Tuesday, 15 September 2015

Low Diamond Prices May Last a While

falling-diamond-prices-likely-to-staySo it looks like there isn’t a near-future turn-around for the diamond market. Recently prices dropped a significant amount due to demand for the shiny stones and other economic factors.

On Septembe 14, 2015 the Wall Street Journal reported that this may be a new reality for the diamond industry. A strong US Dollar has made it more expensive for retailers to buy diamonds in Europe and Asia. And because of the price drop there’s less demand from low-volume retailers and cutters.

And of course, there’s China – and all the worries surrounding that country’s economy. So for now, De Beers – one of the largest Diamond companies in the world – seems to be dealing with the low demand and low prices.

Here’s what the Wall Street Journal had to say about the China concerns:

A sharp slowdown in jewelry buying, partly linked to a corruption crackdown, caught out retailers like Chow Tai Fook. Ambitious growth plans have been shelved. And, as a result, the companies are sitting on excess stock. Chow Tai Fook’s inventory measured in days’ turnover jumped to 321 in its fiscal year to March, a third higher than two years ago.

There is likely more weakness to come. Whether or not the summer gyrations of the Chinese stock market hurt the real economy, volatility risks denting consumer confidence. Further devaluations of the yuan would exacerbate currency headwinds.

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