RAPAPORT… The sharp rise in diamond prices lately is due in part to speculation, cautioned Rapaport Senior Analyst Avi Krawitz in the Diamond Trends Webinar last week.
Unlike in 2021, when record growth in jewelry sales pushed diamond prices up, the gains of 2022 owe more to supply factors than to demand ones, he explained.
Mining companies are pushing for a shorter, more efficient supply chain in which a larger portion of rough goes immediately toward manufacturing rather than trading on the secondary market. At the same time, miners are producing less than before the pandemic and selling all their new output, having reduced their excess inventory in the last year.
This combination of factors has led to shortages on the secondary rough market, driving up prices to unsustainable levels, Krawitz said. Manufacturers, in turn, are raising polished prices as their costs increase, even though polished inventory continues to grow.
Watch the full presentation above.
Webinar: Behind the Rough-Price Surge
The Bottom Line
- The 2022 diamond price increase is driven more by supply factors than by demand, unlike the 2021 surge linked to jewelry sales growth.
- Mining companies are streamlining supply chains, directing more rough diamonds straight to manufacturing and reducing secondary market trading.
- Reduced mining output and depleted inventories have caused shortages in the secondary rough market, pushing prices to unsustainable levels.
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