TOKYO -- Prices for diamonds are at their lowest level in five years as demand declined sharply in China, India and other emerging nations. China is the world's second-largest consumer of the precious stones after the U.S.
Profitability at jewelers and diamond polishers is deteriorating, but domestic spending is beginning to pick up. Although diamond prices rose last year in Japan as the yen weakened against the dollar, prices may go down this year.
Polished diamonds are trading at around $7,100 for one carat of a standard stone on the international market, 5% lower than a year earlier. De Beers, a subsidiary of British mining giant Anglo American, controls 30% to 40% of the world market for rough diamonds.
Unlike platinum and other gems that are traded every day on the international markets, rough diamonds have been sold by the South African company at high prices. However, the company lowered its trade prices for rough diamonds due to economic slowdown and sluggish consumption of big-ticket items in China.
Diamond sales at Chinese jewelers are weak. Hong Kong-based Chow Tai Fook Jewellery Group saw its same-store sales down 15% from a year earlier in the October to December quarter of 2015. With its stock price halved in a year, the jeweler is mulling the shuttering of unprofitable stores.
In Japan, the world's fourth largest consumer of diamonds, retail prices vary depending on grade, size and polishing, but are stable as a whole. Jewelry companies raised diamond prices in the first half of 2015 because of the cheap yen. An officer at Tanaka Kikinzoku Jewelry in Tokyo said that with the prices of platinum for ring settings, as well as diamonds, declining, the jeweler may cut prices if costs remain low.
Diamond sales have been brisk in Japan. F.D.C. Products, a unit of Japanese jewelry seller Yondoshi Holdings, saw its customer numbers at existing stores grow 11% on the year in December 2015. "Shoppers in Japan are keen to buy more diamonds for weddings and other occasions," said a Yondoshi Holdings representative.
"There are more diamonds than demand" in the international market, said Nobuyuki Harada, a director at Tokyo-based diamond trader Suwa & Son. In December 2015, a De Beers executive told analysts that there are excessive inventories of diamonds.