Diamond Price increase on the near horizon

[Texas Leaguer]

Due to the latest tariff threat diamond prices appear on the verge of a significant increase. As of this moment the US is set to impose on India an increase from 10-25% on Aug 1. Since the majority of the world's diamonds are cut in India this could mean a 15% increase to take effect as early as this weekend. We have been advised by multiple trading partners that Indian manufacturers are poised to implement the increases, both on new orders and on diamonds that are in the US but have not been invoiced.

We could see an accross the board price increase reflected in virtual inventory that predominates the online space. And this could happen almost overnight, which will be an unprecedented event in the diamond industry.

With all the vasilation and pauses and backtracking that we have witnessed to date with this trade war, nobody can say what will actually happen. But India is gearing up for it. Uncertainty has plagued the diamond industry for months now, causing cancelled orders with manufacturers and various other forms of disruption. What will actually happen next is likewise uncertain, but it is something that members of this forum should be aware of so nobody it taken completely by surprise.

https://apnews.com/article/trump-tariffs-russia-india-9e388a55583e7007149819c52f0fd71b

 

[MissGotRocks]

@Texas Leaguer, will these price increases also affect decisions regarding bringing in more inventory?

 

[Texas Leaguer]

@Texas Leaguer, will these price increases also affect decisions regarding bringing in more inventory?

The effects are many. As you mention, it changes the calculus for those of us buying and stocking diamonds. First, you are paying more so you cannot buy as much inventory. But secondly, since your cost is greater and you have to sell for higher prices, there is the question of how that will impact sales.

In addition to the "known unknowns", there will be the "unknown unknowns" as Donald Rumsfeld famously said. We seem to be in the process of discovering them.

It may also affect the dynamics of the sales of virtual inventory. What happens when an online sale that is shipped from India gets returned by the consumer. Will it even be economically feasible to return the stone to India? How will the supply chain adapt to issues like this? How will policies have to change? And these are just the "known unknowns"!

 

[MissGotRocks]

The effects are many. As you mention, it changes the calculus for those of us buying and stocking diamonds. First, you are paying more so you cannot buy as much inventory. But secondly, since your cost is greater and you have to sell for higher prices, there is the question of how that will impact sales.

In addition to the "known unknowns", there will be the "unknown unknowns" as Donald Rumsfeld famously said. We seem to be in the process of discovering them.

It may also affect the dynamics of the sales of virtual inventory. What happens when an online sale that is shipped from India gets returned by the consumer. Will it even be economically feasible to return the stone to India? How will the supply chain adapt to issues like this? How will policies have to change? And these are just the "known unknowns"!

I figured some it would be true, but of course could not foresee some of the other questions you mentioned. Yet another blow to the diamond/jewelry world. I appreciate the heads up and the difficulty in navigating these churning waters.

 

[Texas Leaguer]

Yes, we are looking for that mysterious "bridge over troubled waters". If anyone spots it, please let me know!

 

[Texas Leaguer]

One obvious takeaway at this moment is this: If you are providing advice to visitors to the site who are close to making a decision, it might be a good idea to advise them that pulling the trigger soon might save them some $$.

 

[MissGotRocks]

One obvious takeaway at this moment is this: If you are providing advice to visitors to the site who are close to making a decision, it might be a good idea to advise them that pulling the trigger soon might save them some $$.

Point well taken!!

 

[molinePDG]

This reads as an equally unfortunate scenario as what has been/about to go on with pearls. Wishing everybody all the best on the diamond side of the aisle, as it were, with all of the uncertainty.

As Bryan points out, there's only so much one can do to guard against some headwinds, and there's also the sales aspect of course.

Fingers crossed for as smooth sailing as could be hoped ahead...

 

[Garry H (Cut Nut)]

Virtual diamonds, most of which sit in India, will go up automatically.

 

[tyty333]

Virtual diamonds, most of which sit in India, will go up automatically.

What about lab diamonds? Are they mostly cut in India, and will they also be going up in price?

 

[Rockdiamond]

What about lab diamonds? Are they mostly cut in India, and will they also be going up in price?

