Global Trends in Diamond Demand

There is debate whether the diamond industry is a manufacturing, natural resource, or a consumer industry.  Many factors contribute to the rise and fall of diamond production and purchase which can be reviewed as global demand trends.

According to the IDEX Online Polished Diamond Price Index, average day-to-day polished diamond prices have remained steady for the last eight consecutive months, rising a mere 0.1 percent in November month-over-month. The IDEX Online Diamond Price Index is a real-time index constituted from actual asking prices in the global diamond industry: it therefore objectively reflects price trends as they occur.

Whilst rough diamond prices are higher, consumer demand for diamonds and diamond jewellery has been tenuous for over the past year which has kept polished diamond prices low.  Year-over-year prices have dipped for polished diamonds for the past eleven months and prices remain 10.1 percent below last year’s average.

In November all major diamond sizes experienced slight price deflation; large diamonds of three carat upwards showed greater levels of price deflation than diamonds sized under three carats. This trend of bigger diamond prices decreasing more rapidly has characterized global polished diamond prices over the last few months.

However August 2008 saw a peak in diamond prices and they continued to soften in September, indicating that the year-over-year rate of decline is contracting.

For instance, jewellery demand within the US market is exhibiting a recovery.  As American shoppers are responsible for consuming approximately half of the world’s jewellery, polished diamond prices are expected to increase within the improved demand over the holiday selling period.

As predicted, digital research comScore verified on Monday that US consumers have spent nearly $19.9 billion online so far during this holiday season. This indicates a 3 percent increase compared to the corresponding days of 2008.  In comparison to 2008, the most substantive increases were recorded on Thanksgiving Day (November 26th), Black Friday (November 27th) and Cyber Monday (November 30th).  Over the past week American online holiday shopping reached a total of $4.6 billion and we have since seen a 30 percent rise from the total online spending numbers released by comScore last week.  On December 10th holiday sales reached $852 million.

Fronted by IDEX Online Research is a forecast of modest recovery in diamond jewellery demand for 2010, with a rise in prices due once the demand solidifies. Preliminary figures could be premature but they anticipate recuperation in prices which will see an 8 - 10 percent sales profit for the full year.

However, the polished prices recovery period in 2010 could experience some volatility or instability. If there are any new system shocks prices will be affected. On a long term though the global trend in polished diamond prices is expected to stabilise back into usual annual inflation levels of 3 - 4 percent.