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Diamond Prices Slide as Year Begins with Caution

Indian Banks Reduce Industry Credit
Feb 5, 2019 5:00 AM   By Rapaport
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RAPAPORT PRESS RELEASE, February 5, 2019, Las Vegas … Polished-diamond prices softened in January as US restocking proved slower than expected after the holiday season, and as Far East buyers took vacation ahead of the Chinese New Year. Dealers were cautious due to weak demand, tight profitability and a significant reduction in bank credit.

The RapNet Diamond Index (RAPI™) for 1-carat diamonds fell 0.4% in January and was down 1.8% from a year ago.

RapNet Diamond Index (RAPI™)
January  Y2Y
Feb. 1, 2018, to Feb. 1, 2019
RAPI 0.30 ct. -0.8% -4.1%
RAPI 0.50 ct. -0.3% -0.1%
RAPI 1 ct. -0.4% -1.8%
RAPI 3 ct. -1.8% -5.9%
© Copyright 2019, Rapaport USA Inc.

Although polished prices declined in the second half of 2018, inventory levels have remained high: The number of diamonds on RapNet as of February 5 was 26% higher than a year ago, coming to 1.5 million. In January, rough trading was slow, as De Beers and Alrosa left prices unchanged.

Bank credit to India’s diamond trade declined by up to 30% in the past year and currently stands at $5 billion to $5.5 billion, as noted in the January edition of the Rapaport Research Report. The reduction resulted from several factors:
• State-owned banks adopted a more conservative approach across all industries in response to a rise in non-performing assets in the country.
• The 12% depreciation of the rupee against the US dollar in 2018 reduced credit in dollar terms, since Indian credit lines are set in rupees.
• Bankers raised the industry’s risk profile following the $2 billion alleged fraud of Punjab National Bank by jewelers Nirav Modi and Gitanjali Gems.
• Manufacturers’ profits continued to tighten due to high rough prices.

Indian diamantaires need to improve transparency and profitability to gain favor with the banks. A shift to a more conservative lending environment in India will exert additional pressure on the trade in 2019, but will be a positive development in the long term. With reduced bank credit, businesses will have less money to spend on non-profitable rough, helping to shift their mind-set away from turnover and toward bottom-line profits.

To learn more about the Rapaport Research Report and to subscribe, click here.

Rapaport Media Contacts: media@diamonds.net
US: Sherri Hendricks +1-702-893-9400
International: Alex Shine +1-718-878-5138
Mumbai: Prashant Bhojani +91-97694-66855

About the Rapaport Research Report: The Rapaport Research Report provides subscribers with in-depth analysis of key issues affecting the diamond market. It presents exclusive analytics of diamond prices for a variety of categories, based on sales and inventory data from RapNet® – The Diamond Market.

About the Rapaport RapNet Diamond Index (RAPI™): The RAPI is the average asking price in hundred $/ct. of the 10% best-priced diamonds, for each of the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded, RapSpec-A3 and better) offered for sale on RapNet® – The Diamond Market. www.RapNet.com has daily listings of approximately 1.5 million diamonds valued at approximately $7.4 billion. Additional information is available at www.diamonds.net.

About the Rapaport Group: The Rapaport Group is an international network of companies providing added-value services that support the development of ethical, transparent, competitive and efficient diamond and jewelry markets. Established in 1976, the Group has more than 20,000 clients in over 121 countries. Group activities include Rapaport Information Services, providing the Rapaport benchmark Price List for diamonds, as well as research, analysis and news; RapNet, the world’s largest diamond trading network, with over 15,000 members in 97 countries and daily listings of approximately 1.5 million diamonds valued at approximately $7.4 billion; Rapaport Laboratory Services, providing GIA and Rapaport gemological services in India, Israel and Belgium; and Rapaport Trading and Auction Services, the world’s largest recycler of diamonds, selling over 500,000 carats of diamonds a year. Additional information is available at www.diamonds.net.

Image: A loupe and polished diamonds. (Shutterstock)
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Tags: Alrosa, De Beers, diamonds, Gitanjali, India, Jewelry, Nirav Modi, Punjab National Bank, Rapaport, RAPI
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