Globally, October to February is holiday season when retail diamond sales rise and prices drop. This period follows the June-September period when retailers pile up the inventory and retail prices are hiked.
Jewelry retail volume is driven by different happenings or events in the local society, which can be categorized in to:
1) Calendar events like Christmas, Thanksgiving, Valentines Day;
2) Personal events like Wedding, Anniversary, Birthday; and
3) Others like discount season, promotions, self-purchase
While retailers might find it difficult to predict the personal events, they do prepare themselves for the calendar events. Graph shows seasonality of Jewelry sales in US market. The third quarter shows a slow down followed by a boost in sales during the fourth quarter.
[Image Courtesy: IDEX Magazine]
Prices for American jewelry retail saw an upward trend in July, typically in anticipation of the holiday season. Retailers build inventory so that they can meet the demand and later offer pieces at discount.
[Image Source: IdexOnline.com]
Though Jewelry Consumer Price Index has shown an upward trend for the past 3 months, it’s nowhere near that of same period last year. Across the global markets, trading has been slow with focus on meeting current demands than building inventory. International Diamond Week to be held in Israel was postponed indefinitely, which further slowed trading of roughs.
The demand for rough diamonds shows seasonality pattern too but the cycle is different. Typically demand for roughs is higher in first half of the year as retailers replenish the depleted stock and prepare for the demand surge of the second half. According to ALROSA, beginning of 2014 showed more stable demand compared to previous years but that might be due to weak demand in 2013, indicating a stock build-up at processors side. The diamond processing business will likely see a slowdown even though there is a stable supply since the processors will be hesitant to pass on price hikes to customers.