Rough Prices Drop as Trading Cools

RAPAPORT… Rough prices have fallen substantially on the open market following months of heightened activity, dealers told Rapaport News.

Buyers had stocked up on goods in anticipation of further price increases, while rising rough valuations had resulted in thin manufacturing margins, traders explained. Russia’s war in Ukraine has also prompted buyers to hold back.

Prices on the secondary market have slipped by around 10% for 2-carat goods and larger in recent weeks, with rough up to 0.75 carats declining by 20% to 25%, a manufacturing executive said Thursday on condition of anonymity. Prices of the smallest melee items have slid approximately 40%, he added. Tenders have also seen price drops of more than 10%, the sources noted.

“There was excess liquidity in the market [as] everyone thought that rough [was] going to be less [plentiful] and demand [was] going to be there,” he said. “So a lot of people chose to leave their goods in the safe, whether it was rough or polished. And this was pure speculation, which I think is unwinding right now.”

The rough market has branched off into two markets in the past few months: Tenders and auctions have seen rocketing prices as the midstream scrambled for goods amid shortages, while Alrosa and De Beers have implemented more modest increases at contract sales.

The split continued in March, with Alrosa keeping prices steady at this week’s contract sale, according to the sources. Customers were willing to buy but also displayed some caution, and are are using a variety of payment solutions amid financial sanctions on Russian businesses, they said.

“The Indian players appear not to be blinking before buying, whereas the Belgian ones are blinking at least, but I think they will end up buying,” an insider said.

Some of Alrosa’s contract clients are worried about the market being weaker when the rough they buy reemerges as polished, but they are keen to remain on good terms with the miner, he added.

Alrosa’s sale took place last week from Monday to Thursday. De Beers’ next sight is scheduled to begin this Monday.

Image: Rough diamonds. (Alrosa)