Buyers prefer logic to emotions and decided to buy only those goods that they can use with profit

As expected, large diamond mining companies and large suppliers to the market offered large volumes of diamonds in this cycle. The declared list prices were, in the main, stable, with one big exception. Still, retailers and wholesalers with large stocks of diamonds are in no hurry to buy diamond jewelry, even in the United States, where business is the most stable.

Supplier prices

On De Beers website in Botswana, held last week, goods were offered for about $ 600 million and an additional $ 50 million for unscheduled applications. According to the sightholders, De Beers did not lower the declared prices. But it was reported that the assortment was weak in quality, which means that in reality, prices were higher.

The reason for the weak assortment is not known. Earlier it spoke about changes in volumes of production. This is part of the nature of mining: certain levels of inconsistency should be expected. Sightholders hoped that prices would be adjusted, but this did not happen.

The price list of De Beers showed a wide combination of price changes both upward and downward. Some prices have changed only by a fraction of a percent, and in other cases the changes have been more than 10 percent. Such fluctuations can sometimes be expected. The problem is that there has been no increase in demand for any type of diamonds, which could explain the double-digit price increase.

Reaction from sightholders is discontent. They expected De Beers to keep prices at least stable. The only thing that everyone in the industry wants is stability, which seems even more difficult to achieve than ever.

Demand for unscheduled deliveries

As on the May website, applications for unscheduled deliveries of goods worth $ 50 million were for several products that are really in demand and whose production remains profitable. These goods are intended primarily for the American market. If the prices of these diamonds are too high, then it eats up the profits that can be obtained from diamonds, then the interest in these diamonds is lost. According to the sightholders, it happened with some of the goods.

It is not clear from what number of products have been refused. Insiders say that they refused only 10% of the goods on the site, some indicate up to 35% and even 40% of the goods. Because of the prices, some unscheduled goods are also not redeemed. Buyers prefer logic to emotions and decided to buy only those goods that they can use with profit. Most of the remaining goods were abandoned.

ALROSA, on the other hand, is reported to have raised prices announced during the last offer cycle. ALROSA's customers are talking about an increase in prices by 2-3 percent. And again, you need to ask: why? If the market is very stable and is no longer shrinking, the supply of an expensive product to the market is, at best, surprising.

Consumer demand

It should be noted that there is a change in the consumer market. The demand for larger goods has changed, for example, diamonds weighing 3-5 carats GH and purity VS2-SI2. They were once popular in the American market. When buyers in China began to show interest in them, the prices for them increased, and the American market began to buy less, because they became too expensive. With the increase in wholesale prices, prices for rough diamonds have risen.

At present, Chinese buyers no longer seek to have these goods, and the prices for them have receded back to their original levels. This again returned the interest of the United States market. But what happened to the prices of rough diamonds for making these diamonds? They stayed tall. And that's not all, during the last offer cycle, some vendors even grew even more. As a result, it may happen that, in the end, there will be some demand, and diamond producers will not produce them, because it will hold back the price of rough diamonds.

Wholesale strategy

The middle part of the diamond market - diamond producers and wholesalers - is looking for ways to adapt to the continuing situation in the market. They buy what they can afford, send their workers on long holidays in order to reduce the amount of work in the factories, negotiate with banks about more favorable conditions and do everything possible to reduce the levels of stocks that link most of their financial resources.

At the same time, they are doing everything possible to keep prices high. At a recent exhibition in Las Vegas, traders kept prices for everything they could. There was a demand and there were deals on ordinary goods for the American market: diamonds weighing 2 carats and below the color in the GHI range, SI-I purity, and sometimes VS2. Wholesalers did not make concessions in the prices of these goods.

For diamonds of a smaller size and lower cost, the situation was different. To keep prices low, diamond manufacturers have loaded their factories with cheap diamonds in recent months, resulting in lower-priced diamonds - a combination of lower color, lower purity and smaller sizes. In the range of diamonds there is a large offer, and many financial opportunities are associated with this. The demand for these products was lower, and prices in many cases fell even more. This creates a cash flow, but not the required level.

Last month, demand for diamonds fell. There was a decrease in demand in almost every range of diamonds, especially for diamonds of small size, 1 carat and lower. For diamonds of round cuts weighing from 1.50 carats to 2 carats, demand rose, probably in anticipation of a trade show in Las Vegas.

According to the revised analysis of the demand for round cut diamonds in the current market, demand stabilized (see table below). Demand has largely remained unchanged, as both retailers and jewelry manufacturers are not experiencing, and currently do not expect, growth in demand from consumers.

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