IDEX Online Research: Polished Diamond Prices Rise in July
August 04, 15The IDEX Index for global polished diamond prices showed an increase in July, but that single index figure does not tell the whole story. Prices were mixed, and trading was choppy. Here’s the underlying detail:
· The IDEX Index of Global Polished Diamond Prices averaged 132.2 during July, up from June’s average of 130.1. The good news: prices were generally fairly solid. The better news: this is the second consecutive month that diamond prices have edged higher.
· On a daily basis, prices drifted slightly lower later in the month. Polished diamond prices reached a daily high of 133.3 on the IDEX Index scale on the first day of July, but drifted lower to the mid-132 range mid-month, and fell to the 131 range by the end of the month.
· There was a wide variation in price trends by size of stone. Diamonds in the 0.5-carat range dropped significantly in price. Further, 4-carat stones also dropped in price. Stones ranging in size from 1 carat to 3 carats posted varying gains on a month-to-month basis.
Polished Diamond Prices: Ups and Downs
Price volatility began in the third quarter of 2014, and has continued unabated in 2015. If anything, the volatility has accelerated during the first seven months of 2015.
The graph below illustrates short-term trends – and recent volatility – for polished diamond prices.
A graph of polished diamond prices for the past five years puts the recent price volatility in perspective, as shown below:
On a month-to-month basis, July global polished diamond prices were up 1.6 percent, when compared to June, as the graph below illustrates. Further, the graph illustrates the movement in recent polished diamond prices.
On a year-to-year basis, global polished diamond prices were lower in July, when compared to the same month a year ago – July 2014 – as the graph below illustrates. This is a worrisome trend, since this is the eleventh consecutive month that polished diamond prices have been flattish or below the prior year’s level.
Daily Diamond Prices Drifted Lower
Despite higher average prices for the month of July, when compared to June, overall polished prices started the month high, but ended lower, dropping just slightly almost every day. By the end of the month, they were down slightly over 1 percent from the high at the beginning of the month.
After less-than-robust demand at recent trade shows, coupled with industry banking and credit turmoil, it is no surprise that diamond prices have trended sideways to slightly down.
The graph below summarizes polished diamond prices on a daily basis during July 2015.
Diamond Prices By Size Bounced Around in July
There was no pattern to diamond prices by size. Similar to trends in June, small stones – about 0.5 carat in size – showed a notable price decline since there appears to be an ample supply of these diamonds. Among larger diamonds, 4-carat gemstone prices were off. In between, prices were up, but mixed in terms of percentage gains.
On a month-to-month basis – comparing prices in July 2015 to June 2015 – prices for most polished diamonds were mixed, as the graph below illustrates.
On a year-to-year basis – comparing prices during July 2015 to July 2014 – polished diamond prices were lower for all major sizes of gemstones. The graph below illustrates the year-to-year price trends for polished diamonds by size.
Over the longer term, the most price volatility has occurred among stones 3 carats and larger, as the graph below illustrates:
Outlook: Diamond Prices Could Be Poised for Negative Bias
In the past, we’ve cited many reasons that diamond prices were not expected to rise significantly – or decline notably – this year. We noted that the global economy is sluggish, and shoppers are showing restraint.
Now, we have new factors that are likely to have a negative impact on diamond prices. All of these factors are industry-specific: diamond banks are reducing credit, significant changes have occurred in diamond Sight terms, diamond grading irregularities have surfaced and lab-grown diamonds seem to be slipping into the market. Those internal challenges are likely to have a negative impact on polished diamond prices.
As a result, we have reduced our diamond price forecast to a “negative bias” from our earlier prediction of “flattish” prices in 2015.