Diamond markets were quiet in August, with dealers taking their summer vacations amid uncertainty about the upcoming Hong Kong Jewellery & Gem Fair.
Demand from China slowed due to an escalation of the US-China trade war, protests in Hong Kong, and the depreciation of the yuan.
Diamond prices continued to soften, with the RapNet Diamond Index (RAPI™) for 1 carat down 0.4% during the month.
According to RapNet, expectations are low for the Hong Kong fair, which begins on September 16.
Suppliers are anticipating weak buyer attendance as demonstrations continue to affect commerce in the city.
Luxury shoppers were put off by the protests as well as the 4% depreciation of the yuan against the dollar in August. The devalued yuan puts additional pressure on diamond prices for local importers.
The drop in Chinese demand has made it difficult for diamond manufacturers to rebalance their inventory, since sales have fallen more than supply in certain categories. Cutters have significantly reduced polished production.
The number of diamonds on RapNet declined by 2.5% in the past month to 1.5 million as of September 1.
Manufacturers refused about 50% of De Beers’ supply in August as the miner adopted a more flexible sales policy amid the difficult market conditions. De Beers kept its prices stable.
Rough sales are expected to be small again in September, with manufacturers limiting their purchases until after Diwali, which begins October 27.