While demand in the Far East and Europe is supporting a rise in significant segments polished prices, the slowing US economy and weak US retail environment is causing concerns about further pressure on manufacturing margins and declining prices in cheap polished. With the recent surge in rough and healthy demand outside the US, wholesalers say they have increased prices in the medium to higher end (SI1+). Buying remains active in large sizes (3+ carats) despite traders saying that suppliers are asking “crazy prices”. In the better end (VVS-VS), all sizes and colours, traders are also increasing prices. But in lower quality SI-Piques selling conditions are said to be extremely tough despite traders lowering December 2007 prices due to sluggish holiday sales in the US market. Sales in India, Hong Kong, China and the Middle East are growing. Turkey is becoming an increasingly active player and Europe continues to be a strong market for VS-SI goods. That said all these markets together are unable to offset the downside of US business slowing down. There is a real fear that a prolonged US slowdown will put pressure on the overall upward polished price trend. Traders are anxiously waiting to see a change in March and April ahead of the major trade shows.

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