Diamond trading was seasonally slow in December as the industry’s focus shifted to retail and as diamantaires took their end-of-year break. Sentiment received a boost from strong holiday e-commerce sales, the distribution of Covid-19 vaccines, and the US approval of a $900 billion coronavirus stimulus package.
Polished prices firmed as supply declined due to limitations on diamond manufacturing during India’s lockdowns. The RapNet Diamond Index (RAPI™) for 1-carat diamonds rose 2.3% in December and 5.8% for the full year.
|RapNet Diamond Index (RAPI™)|
|December||4Q 2020||FY 2020|
|RAPI 0.30 ct.||0.4%||-4.7%||0.2%|
|RAPI 0.50 ct.||0.8%||-2.3%||12.1%|
|RAPI 1 ct.||2.3%||3.8%||5.8%|
|RAPI 3 ct.||2.5%||7.0%||3.7%|
© Copyright 2021, Rapaport USA Inc.
The industry began 2021 with a healthier supply-demand balance than it had at any stage in the past five years.
The volume of 1-carat diamonds on RapNet in the D-H, IF-VS range — the categories the RAPI measures — declined 24% in the second half of 2020. The top 10% of diamonds in that category were selling at an average of 32% below the Rapaport Price List on January 1, 2021, compared to 37% below on July 1, 2020. The lower discount suggests that demand is stronger relative to the available supply.
Manufacturers are raising polished production in anticipation of steady first-quarter orders as jewelers and dealers seek to replace inventory they’ve sold during the holiday period.
Jewelers with solid e-commerce programs had a good season. Many off-mall independents also did well, as consumers felt safer visiting stand-alone stores than crowded malls and were driven to support local community businesses following the Covid-19 lockdowns. Independents without an effective online presence struggled.
US jewelry sales for October 11 to December 24 fell 4.3% year on year, according to Mastercard SpendingPulse. Online jewelry sales grew 45%.
There is some optimism for the year ahead even as Covid-19 continues to disrupt business activity. To ensure growth, the trade must intensify its efforts to engage with consumers via storytelling and improved omni-channel platforms while keeping supply in sync with prevailing levels of demand.