Not All Diamonds Enjoy Recovery as Budget Stones Get Left Behind – by Thomas Biesheuvel Bloomberg News – September 28, 2016)

The recovery in diamond prices is leaving out the smallest and lowest-quality gems. For the smallest diamonds, prices are down 15 percent this year, data compiled by Bloomberg show.

That compares with an average 7 percent increase for all stones yet to be cut and polished. The overall market is recovering after De Beers and Russia’s Alrosa PJSC cut supply in 2015 to boost sales.

The slump in gems smaller than three grains (0.75 carat) is partly a hangover of producer stockpiling, which left a “hefty supply” to sell in the first half, said Johan Dippenaar, chief executive officer of Johannesburg-based Petra Diamonds Ltd.

Manufacturers are also turning more to bigger, higher-quality types which can be bought and sold faster, consultant Gemdax said. In addition, cheaper stones are those most threatened by the rise of man-made diamonds.

Average rough-diamond prices slid 18 percent last year, the most since 2008, as slowing Chinese demand and an industry-wide credit crunch cut purchases. The slump prompted De Beers and Alrosa to hold back supplies to support prices. While there has been a general recovery this year, some mining executives and bank analysts have questioned whether the rebound will last.

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