The third Sight of 2019 was bigger than the previous Sight, but quantities are going to be reduced in future cycles.
Demand for boxes in the secondary market weaked in April with premiums dropping to 3.1% compared to 3.4% in February, as you can see on the monthly preference section on Bluedax.com.
Low demand with manufacturers claiming that the polished yield from this range is not selling well and prices are dropping.
While there is demand for these goods, selling or trading the rough is still not leaving any margin for profit.
These goods are selling well, but there is also a lack of profit in trading the rough. Most of the premiums are somewhere between 0-1.5%, which translates into losses for the seller.
Goods in this size range were hurt the most, and we are still not seeing the situation improving with sellers unable to make any profit in this category.
The amount of goods entering the market from Africa dropped substantially, with price levels still high. There are no alternative to the Sight goods because they are too small and too expensive.
In general the polished market is slow, especially for high-end goods in larger sizes.
Smaller sizes, which are facing competition from lab-grown diamonds, are starting to see some difficulties too.
Compounding the situation, there are many rumors about companies going into liquidation to repay the banks.
All of these factors are affecting polished prices and creating panic and uncertainty in the market. There just aren’t enough margins to absorb this price volatility and every price drop represents a loss to the manufacturers
Banks all over the world are tightening their lines of credit. They understand that manufacturing diamonds are not profitable and after a few big bankruptcies that shocked the industry have lowered lenders’ confidence in the industry. As a result, clients need to bring increased collateral against their loans, which is putting even more pressure on them.
Lab Grown Diamonds
An increasing numbers of players are entering the lab-grown diamond market, for the simple reason that - compared to the natural diamond market - it’s possible to make a profit from lab-grown stones. There’s also good demand for this trend at the moment owing to a heavy media campaign and no one wants to get left behind. However, the presence of more sellers is pushing profits down, so there’s no telling how long this sector will remain so attractive.
The lack of profitability continues and rough prices don’t leave any room for mistakes.
Many players are searching for alternative and opportunities outside the diamond industry or simply shifting to lab grown diamonds.