The February Sights have ended, and the market remains slow and depressed.
Premiums in the secondary market were slightly higher than last month: from an average of 2.1% with 53 days’ credit in January to 3.4% and 50 days’ credit in February, as you can see on Bluedax.com Home Page monthly performance section.
One of the factors that contributed to this increase was a price reduction by De Beers for a few items. However, once you take into account all the costs (VAS + broker + expenses + interest), even these slightly better numbers were still not enough to allow sellers to make any profit.
Performance by Size
• 5-10 ct +
Low demand for these sizes due to low demand for polished goods of 3 carats and up, especially in the high end where the value is high.
• 2-4 ct
Good demand for boxes as the 1-2 carat polished is selling well
• 4-8 grs
Medium demand for some boxes which sold for as much as 5% above the list, but with long credit terms.
The 0.30-0.90 polished is moving but the prices have to be very competitive, which, once again, leaves manufacturers without any profit.
This category was hurt the most in the past year and there is still low demand, especially in the cheaper ranges where prices are continually dropping.
This range was also affected by the large volume of recycled polished melee goods that entered the Indian polished market and which substantially affected the market for some items.
At the moment, there are limited goods on the outside market as a result of a stop on all artisan mining in Angola (the main source of these items), leading to high prices.
Buyers in Angola are also playing a new purchasing game for goods from Sodiam and Endiama. In the spirit of the Sight system, buyers are making strategic purchases from the miners in the hope of winning long-term supply contracts.
This is resulting in them overpaying for goods and clients in the secondary market being scared off by the high prices. Inevitably, some of these goods are being traded at a loss; a situation that cannot continue for much longer.
The industry in India is steeling itself for the annual meeting to discuss credit with the banks. Some are saying they expect the banks will cut at least 15% off the current credit line, which could push rough and polished prices down.
It seems as if the lab-grown diamond business is growing. According to reports, there was a big increase in the number of companies selling lab-grown diamonds at the Hong Kong show compared to previous years.
More importantly, public interest in lab-grown diamonds is increasing.
Ultimately, some mines are going to be affected by these goods as they will no longer be seen as economic to keep as going concerns.
The general mode in the industry is not good.
No matter how hard they try, people are just not able to make money.
Unfortunately, there is no solution in sight.
While everyone knows what the sickness is, no one has a cure.
Let’s hope the industry soon finds its way back to profitability, especially in the mid-stream.
Until then, have a good week.