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Diamond Markets Unsettled Amidst Liquidity Concerns

The subdued sentiment continues to spread throughout the global diamond market as liquidity concerns and Rupee fluctuations severely hamper trading. All eyes are now focussed on this weeks’ Hong Kong Show to ascertain the current underlying demand in the market, however expectations remain downcast.

Global rough markets remain depressed. Last month’s DTC Sight was estimated at $575 million with up to twenty-five percent of goods refused at the Sight, the majority of which being the cheaper Indian goods. This significant level of refusal is a poignant indicator of the current state of play in the rough market. The lack of manufacturer profitability and the current Jewish and upcoming Indian Holidays are causing market participants to hold off buying for the moment with the volatile Rupee only adding to these woes. Mine owners still firmly believe in the genuine underlying shortage of rough and are hence continuing to hold-out on prices, however secondary market prices continue to ease as traders move to quickly offload inventory in the face of potential further market downturn. Overall rough market sentiment remains pessimistic for the immediate-term.

Global polished markets show no fundamental signs of an upswing in the immediate future. Although some market participants are hoping for some positive momentum emerging from this week’s Hong Kong Show, the effect of the overall negative market sentiment is currently outweighing any potential signs of improvement causing inventory levels to rise. This, in turn,  is further exacerbating the financing liquidity squeeze in the market.

The intra-dealer trading markets have now definitely shifted to being a ‘buyers’ market’ where cash is king. There will be genuine deals to be capitalised upon for the more cashed-up and financially stable buyers. The upper-end of the market is still remaining stable in terms of both demand and prices and significant buying opportunities are emerging in the mid-ranged goods.