The diamond industry has entered the second quarter of 2026 with a cautious and “subdued” sentiment. The RapNet Diamond Index ($RAPI^{TM}$) continues to reflect the volatility that defined the previous year, showing a clear split between “investment-grade” larger stones and the high-volume smaller categories.
1. The Price Performance Breakdown
According to recent data, the price declines have been most pronounced in stones under one carat. The trend that intensified in late 2025 has carried over, with smaller goods seeing sharper corrections compared to their larger counterparts.
| Category | Monthly Change (Recent) | 2025 Annual Performance |
| 0.30 ct. | -1.3% (Jan) / +1.0% (Feb) | -20.3% |
| 0.50 ct. | -1.2% (Jan) / +0.3% (Feb) | -26.0% |
| 1.00 ct. | -1.3% (Feb) | -9.9% |
| 3.00 ct. | +0.2% (Feb) | +0.3% |
While February saw a slight “easing” of the decline in some small-stone categories, the broader 1-carat index remains under pressure, falling $1.3\%$ in February. In contrast, stones of 2 carats and larger—particularly those in long fancy shapes like Ovals, Marquises, and Emerald cuts—are seeing steady demand and even commanding premiums due to short supply.
2. Key Drivers of the Price Drop
Several macroeconomic and industry-specific factors are weighing on the price list:
- Lab-Grown Competition: Synthetics continue to capture significant market share in the fashion and bridal segments. In the U.S., lab-grown diamonds now account for approximately $61\%$ of engagement ring center stones, forcing natural diamond prices to adjust to maintain competitiveness.
- Geopolitical Uncertainty: The ongoing conflict in the Middle East has disrupted major trading hubs like Israel and Dubai. This has limited the movement of goods and dampened sentiment among international buyers.
- Tariff Fluctuations: The “Tariff Chaos” involving U.S. and Indian trade has created a fragmented market. While a recent trade deal lowered some Indian tariffs from $50\%$ to $18\%$, the uncertainty has led many buyers to delay orders.
- China’s Economic Slowdown: Traditionally a powerhouse for diamond demand, the Chinese market remains weak, leaving a surplus of inventory in the mid-stream.
3. Supply-Side Adjustments
The “Big Two” producers are reacting differently to the market softness. De Beers recently reduced rough prices at its January sight to stimulate movement, but this caused concerns that lower-cost rough might further flood the polished market. Meanwhile, Anglo American made headlines by reducing De Beers’ book value from $\$4.1$ billion to $\$2.3$ billion, signaling a realistic appraisal of the current market valuation.
4. The “Bright Spots”
It isn’t all downward movement. The market for fancy shapes is a notable outlier. Long Cushions are reportedly trading at $20\%$ to $25\%$ premiums over square versions, and high-quality Marquises remain in very short supply. Additionally, “Old Mine” and “Old European” cuts are seeing a resurgence in demand as consumers look for unique, vintage aesthetics.
Looking Ahead
As we look toward Mother’s Day (May 10), the industry is hoping for a seasonal boost. However, Rapaport experts suggest that a full recovery will take time and will require a significant industry-wide investment in natural diamond marketing to differentiate the product from mass-produced synthetics.
