The final push of the global holiday season stimulated a small increase in polished diamond prices, with all but 4-carat stones showing a slight improvement. December marks the first time since August that the majority of stone size categories showed any sort of price increase.

 

However, the increase was small – the Index began the month at 123.2 and ended at 124.4 – but given the performance of diamonds prices throughout the year, any increase is welcome news.  

 

Diamond Price Downward Trajectory Checked

There has been volatility in the market since the third quarter of 2014, with the trend showing continually dropping prices. However, December’s results checked the downward pattern that had been evident since August of this year.

 

The graph below illustrates short-term trends for polished diamond prices.

 

A graph of polished diamond prices for the past five years clearly shows the general pattern of dropping prices, despite December’s slight improvement.

 

 On a month-to-month basis, December’s global polished diamond prices were up 0.7 percent over November, arresting a negative trend seen since August.

 

On a year-on-year basis, December saw a decline of 2.8 percent, which from November’s low of 6.7 percent, represents the single biggest monthly improvement since March 2015. December’s results also mark a slight increase from the December 2014 fall of 3.5 percent.

 

Diamond Prices by Size Increased in December; But Declined Year-Over-Year

On a year-to-year basis – comparing prices during December 2015 to December 2014 – polished diamond prices were lower for all major sizes of gemstones.

 

On a year-over-year basis, 0.5-carat diamonds declined by a substantial 14.7 percent in December, although they increased by a modest 0.3 percent on a month-over-month basis.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The performance of 3-carat diamonds, however, continues weaker than the same month a year ago, with a 12.4-percent decline, although it increased a slight 0.6 percent compared to November 2015.

On both a year-over-year and month-over-month basis, 4-carat stones declined 1.7 percent.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over the longer term, the most price volatility has occurred among 3-carat stones, which have declined for much of 2015, although 0.5-carat stone prices have trended lower (dark blue line at bottom of the graph) as illustrated below.

 

 

 

 

 

 

Outlook: Diamond Prices Unlikely To Improve Near Term

There were some positive reports coming from the US regarding the sales of diamond jewelry over the holiday period. Many retailers said that results were about the same as December 2014, if not a little better – which included a slight increase in the average ticket price.

 

Rough prices in the last two months or so have risen around 7-12 percent, according to rough diamond brokers Bluedax.com. Following the return to work after Diwali, there was a shortage of goods in the Indian market, with traders buying outside of the regular ALROSA and DTC goods. 

At the latest Sights, there was once again a high refusal of Russian goods – with up to 70 percent of items rejected. Those goods that were bought made a profit of 2-5 percent at an average of 90 days credit. 

At De Beers, Sightholders could sell some 20 percent of goods back to the DTC. This "buy-back" gave traders a higher price than they could have found by selling the goods on, which meant that there were almost no sales to the secondary market.

There are few changes expected in January. While the first Sight of the year will probably be on the smaller side, people cannot reject goods because of a shortage in the market following holiday season demand. However, traders are unlikely to make much more than 1-3 percent on their purchases – and the story is likely to be the same at ALROSA’s Sight week.