Prices of rough diamonds have been on the rise for months now, with experts saying the price increase in the past three months has reached nearly 25%. And now, reports that De Beer’s Diamond Trading Company (DTC) raised rough diamond prices by an average of nearly 3% this week caused widespread concern among diamond cutters.
Despite the rise in rough diamond prices, the price of polished stones has actually stabilized. Now it looks like diamond cutters and manufacturers will be making every effort to hike up polished process, despite the unavoidable resistance they will certainly face from customers.
According to Rappaport Network News’s Avi Krawitz, most diamond officials expect this to cause manufacturing margins to continue to shrink in the face of rising operating costs.
De Beers and Rio Tinto Diamonds are both carefully controlling their rough diamond supply with production having held their sales last week from Monday November 8th through Friday, November 11th. While it’s not clear whether RTD has also implemented an overall increase on their rough
diamond prices, there have been reports that Angolan diamonds have also seen a 2% increase in prices just recently.
Rohit Mehta, director of Moments Creations and Jewellery India Pvt. Ltd and immediate past president of Surat Diamond Association(SDA) told Indian news portal Sify.com that this price hike may jeopardize the Surat diamond industry. “Various types of rough diamonds have seen price escalation in last three months or so. This is hurting us,” she said.
CO Vanai, another former SDA president, elaborated on the situation. “Polished diamond prices have stabilized, while rough diamond prices have surged. Few months ago, diamontaires used to get 2 to 5 per cent margins on sale of polished diamonds. Now, many are selling these precious stones on cost-to-cost basis,” he said.
While De Beers has announced their intention to increase their rough diamond production in 2011, they have been clear that they do not plan to come close to the high production levels they reached in 2007-2008. DTC spokesperson Louise Prior said that De Beers will not take a short-term approach to the diamond market. “We only take a long-term view on pricing and production,” she told the Rappaport News Network.
This simply leaves to be seen how diamond manufacturers will survive this holiday season. Many are hoping that polished diamond prices will be lucky enough to experience an increase this Christmas.
