Rough diamond prices need to fall - Rapaport

Nov 25 (Reuters) - Rough diamond prices need to decrease by up to 50 percent to boost profitability in the trade of the stones, Martin Rapaport, whose Rapaport Group is the primary source of diamond price information, said.

Manufacturers who cut and polish diamonds have in recent years found themselves caught between giant mining companies charging high prices for rough stones, and big retail chains that demand gems at low margins to keep sales moving - leading to an erosion in profit margins for the polishers and dealers.

"The mining companies must urgently inject profitability into the diamond trade, by immediately reducing rough prices by 30 percent to 50 percent," Rapaport said.

"The greatest threat to the diamond industry is that the mining companies will continue to ignore the needs of the trade. More and more cutters will stop cutting, diamond supply will plummet, more dealers and retailers will leave the industry, forever."

While the over $80 billion overall spent on diamond jewellery last year was a record, the manufacturers are expected to share a profit of just $100 million in 2015. That is half last year's total and down from $900 million in 2010.

The manufacturers and dealers depend on just a handful of miners for rough diamonds - including De Beers, a unit of Anglo American and Russia's Alrosa.

Both De Beers and Alrosa have lowered prices this year.

De Beers acknowledged in a 2014 report that high costs for rough diamonds were forcing changes on gemcutters. (Reporting by Olivia Kumwenda-Mtambo; Editing by Greg Mahlich)