Market Overview

Rapaport Press Release: Diamond Trading Slows in Seasonal Lull

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1ct. RAPI -0.4% in July

Diamond prices softened slightly in July due to a seasonal slowdown as
US wholesalers closed for their summer vacations. Bargain-hunters were
asking for higher discounts during the quiet period, but suppliers had
little urgency to sell after a positive first half.

The RapNet Diamond Index (RAPI) for 1-carat diamonds slid
0.4% in July, but remains up 3% since the beginning of the year. The
index has increased 0.8% in the past 12 months.

     
RapNet Diamond Index (RAPI)    
  July Year to date* Year on year**
RAPI 0.30 ct. -1.2% 8.4% 6.2%
RAPI 0.50 ct. -0.3% 5.8% -0.2%
RAPI 1 ct. -0.4% 3.0% 0.8%

RAPI 3 ct.

-1.2% -0.3% 1.0%

© Copyright 2018, Rapaport USA Inc.

*January 1, 2018 to August 1, 2018. **August 1, 2017 to August 1,
2018.

US dealers have now returned from vacation, but are finding it difficult
to replace goods they sold during the second quarter when prices
strengthened.

Manufacturers are keeping polished prices relatively firm as they defend
high rough prices, which increased an estimated 4% in the first half of
2018. Lower rough supply is also supporting prices, with both De Beers'
and Alrosa's sales volumes declining 7% year on year during the
six-month period.

Polished inventory is consequently lower, with the number of diamonds
listed on RapNet down 3% from a year ago to 1.4 million stones on August
1.

While last year saw strong demand for smaller diamonds following India's
demonetization program, activity has shifted back to GIA dossiers, which
are selling well. There are consistent orders from the US and China for
0.50-carat, D to G, VS to SI diamonds, and rising interest in
0.70-carat, G to J, VS to SI after an extended weak period. Small stones
are moving slowly.

The depreciation of currencies in China and India is reducing the
budgets of local dealers and causing a shift in demand to lower
qualities. Still, Hong Kong jewelers have maintained steady growth,
which has raised expectations for the September Hong Kong show and the
October 1 Golden Week retail season. The US and China continue to
support the market and boost optimism for the second half, despite trade
tensions.

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