What goes up must come down
Manufacturers are concerned about the strength of the gemstone market after business cooled further in September. The Hong Kong show was active for exhibitors of high-end colored stone products. However, exhibitors of commercial-quality goods saw little demand. This marks a reversal from the spring, when both fine- and commercial-quality goods were in demand, reflecting robust trading activity in the high end as well as the discount sectors. As the holiday season approaches, retailers are adopting a wait-and-see attitude before committing to new stock.
The scarcity of fine colored stones, like unenhanced ruby and sapphire, for example, helped attract steady demand. This trend has been particularly strong in recent years. Yet dealers are now cautioning that in some categories, prices have gone so high that retailers are now reluctant to buy stock.
Dealers report that the decline in equity markets and slowing recovery has negatively influenced demand for diamonds. As dealers discount to create cash flow, prices have dropped in certain categories; price corrections have been significant in categories such as lower- and promotional-grade melee, which has reportedly declined 20–30 percent in recent weeks. Yet for the most part, price changes seen in the more common diamond categories are modest, amounting to 3–6 percent.