Rapaport backpedals on steep price list hike
Chairman urges suppliers not to raise diamond prices
May 29, 2008
By Michelle Graff
Las Vegas —Rapaport Group
Chairman Martin Rapaport is urging suppliers not to raise diamond prices, despite the increases of up to 25 percent included on the Rapaport Price List published last Friday, on the eve of JCK Las Vegas.
In a meeting with media members in a suite on the top floor of Las Vegas' posh Venetian hotel, Rapaport said he increased the prices in response to volatility in the global diamond market due to a combination of factors, including growing wealth in emerging nations and continued economic troubles in the United States.
"It's a really weird market," said Rapaport, who in recent months has been warning about speculation pushing up prices for larger stones. Rapaport said he sees no reason why he should quote prices on his list that are lower than those he sees actually being paid.
Despite the steep increase, he advises industry players to "relax, keep the same price per carat," terming his list as only a "benchmark" and "a reference point" for the industry.
The sentiments Rapaport shared on Wednesday with reporters in Las Vegas were reinforced in an e-mail his company sent out to about 12,000 industry players worldwide that same day, in response to what he terms as a "request for more information" on the price increase.
The e-mail stated that the higher prices reflected in the May 23 price list do not a reflect a sudden change in diamond prices but rather adjustments made to reflect the level of premiums in the trading markets. It went on to state: "We do not believe there is any reason for suppliers to raise prices based on these adjustments. We advise buyers that in our opinion they should not pay premiums over the latest price list. Prices in the current market are at or below the price list."
The e-mail also states that "The global economy is undergoing a period of extreme volatility...These are not normal times and they are impacting diamond prices. Rapaport does not set or control diamond prices. We report them," cautioning that diamond prices could drop, just as gold prices fluctuate.
The e-mail concludes by stating that Rapaport is attempting to communicate the "risk of volatility" in the diamond trade while also possibly cooling down some of the speculation on larger stones in the rough markets and cutting centers.
Rapaport said he did not increase the prices because of Las Vegas Market Week but notes that the shows are actually a good time for such an adjustment because it is easier to get a consensus on the increase when all the industry players are gathered together.
"This is the greatest marketplace in the world for the next four days," he said, terming it "Basel in America."
In other news from the opening day of JCK Las Vegas:
—In a session titled "Top Five Diamond Issues," industry analyst Ben Janowski said the No. 1 issue confronting the diamond industry today is that the stones are losing their mystique, which already has eroded somewhat in the face of competition from other luxury goods.
—Hertz Hasenfeld, vice president of New York-based diamond supplier Hasenfeld-Stein, urged retailers to improve their relationships with suppliers, in a session titled "Independents and the Diamond Pipeline."
— In a session titled "The Affluent Consumer and Natural Colored Diamonds," diamond marketing expert Diane Warga-Arias spoke about natural-colored diamonds and the margins available on the stones, which are both rare and difficult to compare to each other and to colorless diamonds.
While educational sessions were held on Wednesday and continue today, the show floor for JCK Las Vegas does not open until Friday. The show runs through June 3 at the Venetian.
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