Polished prices in December fell against the backdrop of the fall of liquidity in India because of the decision of the authorities to stop the circulation of bank notes of 500 and Rs 1,000. This was reported in the monthly report Rapaport portal.
Trade slowed because many diamantaires took leave during the holidays.
Diamond Index RapNet (RAPI) for 1-carat diamond category RapSpec A3 + fell in December by 1.3%. RAPI to 0.30 carat diamond increased by 0.2%, whereas for 0.50 RAPI-carat stones fell to 2.2%. RAPI for 3-carat diamonds dropped by 1%.
RAPI for 1-carat diamonds dropped by 3% in the fourth quarter and by 5% for the full year.
According to the report, sentiment has improved in spite of the decline in, and the level of consumer confidence rose in the United States. Record growth in stock prices and the Fed's decision to raise interest rates indicate an improvement in the economic outlook. A stronger dollar is also expected to lead to an increase in domestic spending.
Other markets remain weak. Travel expenses in China have been restrained, as the government restricts capital outflows. In addition, the RMB has depreciated in 2016. Sales expectations in the mainland of China positive for the Chinese New Year, beginning on January 28 while they are weak for Hong Kong.
Indian jewelery sales have fallen and is expected to remain under pressure during the first half of next year due to demonetization. Demand for lower-quality diamonds are generally supplied to the domestic market in India, fell. The Indian diamond cutting production at small plants was practically at a dead end, while major exporters with the proper accounts have been less affected by the demonetization.
Demand for diamonds has slowed, but stocks of diamonds were down because of the low availability of new supplies. Diamantaires be careful not to raise the level of stocks before the New Year.
Diamond trade are expected to improve in the first quarter of 2017, as retailers of jewelry will begin to replenish stocks of products sold during the holiday shopping season. Demand for diamonds may grow, while the mining companies will increase production of rough diamonds to meet short-term demand for diamonds. According to Rapaport opinion, diamond miners should resist the temptation to raise prices for rough diamonds for cutting and polishing to maintain the profitability of the segment and to sustain growth in the long term.
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