Market Overview

Rapaport Press Release: Diamond Trading Slows in March

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1-carat RAPI up 2.8% in 1Q

Diamond prices stabilized in March, but sentiment softened after a
positive start to the year. Dealers were disappointed with the Hong Kong
diamond show, while a major bank fraud involving two Indian jewelry
companies impacted confidence as well.

The RapNet Diamond Index (RAPI) for 1-carat diamonds slid
0.1% in March. RAPI for 0.30-carat stones rose 0.4%, while RAPI for
0.50-carat grew 1.1%. RAPI for 3-carat diamonds declined 0.4% during the
month. RAPI for 1-carat rose 2.8% during the first quarter.

 
RapNet Diamond Index (RAPI)
        March       1Q 2018      

Y2Y
Apr. 1, 2017 - Apr. 1, 2018

RAPI 0.30 ct.       0.4%       7.3%       2.7%
RAPI 0.50 ct. 1.1% 5.4% -9.1%
RAPI 1 ct. -0.1% 2.8% -1.5%
RAPI 3 ct.       -0.4%       0.0%       0.9%

© Copyright 2018, Rapaport USA Inc.

Allegations that jewelry tycoon Nirav Modi spearheaded a $2 billion
fraud against India's state-owned Punjab National Bank fueled concerns
that lenders would tighten credit to the diamond sector. Other banks
have already raised their collateral requirements, and the financial
year that began April 1 is likely to see a liquidity squeeze. Some large
manufacturers with sizable credit lines are facing greater scrutiny.

Manufacturers are also under pressure from the rough side after De Beers
raised prices an estimated 2% to 3% in the first quarter. Cutters are
protecting their profits with steady polished prices, and buyers have
adapted to the higher rates that emerged in January and February.
Retailers are supporting demand by restocking after good US and Chinese
holiday seasons.

The Hong Kong show was slower than expected, but the outlook for China
remains positive. Consumers have acclimated to Premier Xi Jinping's rule
and are starting to spend again. A shortage of eligible women is leading
men to prove their value and spend more on diamonds.

The Hong Kong-driven recovery in the watch industry lifted the mood at
Baselworld, but diamonds continue to lose status at the event. New trade
shows in Antwerp (Carat+) and Geneva (GemGenève) during May might
provide suppliers with better selling opportunities in the high-end
European market.

Rapaport expects polished trading to continue slowing in the coming
months, as the second quarter is traditionally a quieter period for the
diamond trade.

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