Diamond Prices
Diamond prices spiraling is feared in the Russian market. The net diamond prices have risen steadily during the first six months of the year. This contrasts with the past two months. These trend is changing, and perhaps even turning south for polished diamonds. The classic imbalance between the strong rough market and a softer polished market continues this year. Russia's largest miner, ALROSA estimates that the diamond market has grown steadily by 2.5-3 percent throughout the first three months of 2014.
Furthermore, they insist this growth has continued at the same rate. "From April to June, we observed increased demand from our clients for all typed of rough," ALROSA states. Throughout 2014, the miner increased prices on average by 2.5% in February, 1.5 percent in June and another 1.5 percent in July. Due to increased demand in India and the United States for the polished diamonds, ALROSA is said to expect a positive trend in the second half of the year.
Diamond Prices and ALROSA
Despite these facts predicted by ALROSA, the manufacturing aspect of the diamond industry is less optimistic of the growing price trend. The manufacturing division still fears that diamond prices are spiraling. "In the first quarter, the rough and polished markets we are moving similarly. Additionally, with the prices growing by 3 percent to 4 percent for both," said Nikolay Afanasiev. Who is the head of sales at Kristall Smolensk. He explained that in the second quarter, the polished market was saturated, and although the rough prices of diamonds grew by 3 percent to 4 percent on average, there was definitely no sufficient underlying demand for polished prices to continue their rise at the same type of rate.
Diamond Prices Short Term
Nikolav expresses that polished prices grew by 1 percent to 1.5 percent over the course of the second quarter, "In the short-term, this strategy of rough companies is good; in the long term, it will undermine manufacturing companies even more," he states. The director general of the Choron Diamon, Rajesh Gandhi mentions that diamond manufacturers are experiencing pressure not only from the high rough prices in the market and flat polished prices, but also from the banks that are increasing their tight regulations on lending money to the diamond industry.
He says, "Of course, such a situation diminishes the amount of speculation at the market, but in the long run, it will hurt it. " states Gandhi. Reverting back to diamond prices spiraling in Russia specifically, small Russian companies are decreasing or even closing their manufacturing due to these tight credit conditions from the banks. "So what happens is that miners and dealers are getting their money," Gandhi mentions, "but manufacturers aren't because there is less demand in the market."
Diamond Prices and Russia
The production of jewelry with diamonds increased by 25.7 percent throughout the first six months of 2014,. This compares with the same period last year, reaching 1.2 million items, according to the Russian Statistics Bureau. In June, the production of diamond jewelry grew about 7 percent which compares with June of 2013. These numbers decreased by 20.2 percent in comparison to May 2014. Although the production of jewelry increased first by volume, the demand in the market was just not right.
During the first 7 months of 2014, jewelry makers and retailers are facing tough challenges because the demand for the product has weakened due to the slowdown in the countries economy, the fall in the value of the ruble, inflation, and to some extent, the continued crises in Ukraine. All of these factors have a part in contributing to diamond prices spiraling. Despite this, many companies said that they managed to meet the challenges by changing their marketing strategies and creating their time-tested client base.
Diamond Prices effecting Sales
"We observed the slowdown in sales only in big Moscow retail centers. But the demand for jewelry, in general, met our expectations," says Maxim Veinberg. Veinberg is the executive director of Adamas, one of the biggest retailers in the country. Svetlana Rakhmanina, the director of retail for Ekaterinburg-based Rifesta continues, "We have an established network of retailers and we have our own stores, which helps us keep our finger on the pulse of the market." Despite the fact that the volume of overall sales is still larger in low-priced jewelry costing up to about $800, companies tend to believe that the most profitable jewelry categories are medium prices which would be considered between the $1000 and $4000 dollar range.
The medium plus priced that ranges between $4000 and $6000 are also considered highly profitable. Due to these facts, large quantities of retailers are targeting this sector of the market. "Veinbreg comments; "Sales management contributed a lot to the fact that sales were good in their medium segment. Our company is stimulating the demand for various categories of items. And this is a planned and long-term strategy." Rifesta also keeps a watchful eye on the fluctuations of the market. And makes adjustments accordingly. Rakhmanina recalls that the company needed to make changes to a collection for a May trade show in order to meet new market price expectations.
Growing Demand and Diamond Prices
The growing demand for more unusual and unique designs have been under constant growth within the recent past. Rakhmanina claims that Rifesta's newer fancy cut diamond collection found great success this year. "It was a long shot because people in Russia like round diamonds. But the new shapes were so unusual for the Russian eye that they worked. Of course, special marketing helped." The stones in discussion ranged from .05 carats to .30 carats in size. Several manufacturing facilities said that the best selling diamonds were in the range of the I to the K color. As well as VS1 to SI1 in clarity. However, there were different increases in demand for better jewelry.
Diamond prices and prices for shapes go hand in hand.
http://en.wikipedia.org/wiki/ALROSA
http://eng.alrosa.ru/
http://sales.alrosa.info/