Economic headwinds, Chinese caution and the threat of lab-grown are the trade’s current concerns. But the recurring difficulties that existed before Covid-19 have not gone away.
“The more things change, the more they stay the same,” wrote French writer Jean-Baptiste Alphonse Karr in 1849. The famous proverb is understood to mean no matter how tumultuous a situation is, some underlying patterns remain consistent.
The diamond industry must keep this in mind as it navigates the current market slump. Can the trade learn from the past and bring about a sustainable improvement? While US economic weakness, rising competition from lab-grown diamonds and the slowdown in China sparked the downturn, market inefficiencies over the past 15 years have also contributed.
Polished prices have seen their sharpest drop in recent memory. The RapNet Diamond Index (RAPI™) fell 38% from April 2022 to November 1, after sharp increases recorded in the post-pandemic years of 2021 and 2022.
Twice before in the past decade and a half has the RAPI index seen a similar diamond industry pattern (see graph). Pre-2008, the market was on a strong upward trajectory before the financial crisis. When the markets crashed the 1-carat RAPI fell 29% from its peak in August 2008 to its bottom in April 2009. The retail expansion in China then drove a recovery, fueling prices to rise sharply until mid-2011.
For the rest of this article: https://rapaport.com/analysis/time-to-tackle-the-diamond-industrys-pre-pandemic-challenges/