China's Demand for Diamonds Weakening and Prices Also Falling

According to the market observation, it is good news for consumers that diamond prices decline. But from the perspective of investment, the diamond prices will continue to fall because the Chinese market weakens the demand for diamonds, and it appears the problem of supply over demand in diamond market.

Nicholas Colas, a chief market strategist from America investment company Convergex  warned last Thursday those that want to invest diamonds should invest the most perfect quality diamonds, because diamond prices continue to fall and diamond minesare in oversupply. And recently, many diamond miners have cut the production of diamonds.

Colas pointed out that the diamond producter Russia Alrosa announced the earnings in the third quarter of 2015, which sold only 42% of rough diamonds. Alrosa plan to make the remaining unsold rough diamonds hoard, and wait until the price picks up for sale.

Recently, diamond miner Anglo American has taken the measures to reduce 27% of yield, which owns  famous DE beers diamond company. Rio Tinto also states they will reduce their diamond production.

Diamond prices have been gradually declining from 2011. Colas points out that the following form from PriceScope website can clearly indicate the price movements of diamonds in recent years. All types of diamond prices reach the peak around 2011, and in the same period, the economy and stock market in an emerging market after the high peak of the financial crisis era.

Colas says: "First of all, the price of diamonds is clearly affected by the fluctuations in China's slowing economic growth, but it does not stop its prices declining in the United States and India."

China is the second largest market of diamond products, and the United States ranks first. India's third.