Recently Bloomberg released an article regarding budget diamonds to be left out while all other diamonds enjoyed the recovery meaning a diamond price recovery. The statistics in the graph show that the diamond prices for smaller loose diamonds went down 15% this year. While compared to the other polished diamonds it grew with an average of 7%. The reason for the recovery in the diamond market came after De Beers and Russia’s Alrosa PJSC cut supplies in 2015 to boost the sales numbers.
According to Johan Dippenaar, the chief executive officer of Johannesburg-based Petra Diamonds, the slump for gems smaller than three grains is partly due to stockpiling. Furthermore, consultant Gemdax shared that manufacturers are nowadays more interested in bigger and higher quality diamonds as those are sold faster. While furthermore there has been a slip of 18% last year due to the slowing down of demand by Chinese and a slow down at industry-wide credit crunch cut purchases. Due to all these negative influences on the diamond sale De Beers and Alrosa were prompted to hold back supplies in order to support the diamond prices.
This action created a recovery in the diamond industry, yet the recovery did not stretch over all the diamond types. As Bloomberg describes “among small diamonds, those classified as fine quality have this year outperformed so-called commercial stones, the poorer clarity varieties often off-white or brown in color.”
While you might think smaller stones take less time to cut and are therefore preferred by diamond cutters and polishers, it is actually faster to generate a profit from larger stones than smaller stones. Therefore many manufacturers turned to bigger diamond types as its much faster to earn back on their investment.
Lastly, man-made diamonds affect the possibility of smaller diamonds to enjoy the recovery as smaller man-made diamonds can be more easily passed off as mined diamonds.