This content was first published on IGR – Italian Gemological Review no. 8 in 2019. The information provided here is therefore current as of the original publication date.
The topic of the moment is certainly the measures adopted by De Beers in November, as the company decided to lower rough diamond prices by 5-6%; the choice was welcomed by producers who complained of poor profits, resulting in an inevitable reduction in production, mainly in India.
According to various analyses, the general trend in the global cut-diamonds market appears to be less disrupted, marked by relative stability. However, experts did not report the typical pre-Christmas fervour that usually begins by the end of October/beginning of November. On the other hand, it should be noted that the main markets are still characterised by different requests in terms of jewellery sizes; most of them range from 0.30 to 0.50 carats, except in the United States, where gemstones of 1 to 2 carats are still in great demand.
As for the old continent, the demand for fancy yellow diamonds is growing significantly. Unfortunately, Israel exports are starting with a negative balance of trade due to delays in orders from the United States. But Hong Kong is having the greatest impact on the markets. The continuing instability between China and Hong Kong, following escalating protests, is significantly and not positively influencing all markets, which have always been cautious and skeptical in seasons of political turbulence.
Apart from the current overview and data, the diamond industry seems to be characterised by longer-lasting structural changes. These include changes in the balance of power within the supply chain. In recent years, due to the high variability of consumption recorded in global markets, big players started to focus their attention on market segments that were once the preserve of small or medium-sized distribution companies. Many are paying the costs of this massive invasion, mainly in the commercial sector. Are large groups – which can influence prices by controlling raw materials – destined to cannibalise the market?
Martin Rapaport is trying to answer this question. You may or may not agree with this eclectic diamond industry personality, but the issue he raised is concrete. To step in and try to get around the new logic of leading groups, Rapaport promoted an international trade mission to India in April (which we joined ourselves), engaging as many as 36 industry operators. The aim was to give greater impetus to mid-sized players of the diamond-and-jewellery trade, who are suffering as more structured, powerful groups invaded their own spaces. The mission offered an opportunity to revive direct contacts and foster dialogue among local and international distributors, diamond cutters and local market makers; it all took place in Surat, the world’s largest – and perhaps most underrated – diamond cutting centre.
In short, a new scenario has emerged. On the one hand, a market oligarchy has risen to prominence, with groups that distance smaller fish like big fish in constant search for food do. On the other, there are signs of resilience and redemption on the part of intermediaries who – under conditions of growth and competitiveness – have made the diamond industry solid over time, ensuring sales and employment.
By Sergio Sorrentino, published on IGR – Italian Gemological Review #8 – Winter 2019
