Retailers in the United States are maintaining inventory levels consistent with last year, ahead of sales for the holiday season.
World diamond markets remained stable in September. The improved sentiment was seen in trading at the Hong Kong Jewellery and Gems Fair which is a significant bellweather for the industry.
The relatively high prices of rough supported the polished market, while suppliers maintained strong polished prices and preferred to delay sales rather than absorb losses due to the high price of rough.
The Hong Kong show showed that there are three trends affecting the diamond market: dealer demand improved but sales were limited. Manufacturers increased polished production even though profit margins tightened. Chinese demand stabilized at levels well below those of the expansion years.
The diamond market is readjusting to lower retail inventory requirements, particularly in the Far East where jewelers have halted or scaled down their store expansion programs. Chinese buyers shifted to lower price points and are more selective as they restrict inventory purchases. U.S. retailers maintained inventory levels consistent with last year ahead of the fourth-quarter selling season.
Polished inventory is growing as manufacturers raise production before Indian factories close for the Diwali festival, despite tight profit margins. The number of diamonds listed on RapNet rose 4% in the third quarter and was up 22% from January 1, 2016. Rough trading was buoyant in September with prices firming and premiums rising on the secondary market.
Polished manufacturing is expected to soften for the rest of the year as dealers concentrate on filling final Christmas orders. A buildup of inventory is anticipated as demand remains relatively sluggish. The season is not expected to be stellar as consumer spending is cautious amid economic volatility and political uncertainty, while the industry’s generic marketing campaign is yet to gain traction.
