Diamond prices dropped sharply in July amid slow retail sales and an oversupply in India, according to Rapaport’s RapNet Diamond Index. The seasonal summer slowdown also had a negative effect on sales.
The RapNet Diamond Index (RAPI™) for 1-carat goods, reflecting round, D to H, IF to VS2 diamonds, slid 7.3% in July, the steepest monthly decline for that size since December 2008.
Meanwhile, the RAPI of the 0.30-carat, 0.50-carat and 3-carat stones declined 8.9%, 7.9%, and 5.8% respectfully.
However, SI (Slightly Included) diamonds saw a “moderate” decline of 3.2% due to steady demand from the US market.
Weak sales also led to an increase in polished inventory. The number of diamonds on RapNet increased by 2% in July for a total of 1.7 million and jumped 9% between 1 April and 1 August.
As a result, Indian diamond manufacturers reduced their production in July to realign their inventory with current demand. The report stated that these cuts will take six weeks before it impacts inventory levels.
Additionally, rough diamond demand was sluggish. De Beers allowed sightholders to refuse goods at its July sight and offered 30% buybacks for certain categories. Sales were estimated to be under $200m (£156.7m).
The report stated that luxury brands also bought fewer diamonds than in previous years, creating weakness in high-end goods. LVMH’s jewellery and watch sales declined 5% year on year to $5.58bn (£4.37m) in the first half of 2024.
According to LVMH, slow US bridal demand had put pressure on Tiffany and Co.
Sales in China also remained weak due to the slow economy and due to shoppers shifting away from diamonds as an investment. The report highlighted that consumers with money preferred to spend at overseas tourist destinations rather than domestically.
Lastly, India’s jewellery industry expects the India International Jewellery Show (IIJS), which runs from 8 to 13 August, to signal strong domestic demand ahead of Diwali.
