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NEW YORK–(BUSINESS WIRE)–Certified polished diamond prices rose in 2011 spurred by strong buying in the first half of the year. However, global economic uncertainties and tight liquidity in the cutting centers caused prices to soften in the latter half. While confidence has improved since January 1, following a period of relative price stability and a satisfactory U.S. holiday season, concerns remain whether current price levels are sustainable.
For 2011, the RapNet Diamond Index (RAPI) for 1.00 ct. polished diamonds rose 19% to 96.96. The 0.30 ct. category fell 1% to 16.11, and 0.50 ct. increased 20% to 34.39. The RAPI for 2.00 ct. diamonds grew 15% to 18.78 and 3.00 ct. rose 18% to 35.19.
There was a stark contrast in price developments between the first and second halves of the year, mirroring movements in the financial and commodities markets (see table below).
| RAPI 0.3 ct | RAPI 0.5 ct | RAPI 1.00 ct | RAPI 3.00ct | RAPI 5.00 ct | Gold | S&P 500 | |||||||||||||||
| FY 2011 | -1.0 | % | 20.2 | % | 19.3 | % | 18.3 | % | 6.4 | % | 8.9 | % | 0.0 | % | |||||||
| 1H 2011 | 25.4 | % | 37.8 | % | 34.0 | % | 31.4 | % | 18.0 | % | 5.5 | % | 5.0 | % | |||||||
| 2H 2011 | -21.0 | % | -12.7 | % | -11.0 | % | -9.9 | % | -9.9 | % | 3.2 | % | -4.8 | % | |||||||
According to the just released Rapaport Diamond Price Statistics Annual Report 2011, the price increases between January to June 2011 were influenced by an aggressive overheated rough market driven by over-easy credit in the Indian market, speculative demand and significant restocking by retailers in the Far East and subsequently in the U.S.
The second half of the year was influenced by increasing uncertainty caused by the U.S. and European economic crises, volatile financial, currency and commodity markets, as well as continued political instability in the Mideast. Tight liquidity, particularly in India, impacted trading from July as manufacturers were unable to obtain replacement costs on the high rough prices they had paid earlier in the year. Even as liquidity challenges eased, weak currency markets continued to add to cutting costs. These factors are expected to continue to influence the market in 2012.
“Diamonds did extremely well during the first half of 2011 but declined sharply during the second half. Prices have stabilized over the New Year but uncertainty prevails due to adverse economic conditions. Rough prices are declining as the European crisis significantly reduces liquidity to the trade. Chinese and Far East demand are relatively weak but should do better after the Chinese New Year quiet period. U.S. demand held up well over the holidays and will likely remain stable during 2012,” said Martin Rapaport, Chairman of the Rapaport Group.
Additional information is available in “Rapaport Diamond Price Statistics Annual Report 2011,” which can be purchased by contacting: [email protected]. The media may request a copy by emailing: [email protected].
About the RapNet Diamond Index (RAPI): The RAPI is based on the best asking price in hundred $/ct. for the top 25 quality 1 ct. round diamonds (D-H, IF-VS2, RapSpec-2 and better) with GIA, HRD or AGS grading reports offered for sale on RapNet – Rapaport Diamond Trading Network.
