The Rapaport Melee Index (RMI) for small diamonds dropped 13% to 122.48 in the second quarter of 2012. Melee diamond prices fell as Far East and Indian demand slowed as the rupee declined sharply. Overall diamond trade liquidity has become problematic as banks deal with global economic uncertainty and the European banking crisis.

Melee prices have fluctuated over the past year and experienced a correction after sharp increases during the first half of 2011. Prices are now coming under increasing pressure as global diamond market sentiment is expected to remain weak. Year on year, the RMI dropped 20% from the peak it achieved in June 2011 of 153.73.

"After a strong first quarter, we have seen the market for commercial and higher-quality melee slow down in the second quarter of 2012. Tight liquidity and a weak global economic outlook have limited wholesalers' inventory purchases amid concerns that prices may continue to decline. Buyers are focusing on filling orders, rather than building inventories. While the second half of 2012 is expected to be challenging, our monthly auctions continue to be a strong platform for sellers to achieve the highest cash market prices from serious buyers in the major diamond trading centers. Our auctions provide a consistent and reliable outlet for the sale and purchase of diamonds at fair market value," said Ezi Rapaport, Director of Global Trading.