By Michelle Graff
The RapNet Diamond Index for 1-carat, 0.50- and 0.30-carat polished diamonds increased in the month of February, albeit very slightly.
New York--Rough diamond sales and polished diamond prices continued their recovery in February, yet caution remains the trade’s watchword as global demand for diamonds still is relatively weak.

In its monthly price report released Tuesday, Rapaport said that polished diamond prices remained firm last month.

The RapNet Diamond Index (RAPI) for 1-carat GIA-graded diamonds rose for the fourth consecutive month, albeit very slightly (0.3 percent). Compared to a year ago, however, 1-carat diamond prices remain depressed, down 8 percent.

Prices for 0.30-carat and 0.50-carat diamonds also were up in February, 0.4 percent and 0.7 percent, respectively.

The RAPI for 3-carat diamonds slipped 1 percent.

Rapaport noted in its report for February, “Midstream Inventory Replenishment,” that the upturn in polished prices is due mainly to shortages in select categories of better quality diamonds, not growth in demand for diamonds at the consumer level.

Retail demand in the Far East remains weak and dealers are looking to the United States for “encouragement” as sales here are steady, but jewelers remain cautious. There are lingering concerns about the economy and the volatile stock market, and there’s also the fact that consumers tend to be more frugal during election years, the report noted.

On the rough side of the market, both Rapaport and De Beers said that it continues to show signs of recovery as excess inventory, which kept manufacturers from buying in the second half of 2015 and caused them to cut back on production, works its way through the pipeline.

De Beers reported Tuesday that preliminary results for its second sales cycle of the year indicate that it moved $610 million in rough diamonds, up from $545 million in the first sales cycle of the year and more than double the $248 million in rough it was selling at the end of 2015. (The $545 million is an actual figure, restated from the provisional $540 million figure De Beers reported in late January.)

Commenting on the results, De Beers Group CEO Philippe Mellier said, “Retailer restocking after the end-of-year holiday season is supporting demand for polished diamonds and, in turn, we are seeing improved demand from the midstream for rough diamonds. However, we remain mindful of the need for a cautious approach as the recovery continues.”

Rapaport Group Chairman Martin Rapaport also is urging caution when it comes to rough diamond prices, noting that “Current polished price levels reflect artificial shortages created by a 42 percent decline of rough supplies in the second half of 2015. Production is now normalizing, which will soon significantly increase polished supply while overall demand remains weak.”

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