Monthly Update on the Diamond Market

Welcome to our monthly section dedicated to updates on the diamond market. In this space, we will analyze the main trends and the most significant events that marked the month of August. The information presented comes from reliable sources such as Rapaport News and IDEX.

Overview of the Market

In August 2024, the diamond market continued to show signs of weakness, with a persistent reduction in prices due to an oversupply and uncertainty in global demand. Competition from synthetic diamonds, coupled with global economic challenges, further weakened sales, particularly in key markets such as the United States and China.

The RapNet Diamond Index (RAPI™) for one-carat round diamonds, ranging from D to H color and IF to VS2 clarity, recorded a decline of 1.1% in August. Diamonds weighing 0.30 carats, 0.50 carats, and 3 carats also experienced decreases of 2.7%, 0.7%, and 0.9%, respectively. However, compared to July, the declines were less pronounced due to an update in the RAPI calculation methodology, which excluded certain low-priced diamond listings from China.

The phenomenon is not limited to diamonds; the Swiss watch industry is also facing challenges, as evidenced by a 7.2% year-over-year decline in exports. Prestigious brands such as Rolex, Patek Philippe, and Audemars Piguet have announced their intention to reduce production capacity.

Significant Events of August 2024

The diamond inventory on RapNet increased by 4% from July to September, reaching 1.74 million stones.
The rough diamond market experienced a significant decline, with August sales seeing a marked price drop ranging from 5% to 15%. De Beers' revenue fell by 21% compared to the same period last year, prompting the South African multinational to decide to reduce its production by 19% in an effort to stabilize prices.
India has cut its polished diamond production by 50% due to weak demand and rising competition from lab-grown diamonds. Many small operators in the industry are struggling, leading to layoffs and a resizing of operations.
Alongside decreasing consumer spending, there has been a growing preference for smaller-sized diamonds. As a result, some companies have started promoting more accessible options rather than focusing on larger diamonds.
As of September 1, the G7 restrictions on the import of Russian diamonds have been expanded to include stones of 0.50 carats and above. However, the United States has exempted from sanctions goods of Russian origin that were present in other countries before March 2024.

Some Curiosities from the World of Diamonds

Would you like to produce diamonds at home? Now you can!

Une entreprise chinoise a commencé à vendre en ligne des machines pour la production de diamants synthétiques sur Alibaba au prix de 200 000 dollars. Ces machines de 44 tonnes utilisent la technologie HPHT (haute pression, haute température) pour créer des diamants, une méthode plus traditionnelle par rapport à la technologie CVD, aujourd'hui plus avancée.

Bose Headphones with Diamonds

To celebrate its 60th anniversary, Bose has created an exclusive pair of headphones adorned with synthetic diamonds totaling 1.77 carats. The refined charging case is also embellished with diamonds, totaling 19.18 carats. All stones are of F/G color and VS clarity, and the set is valued at approximately $9,000.

Customers who purchase a Bose product between August 26 and September 16, 2024, will automatically be entered into a draw to win these precious headphones. This is an opportunity not to be missed to acquire a unique and truly "brilliant" product!

One of the Largest Rough Diamonds in the World Discovered in Botswana

One of the largest rough diamonds ever discovered, a 2,492-carat stone, has been found in Botswana at the Karowe mine, utilizing X-ray recovery technology. Canadian company Lucara Diamond Corp. announced this extraordinary discovery, which ranks among the largest diamonds in history, second only to the famous Cullinan diamond, which weighed 3,016.75 carats and was discovered in South Africa in 1905. The value and quality of the diamond have not yet been disclosed, but its size is truly exceptional.

Analysis of the month:

Sanctions Against Russia and Their Impact on the Diamond Market

International sanctions against Russia, imposed following the invasion of Ukraine, are profoundly reshaping the global diamond market landscape. Starting from September 1, 2024, a new phase of restrictions will take effect, banning the import of natural Russian-origin diamonds over 0.50 carats in all G7 member countries. This decision extends the existing sanctions, which previously applied only to diamonds of one carat or more, putting additional pressure on the industry. Companies are now required to implement much stricter traceability systems.

The Importance of Traceability in the Diamond Industry

Given that the United States accounts for more than 50% of global diamond demand and Russia is the world's largest producer of rough diamonds, it is clear that the G7 restrictions will have a significant impact.

As early as March 2024, European Union countries required that all diamonds imported into their borders be accompanied by detailed information on their origin. Antwerp, one of the world's major diamond trading hubs, now finds itself at the center of these new regulations.

The European Union has announced plans to use blockchain technology to ensure diamond traceability, preventing Russian diamonds from entering the market through false certifications. Other countries, such as the United States, have already implemented a self-certification system, while the United Kingdom is developing methods to verify the origin of diamonds using stricter documentation.

Side Effects of the Sanctions

Despite these measures, the effectiveness of the sanctions remains questionable. Alrosa, the Russian mining giant, reported an increase in profits over the past year by realigning its sales toward markets like Dubai, thus bypassing traditional European sales channels. This indicates that Russian diamonds continue to enter Western markets, albeit to a lesser extent, through alternative routes. Industry experts warn that the new sanctions will not be "airtight," and Russian-origin diamonds will likely continue to penetrate the global market via third-party countries.

Furthermore, these new restrictions may lead to delays in processing and increased costs, particularly for small businesses working on consignment, which now face additional expenses to comply with the new regulations. Some predict that the natural diamond market could experience further contraction, paving the way for greater penetration of synthetic diamonds, which are not subject to such restrictions.

Opportunity for Natural Diamonds

Despite the challenges, many industry experts believe these sanctions could represent a growth opportunity. If this transition period is leveraged effectively, natural diamonds could see their value rise due to their rarity and certified traceability. The increased demand for transparency from consumers, especially for luxury products like diamonds, along with the ability to guarantee and certify the origin of stones, could become key drivers of future sales.

In the long term, the value of natural diamonds may rise significantly as consumers become more conscious of the origin of the luxury goods they purchase. In this context, transparency and the reliability of the information provided will become crucial, particularly in meeting the expectations of a high-end clientele.

In conclusion, the sanctions against Russia pose a complex challenge for the diamond industry, but they also offer an opportunity to redefine the market with a focus on traceability and sustainability - factors that could shape the future success of the sector.

Conclusions

The global diamond market is undergoing a complex and uncertain phase. The decline in prices for both natural and synthetic diamonds reflects a decrease in demand and economic pressures affecting all luxury goods. The sanctions against Russian diamonds are further leading to a reorganization of supply dynamics and traceability, forcing suppliers to adapt to new regulations. However, these challenges also present opportunities for a more transparent, sustainable, and innovative market, opening new avenues for consumers and industry players.

Stay tuned for more updates and analyses on the fascinating world of diamonds.

Monthly Update on the Diamond Market - August 2024