Diamond trading markets have remained robust throughout the Holiday Season underpinning the positive sentiment across global diamond trading markets. Preliminary indicative market data support these sentiments with solid online sales, steady increases in traditional retail jewelry sales and record high consumer price index (NYSEARCA:CPI) for jewellery. Moreover, diamond exports from major diamond trading centers continue to rise reflecting the solid manufacturing and trading activity further up the diamond pipeline.
The year is ending on a positive note for rough diamond producers. Rio Tinto, BHP and Alrosa implemented price increases on their December allocations to clients while the DTC kept its assortments and prices stable at last week’s sight. This in turn has fuelled demand and premiums on DTC goods on the open market particularly from Indian manufacturers. The estimated value of last week’s DTC sight is $400-$450 million bringing the estimated 2010 annual sales to around $4.75 - $5 billion which is still below the annual sales of $5.93 billion in 2008 but well above $3.24 billion posted in 2009.
As noted earlier in the month, polished diamond prices have begun to break through resistance barriers that have held steadfast since July this year. Solid pull-through from the U.S. retail market and consistent demand from Asian and emerging markets, against the backdrop of shortages of some in-demand items in dealer markets, have contributed to the rise in polished diamond prices over the last month. Investment Diamond prices have risen 1-2 percent on average over the last month with some specific categories increasing as much as 5 percent. Special and Unique Diamonds continue to reach dizzying record highs as evidenced by recent Sotheby’s and Christie’s auctions.
Notwithstanding some of the prevalent risks inherent in the diamond pipeline, as we head into the final days of 2010 we maintain our overall ‘positive’ outlook for investment diamonds both in the short and medium terms and expect prices to continue to trend upwards finishing the year with a 20 percent gain.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.