De Beers' decision to cut prices for smaller rough diamonds at its latest sight reflects ongoing challenges in the diamond market. Despite reductions of 4% to 6% for 3-grainer (0.75-carat) and smaller goods, and around 4% for 4- to 6-grainers (1 to 1.5 carats), concerns linger over profitability for manufacturers. This move comes amidst a backdrop of sluggish retail demand in key markets such as the US and China, where polished sales have been lackluster.
The diamond industry has been grappling with weakened consumer demand and economic uncertainties, leading to a decline in polished prices since February 2022. While there have been some signs of recovery, particularly in SI-clarity diamonds, higher-clarity goods have faced challenges. The RapNet Diamond Index (RAPI™) for 1-carat goods, reflecting round, D to H, IF to VS2 diamonds, has fallen by 3.9% between January 1 and May 1, indicating ongoing market pressures.
For manufacturers, the narrowing gap between De Beers' rough diamond prices and those in the outside market has raised concerns about margins. Despite maintaining relatively high prices for 3-grainers and smaller rough in recent months, De Beers has faced pressure to align its pricing strategy with market realities.
Additionally, speculation surrounding the future of De Beers has added to industry uncertainty. Reports of potential sale discussions by parent company Anglo American have raised questions about the long-term direction of the iconic diamond brand. While the company's conservative approach to rough prices has helped stabilize the market in the past, ongoing challenges suggest a need for adaptive strategies to navigate the evolving landscape of the diamond industry.
