Diamond manufacturers worldwide have been grappling with dwindling profits and rising debts, so a price increase would appear out of place. However, many of them had been anticipating that the DTC and other producers would trim rough sales to help relieve pressure on sightholders, so they began bidding up rough boxes to insure they had ample supplies. Typically, the DTC raises prices when box premiums spike, and this is what they did at the March sight.

Two major producers reported strong sales last year, one that many manufacturers labeled “challenging.” Aber Resources of Canada saw its rough sales increase 6% to $332.6 million. Meanwhile, Russia’s diamond mining and marketing group, Alrosa, logged rough sales of $2.86 billion − a 2.4% increase over 2005 − despite a European Union–enforced reduction in its sales to the DTC.

In the polished market, U.S. sales of diamond jewelry items declined by the number of pieces during 2006, though strong demand at the top end resulted in a 6% increase in dollar sales, according to De Beers’s Diamond Promotion Service 2006 market survey. U.S. diamond jewelry sales totaled $35.2 billion, just shy of 50% of worldwide sales.

Action at the top end meant that the average retail ticket rose 9.1% in 2006, while the number of transactions declined by 2.7%. However, the total retail value for the diamond engagement ring category grew 8% to $6.2 billion – again largely through price increases.

De Beers’s Journey diamond jewelry concept sold more than one million pieces during the second half of 2006, for a growth rate of 41% over 2005. Journey piece sales surpassed sales of three-stone diamond jewelry, though the latter’s sales also rose 16% to nearly $3.7 billion, with a 14% increase in average price tickets during the year.

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Source: GIA Insider Newsletter