(IDEX Online) – Prices of polished diamonds decreased in July, according to the IDEX Online Polished Diamond Index. The index averaged 132.4 during the month, down 3.1 percent year-over-year and 1.7 percent compared to the preceding month.

 

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

 

After two months of increasing prices, the index declined in July, resulting in a seesaw effect in month-to-month prices since the beginning of 2012. The IDEX Online Polished Diamond Index rose only eight times in the 19-month period with an overall effect of a 4.6-percent decline since January 2012, and a 0.4-percent decline in 2013.

 

 

Despite the gloomy trend in July, the changes in month-over-month prices are still resulting in an upward trend due to strong price increases in December 2012 and May of this year, as the graph below shows.

 

 

The price index of almost all key sizes of round shape diamonds decreased in July on a month-over-month basis. Only 0.5-carat rounds increased in July compared to June, gaining 1.7 percent.

 

The index for the important 1-carat rounds lost 1.4 percent compared to June. Larger declines of 2.5-3.5 percent were seen for 1.5-, 2- and 3-carat rounds in July.

 

On a year-over-year basis, the price index for round goods declined for all key sizes during the month. One-carat rounds are lagging 3.7 percent behind their prices a year ago, the average price of 2-carat rounds are 5.7 percent lower and 5-carat rounds are 11.3 percent below their prices a year ago.

 

After the price dip in May and the small recovery in June, the price indexes of 1-, 1.5- and 2-carat Princess-shape diamonds fell on a month-over-month basis. This is a widening, if not reversal for these items.

 

On a year-over-year basis, the three key-size Princess shape diamond categories are still exhibiting price increases, mostly the 1.5-carats, which increased by 9.9 percent compared to July 2013.

 

The long-term trend of Princess shape diamonds in the three key sizes shows that the index for 1.0-carat stones has been declining since March of this year, while 1.5-carat and 2-carat Princess-shape goods are only recently suffering from declines.

 

 

Outlook

U.S. retailers enjoyed a good run in the first quarter of 2013, and the most recent information indicates that the trend continued into the second quarter. Solid demand from China and Japan provide additional reasons to expect a temperate improvement in the coming months. Lackluster demand from Indian consumers, hurt by the weakening rupee, is dampening the global demand outlook.

 

With the stock markets continuing to rise, an improving U.S. economy, and expectations that the slowing Chinese economy won’t deteriorate further, we expect polished diamond prices to increase in the long-term, especially with the improving Japanese economy, which is propelling demand in what is still a leading diamond-consuming market.

 

The full analysis and statistics on jewelry industry inflation for May 2013 is available to IDEX Online Research subscribers and IDEX Online members here. Click here for more information on how to subscribe or become a member.