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Las Vegas, NV--The diamond industry experienced a quiet February as the market geared up for the Hong Kong International Jewellery Show, which took place from March 1 to 5.

[Photo by Marta Branco]

According to a news release by Rapaport, the market remains segmented, with smaller diamonds outperforming those over 0.50 carats. The RapNet Diamond Index (RAPI) for 0.30-carat polished diamonds rose 3.5% in February due to a supply decline in the past year and a resurgence in Chinese demand.

Conversely, RAPI for 1-carat diamonds fell 0.1% during the month and 21.7% year on year. While there was a steady demand for VVS clarity, the RAPI category range, the weakness in VS offset this, with sharp declines seen in SI goods.

Dealers exercised caution in light of ongoing economic uncertainty in the US. Retailers have not restocked their inventory as per usual for Q1. However, Mastercard said US jewelry sales climbed 6.5% yearly in January, thanks to Valentine’s Day shopping.

The industry’s focus shifted to the Far East after China lifted its Covid-19 restrictions and reopened its borders. While consumer spending takes time to resume, jewelers expect pent-up demand to be released in the coming months.

Suppliers have increased discounts on 1-carat and larger diamonds, particularly for Chinese buyers at the show, to reduce excess inventory and improve liquidity. However, the release noted that many exhibitors were still left disappointed.

The rough market remained steady in February, as the drop in Alrosa supply caused shortages. Factories are gradually increasing polished production in anticipation of better demand in H2 2023. De Beers raised prices on small rough for the second consecutive month. Auction prices have also increased. The G7 nations' plans to impose new sanctions on Russian-origin diamonds will likely stimulate demand for non-Russian supply.

Learn more in this news release.