Following a difficult 2015, diamond producers staged a strong recovery in 2016, posting a 20% revenue increase. Demand for rough diamonds bounced back after the cutting and polishing segment cleared excessive surplus inventories in 2015. The top five producers’ aggregate 2016 operating profit rose about 3%.
Cutting and polishing revenues decreased slightly in 2016 amid tepid demand for polished diamonds. According to industry executives, however, the segment’s average profitability turned upward after slipping steadily for several years. After declining in 2015 and 2016, rough-diamond prices turned upward in 2017. Polisheddiamond prices, which also declined in 2015 and 2016, stabilized in 2017.
The outlook for 2017 is stable across the segments of the diamond value chain. Rough-diamond suppliers posted a 3% revenue decline in the first half of 2017, as lower-priced assortments made up an increased share of their sales. The cutting and polishing segment’s revenue is expected to stay flat in 2017. The revenues of major retail chains in key markets are trending up amid healthy macroeconomic fundamentals. Retail demand in India turned upward in 2017, after demonetization of large-denomination currency notes at the end of 2016 supported strengthening of organized jewelry retail.