Buying diamonds this festive season? Bigger is better – by Prinesha Naidoo (Mineweb.com – November 12, 2015)

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Industry’s woes have all but wiped out the value of large diamonds.

JOHANNESBURG – The global diamond industry appears to be in a precarious position with weak consumer demand, a supply overhang and a credit crunch among rough diamond traders weighing on prices.

According to various reports, rough diamond prices have decreased more than 12% this year alone. The RapNet Diamond Index (see table above) reveals prices for polished stones between 0.3 carats (ct.) and 3 ct. and reveal how prices have plummeted between January 1 and November 1 this year.

Similarly, data from PriceScope (see chart below) shows the average price of stones between 0 and 0.5 ct. are now lower than at any point during the financial crisis.

As with industrial commodities, much of the decline in diamond prices has been blamed on slowing economic growth in China, the world’s second largest consumer of diamonds after the United States.

According to a 2014 report by De Beers, diamond jewellery sales in China were the fastest growing in the world from 2003 to 2013, growing at an annual compound rate of 21%. Over the same period, the company said average prices paid rose 32% in real terms while average carats per piece rose from 0.18 ct. to 0.25 ct.

Recently, De Beers said Chinese demand for diamonds would grow at around 4% this year, compared to the 6% growth rate registered in 2014. As a result, it cut its full year diamond output target three times this year from an initial goal of 34 million carats (Mct.) to 29Mct.

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