IDEX Polished Price Index Down: The Decline Continues in January
February 07, 23
January proved to be yet another month of straight-line decline for the IDEX Polished Price Index amid ongoing caution and uncertainty. It fell 1.17 per cent, compared with 0.76 per cent in December and 2.62 per cent in November 2022. Festive spending may have cushioned some of the Index's fall in December. January's decline is less than half that of November, which could offer a small glimmer of hope. Sentiment remains weak generally and manufacturing in India is still well below capacity. De Beers reported a sharp drop in rough sales at its first sight of the year (down over 30 per cent to $450m on the last sight of 2022) and said buyers were biding their time. But China has re-opened for business and appears to be recovering from Covid.
January was the 11th consecutive month of decline, although the rate of that decline has fluctuated. The average value of the Index during January was 130.69, down from 132.14 in December. It was 134.30 in November. October was 137.56 and September was 140.94, compared with 144.02 in August. In July it was 147.59, down from June (150.01), May (151.28) and April (153.30) The Index had been in decline since mid-2018, but at a much more gradual pace. It hit a low point in April 2020, with the first lockdowns hit, but the overall trend since then had been upwards.
The longer term graph below shows an upward trend from around April 2020 - when travel restrictions re-directed a good chunk of luxury spending towards jewelry. The post-pandemic recovery gathered pace towards the end of 2021, but hit a peak in early March, shortly after the Russian invasion of Ukraine, and has been declining ever since. The rate of decline has, however, slowed slightly in recent months, so the downwards curve is not quite as steep.
Month-to-month polished diamond prices were down again in January, but only by 1.1 per cent, the smallest decline since last June. December 2022 was down 1.6 per cent and November was 2.4 per cent. Monthly price increases peaked in February at 6.2 per cent, before Russia invaded Ukraine, and have been in negative growth since April.
Year-to-year polished diamond prices tell a different story. Our benchmark is last January, when the industry was enjoying a post-pandemic bounce. Prices this January are down by 8.5 per cent, compared with 4.0 per cent the previous month, which was the first drop in two years. Year-to-year growth peaked in March 2022 at 27.9 per cent, but has been declining steadily ever since. It was 1.8 per cent in November and 5.4 per cent in October. The overall trend had been upwards since the depths of the pandemic in April 2020, albeit with a dip last September and October.
Polished month-on-month prices fell again in January, but by less than December, when losses were, in turn, less than November. Worst hit were 1.0-ct and 1.5-cts, both down by 1.5 per cent (compared with 2.0 per cent and 2.2 per cent respectively in December). 3.0-cts goods were down 0.1 per cent, compared with 0.9 per cent in December. 4.0-cts goods saw a slower rise, up 0.8 per cent, compared with 1.5 per cent.
On a year-on-year basis the price of all sizes shown below, except for 4.0-cts, fell during January, all by more than they had in December. 0.50-cts goods fared worst among these sizes shown below, down by a hefty 14.9 per cent. Beyond that, the larger the goods, the less badly they fared. 4.0-cts goods increased by 1.8 per cent, up on 1.3 per cent in December.
Prices for all sizes shown below kept on falling in January, with the notable exception of 4.0-cts goods which have been the most resistant to the recent decline, and which are on the increase.
Assessment: The steady slide of the Index continues, but there's a glimmer of hope in some month-to-month prices. Price drops have slowed in the last couple of months and 4.0-cts investor goods have seen some growth. Rocketing inflation rates are coming down to Earth in many places. Having said that, the mood of caution clearly persists.