This content was first published on IGR – Italian Gemological Review no. 10 in 2020. The information provided here is therefore current as of the original publication date.
The global situation of the diamond industry during the COVID-19 pandemic peak had made everyone tremble with fear. In fact, following the inevitable falls in the price lists, the industry and the trade were divided on some burning and unexpected questions. In this unpredictable situation, how should the market be properly informed without creating alarmism? Should the price volatility be hidden?
In June we insisted on the need to remain calm and positive. Our conviction was based on the fact that the diamond industry for some time was already evolving by itself, showing long-term changes that will inevitably reach the market and result in greater stability. These include the reduction of the most extensive but less profitable mining activities, the decreased levels of rough and cut gemstone inventories and the disappearance of intermediate trading with consequent simplification of the supply chain.
No doubt, weather is calm after the storm and the sky looks shining. After a quick glance at the sales graphs we discover that it’s a totally different story. The mining industry has underwent a slimming cure and therefore the trade is working on more affordable rough material.
There is no need to sustain the prices because now they are slightly rising rather than dropping. This has revamped the polished goods manufacturing industry which in India is now working hard, albeit with limited labour capacity (up to 30% off), due to distancing restrictions. Of course, demand is not uniform globally, but in the US and India we are witnessing a phase of growing requests.
Surprisingly, new sales peaks can even be predicted for Christmas and Diwali in November. Who would have said that just two or three months ago?
New plots intertwine on stage, Israel plays the card of trade agreements with those Arab countries, formerly orbiting around Antwerp, that can work as a service and trade hub also for precious stones. We are going to see some new things.
The diamond market in China, the first country to experience a real exit from the critical phase of the pandemic, has not yet reached the levels of last year but is definitely returning to shine. However it must be said that many difficulties due to the pandemic are still negatively affecting the diamond business, holding back an adequate support to this surprisingly rising pre-Christmas demand. Shipping and delivery schedules are getting longer, the entire logistics are in trouble, strong retail districts such as HK pay for the decline of tourist transits caused by the well known travel restrictions.
Very much alike the markets, human beings are subject to ever changing moods, have little memory and hardly recall that not long ago the diamond industry was expected to fully recover only in the long term, returning to normality at a very slow pace.
Poor expectations at the time of lockdown and a fast start after reopening. This is the brilliant contradiction of the still bandaged diamond industry which, in spite of the catastrophists, is instead ready to get a second wind and pave the way for the revival of the world economy.
By Sergio Sorrentino, published on IGR – Italian Gemological Review #10, Autumn 2020
