Balance Of Diamond Price Is Disturbed Which Is Affecting The Marketing Of Diamond
2006: Balance Of Diamond Price Is Disturbed And Has Psychological Impact On Dealers
De Beers has announced yet another price increase, though they are not calling it that. A statement from DTC Sales Director Des Cavanagh said "We are re-balancing our prices from the February Sight, the overall effect of which will be an increase of under 2 percent."
The statement said that the price increase "is intrinsically linked to the performance of the polished demand in the key consumer markets" and notes that the increase is "in line with the estimated 6-7 percent growth achieved in 2005 in these markets and the current 2006 growth forecast of 7 percent."
"While 2006 has undoubtedly started with its challenges, we remain confident that the fundamentals of our business remain firm and that there will be opportunities for achieving real growth this year," Cavanagh said. "The prosperity of the diamond industry depends ultimately upon its stakeholders, being able to see past the short-term issues that might be exercising the markets and take a long-term perspective."
It is worth noting that De Beers no longer calls its increases by that name — now they are called "price rebalancings." In any case, the price increase seems to be a throwback to what was called in the old CSO days a "psychological" raise.
Despite what Cavanagh said, we are not sure the fundamentals call for any kind of increase, even a small one: Yes, there is a genuine shortage of larger stones, but there is not the great frenzy that we’ve seen in years past, and demand remains uneven, and stocks remain high, as De Beers has acknowledged (see story on page five).
It seems many consumers are opting for things like electronics instead of jewelry. Prices are falling on electronics; the most deluxe HDTV costs less than a two-carat diamond.
De Beers’ price increase therefore holds certain risks: While on the high end, even a ten percent jump may not matter, any kind of increase matters for the middle-end customer.