Global diamond industry may start recovering from the second half of 2009 as positive signals have begun to emerge from main consuming markets, especially the US.
As other global markets show signs of bottoming, it is likely that prices of polished diamonds will firm up and perhaps a gradual recovery will ensue. The recovery is reasonably likely to begin in the second half of 2009, according to latest online survey conducted by International Diamond Exchange (IDEX).
Global polished diamond prices dipped by 10.8% in April 2009 compared to the same month a year ago. It was the fourth month that year-on-year prices dipped for polished diamonds.
All key diamond sizes experienced price deflation. The seven stone sizes represent about one-third of the trading market by value. On a year-on-year comparison, polished diamond prices for the key sizes and qualities fell from the prior year. Almost all sizes of diamonds showed a double-digit loss in April. Comparisons were difficult, since there were a string of double-digit price gains for the larger diamond sizes in 2008.
For the month of April 2009, average global polished diamond prices declined by 1.4% over average diamond prices during March 2009. The IDEX Online Polished Diamond Price Index stood at 108.40 in April 2009 against 121.51 in April a year ago, according survey report.
?Polished diamond prices globally may continue to decline, though at a more modest rate. They have dipped below the historical trend line inflation rate of 3-4% annually, though we believe that they will eventually return to this historic rate of annual inflation,? IDEX report says.
Polished diamond prices appear to have nearly leveled out, ending a free-fall that began in late 2008 and continued into early 2009 as panic selling by diamond dealers has abated.
?We believe that diamond demand and diamond prices are more likely to remain relatively untouched by potential commodity market volatility in the future, once the US and the global economies stabilise. Further, based on 50,000 or more years of demand trends, we do not expect to see any major shift in consumer demand for diamonds or other jewellery as the global economy emerges from the current recession,? report says.
There are some positive factors that that suggest polished diamond demand is firming, and polished diamond prices could stabilise, prior to potentially moving higher.
One of the key factors is that US jewelry retail sales have stabilised, so there is some optimism in the air. Rough diamond suppliers cut back on mining activities, but some appear poised to restart mining operations due to increased demand. Rough diamond suppliers have played a major role in stabilising polished diamond prices and bringing balance to the polished diamond market. Recent sales forecasts also suggest that global diamond sales will be down by only low double-digit levels in 2009.