online Global Polished Price Index.

  

   

Prices Recover For Larger Diamonds

During June, the month-to-month price of 4 carat diamonds spiked dramatically due to increased demand for this size gemstone. While overall monthly prices were up less than 1 percent, the price for 4 carat diamonds rose by over 5 percent between the end of May and the end of June.

 

The graph below illustrates the strength of the recovery in prices of 4 carat diamonds during June 2010, when compared to the prior month of May 2010. Month-to-month prices of other size diamonds were about in line with the average price gain.

  

  

On the other hand, year-to-year prices for these large stones – 4 and 5 carat diamonds – have shown a much more modest price increase than smaller stones, as the graph below illustrates. This is the result of uneven price declines last year: smaller stone sizes fell first, followed by larger stone prices later in the cycle. “Snapshot” graphs of a single month are far less meaningful than overall trends; diamantaires should look at the longer term movement of the IDEX Online Polished Diamond Price Index, which illustrates that polished diamond prices are moving broadly higher.  

 

  

The graph below summarizes three years of price movement of polished diamonds by various key sizes.

 

 

IDEX Online Index Summary Table

The table below summarizes the IDEX Online Index by month for the past three years.

 

 

We strongly believe that polished diamond prices will continue to rise from current levels. Not only is there solid fundamental demand from shoppers, but rough diamond prices have also risen.

 

With pricing pressure coming from both ends of the diamond pipeline, prices in the middle have no way to go but up.