Diamond prices experienced a significant drop in July 2023, with a number of factors contributing to the decline.
Diamond data firm Rapaport outlined key trends and developments in the diamond market, including the impact of De Beers’ price reductions, competition from synthetics, and market dynamics.
Here’s what these trends mean for the UK jewellery industry.
Key Trends in July
Decline in Diamond Prices
De Beers reduced many rough prices by 5% to 15%, contributing to the overall decline in diamond prices. The RapNet Diamond Index (RAPI™) for 1-carat diamonds slid 2.7% for the month, standing at 6,716 on 1 August, down 10.9% since 1 January. The index also declined in other sizes, with 0.50-carat diamonds being the weakest. Additionally, the price index for 1-carat, D-L, IF-SI2 items fell 3.7% in July.
Weak Retail Demand
High inflation and interest rates restricted spending in middle America, and China’s post-lockdown recovery did not extend to diamonds, further impacting demand. However, the high-end segment supported the market as consumers with savings bought branded jewellery.
Competition from Synthetics
The lab-grown diamond sector continued to gain market share, especially in 1- to 3-carat, SI1 goods. Wholesale synthetics prices have plummeted, but retail prices remain high, attracting jewellers to this segment.
Inventory and Production
Manufacturers and dealers accumulated inventories of less-desirable stones, while beautiful SIs were in demand and hard to find. Rough purchases remained low due to weak polished demand and uncertain manufacturing margins, reflecting lower production.
Implications for the UK Jewellery Industry
Opportunities in Synthetics
The growing market share of lab-grown diamonds presents opportunities for UK jewellers to explore this segment. With strong margins and increasing consumer interest, synthetics could become a significant part of the UK jewellery market.
Challenges in Pricing and Inventory Management
The decline in diamond prices and the uncertainty surrounding future price levels pose challenges for UK jewellers in pricing and inventory management. The cautious approach of dealers and the accumulation of less-desirable stones may impact the supply chain and require strategic planning.
The UK jewellery industry must consider global trends, including the impact of inflation, interest rates, and regional demand fluctuations. The high-end segment’s resilience may offer insights into targeting specific consumer segments.
Rough Market Impact
De Beers’ price reductions and the overall decline in rough purchases may influence the UK’s rough diamond market. The July sight registered sales of $410 million, the lowest since December 2021, reflecting a cautious approach that may resonate with UK dealers and manufacturers.
The decline in diamond prices in July 2023 reflects complex market dynamics, with implications for the UK jewellery industry. From the growth in synthetics to the challenges in pricing and inventory management, UK jewellers must navigate these trends with strategic insight. The industry’s adaptability and responsiveness to these global developments will be key to sustaining growth and competitiveness in a rapidly evolving market.