Absolutely. Now we are faced with an unwelcome forced decision. Buy today at the “old” price or face 25% increase tomorrow.
Except maybe the wind blows the other way next week and the taxes, I mean Tariffs get lifted….. or raised.
I guess it’s like the old Chinese proverb… We are living in “interesting times”

 

[freddyboston]

What about lab diamonds? Are they mostly cut in India, and will they also be going up in price?

one nice thing about synthetics is the low price (cost basis for the tariff)
is it wholesale price they use ??

if anything it might put a floor in that market - have a $$ Veblen effect

 

[Matata]

Several years ago, with my poor memory it could have been a decade, when diamond prices significantly increased. I remember discussion here that Asian countries were buying up loads of diamonds and that's when old cuts became popular because they were comparatively affordable and available. Perhaps the same will happen again. Vintage and antique diamond jewelry with larger diamonds might be purchased so the diamonds can be used for more modern rings and other things.

 

[Texas Leaguer]

@Matata,
It's a good possibility that old cuts and recuts increase in demand as new inventory becomes less available. It could strengthen the second-hand market in general.

 

[Garry H (Cut Nut)]

one nice thing about synthetics is the low price (cost basis for the tariff)
is it wholesale price they use ??

if anything it might put a floor in that market - have a $$ Veblen effect

Yes, you are correct - Since the markups on LGD border on criminal and the imported wholesale price is almost zero.

 

[Garry H (Cut Nut)]

Many of the Indian companies have a business run by a brother, uncle cousin with a biz in USA.
They will likely be selling to the family at half or a third of the real price.
They are pretty sharp!

 

[freddyboston]

There's also the matter of variation in Nat. prices based on quality (color cut clarity) and size.... how will US Customs and Border Protection accurately confirm the stated $ value of a parcel of loose stones ? To that point i wonder if will be preferable to grade them in the states after they clear customs..

 

[oncrutchesrightnow]

Yes, you are correct - Since the markups on LGD border on criminal and the imported wholesale price is almost zero.

Many of the Indian companies have a business run by a brother, uncle cousin with a biz in USA.
They will likely be selling to the family at half or a third of the real price.
They are pretty sharp!

Maybe consumers can save money by asking their setting vendors to get the diamonds? For many of us diamond geeks, finding and buying the diamond is the fun part. But maybe for people who want a piece of jewelry that happens to have a diamond in it, “Go talk to Jessie the Jeweler” could be the best cost-saving advice.

There's also the matter of variation in Nat. prices based on quality (color cut clarity) and size.... how will US Customs and Border Protection accurately confirm the stated $ value of a parcel of loose stones ? To that point i wonder if will be preferable to grade them in the states after they clear customs..

That analysis might lead a grading company that has labs in the U.S. to stop grading lab diamonds.

 

[Mrsz1ppy]

Absolutely. Now we are faced with an unwelcome forced decision. Buy today at the “old” price or face 25% increase tomorrow.
Except maybe the wind blows the other way next week and the taxes, I mean Tariffs get lifted….. or raised.
I guess it’s like the old Chinese proverb… We are living in “interesting times”

Ancient Chinese curse…May you live in interesting times. Very appropriate. But no one could ever curse you!

 

[Garry H (Cut Nut)]

There's also the matter of variation in Nat. prices based on quality (color cut clarity) and size.... how will US Customs and Border Protection accurately confirm the stated $ value of a parcel of loose stones ? To that point i wonder if will be preferable to grade them in the states after they clear customs..

The Belgian gov had savvy valuers.

 

[Crimson]

Ancient Chinese curse…May you live in interesting times. Very appropriate. But no one could ever curse you!

Thanks for the heads up, @Texas Leaguer!
@Mrsz1ppy, @Rockdiamond I’m of Chinese and European ancestry. I haven’t come across the saying in Chinese but rather in English sources. Here’s a piece on its origins : https://quoteinvestigator.com/2015/12/18/live/
In Chinese, the term for crisis is 危机, 危 for 危险 (danger), and 机 for 机会 (opportunity). Duality and opposing forces e.g., yin and yang. are inherent in Chinese philosophy,