IDEX Online Research: Polished Prices Quiver in June, yet H1 Is Solid

(IDEX Online News) – Polished diamond prices were generally flat in June, inching up just 0.2 percent compared to May. Prices in June edged up prior to the Las Vegas shows, only to decline, as they did not meet wholesalers' expectations.

The below-expectation Hong Kong fair exasperated the situation. While prices of rounds mostly declined, Princess and Cushion cuts were in good demand, saving overall prices from declining further.

The full analysis of the polished diamond prices is available to IDEX Online Research subscribers and IDEX Online members here.

The IDEX Online Polished Diamond Price Index averaged 139.9 in June.

Source: IDEX Online Research

Year-over-year trends are a somewhat extreme. Prices escalated in the second quarter of 2011, peaking in July. Prices have since declined and have been steady in the first six months of this year.

Therefore, the very modest 0.7 percent year-over-year increase hides the jump and decline prices experienced in the period. The continuous slide in year-over-year increases further demonstrates this, as the following graph shows.

Source: IDEX Online Research

 

Compared to May, prices of 0.5, 3, 4 and 5-carat rounds increased a few percentage points, while 1-2 carat rounds declined.

Source: IDEX Online Research

The first half of 2012 tells a different tale. Although prices escalated in the second quarter of 2011, the first quarter witnessed only moderate price increases.

Although prices were flattish in the first half of 2012, they are still clearly higher than the average prices in the January-June period of 2011 – up a solid 8.5 percent.

Simply stated, prices in the first half of 2012 have ascended to a plateau.

Outlook

The global economic outlook is mixed. The European economy is still holding, however Europeans are aware that the current crisis is living in the shadows of a much worse looming crisis and are therefore cautious in their expenditures. The U.S. economy is steady yet not improving at the rate economists or government hoped.

The economies of China and India continue to grow, however at a slower pace due to the economic situation in the markets they produce for, leading consumers to spend less on luxury.

In the short to mid-term, this economic backdrop will continue to cast a shadow on consumer purchases of diamond jewelry. Our long-term outlook remains unchanged – prices will increase as demand continues and supply contracts.