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Image credit: Gerd Altmann (Pixabay)

The diamond industry is feeling the heat from the economic impacts of the coronavirus pandemic, which is currently ravaging the world in a way last seen in 1918 when about 500 million people – a   third of the world’s population at the time – were infected by the so-called Spanish flu.

Global demand for diamonds has plummeted by more than 50% since March compared to the same period last year, according to Endiama director general Pedro Galiano.

In Israel, diamond trade is said to have dropped by 90% compared to a year earlier, missing out on business that would have raked in about $1.5 billion in March and April, according to Reuters.

India, a major consumer of rough stones for polishing, is encouraging importers to voluntarily reduce rough diamond imports from June 1 to help preserve inventory value and maintain the strength of the Indian diamond industry.

Rapaport Research Report has projected global rough production to ease by 16% to 119 million carats in volume terms and by 29% to $8.5 billion by value.

This was said to be the lowest level since the 2009 global economic crisis.

Diamond market prospects post Covid-19

Rough & Polished contacted three diamond companies, each representing major, mid-tier and junior diamond companies, to get their take on the prospects of the diamond market post the pandemic.

We will also include comments from statements and reports released by diamond companies this month.

De Beers spokesperson David Johnson said although the group doesn’t provide forward-looking statements on diamond sales or pricing, it is monitoring the situation around the world very closely, remain in regular contact with its rough diamond customers.

He said part of the group’s response to date includes substantially reducing rough diamond production guidance for this year by 7 million carats to 25–27 million carats.

Concerning expectations for demand, Johnson said it’s clear there is currently no normal functioning market and it’s not possible to give meaningful views.

“There has been very limited recent trading, and what has taken place may not be truly reflective of market fundamentals, so we will need to wait until trade volumes increase before we can ascertain meaningful information,” he said.

Johnson said once there is a global recovery following the COVID-19 pandemic, De Beers expects that diamonds will play an even more important role in people’s lives than they did before because they are uniquely compelling symbols of relationships and connections.

De Beers’ Group Auctions recently introduced a new selling proposition known as the Buy Platform, which will give its registered buyers access to diamond purchases at any time in light of the current COVID-19 situation.

Registered buyers can make an immediate, direct and straightforward purchase from a range of rough diamonds at any time and from anywhere.

Lucapa managing director Stephen Wetherall said any chief executive outside of the majors (who have contracted clients) would be brave CEO to provide such a forecast.

“We as a company are still ourselves working on what the future will look like, when we may be able to restart our mines or return them to full production and I don’t believe enough is yet known,” he said. “Governments easing isolation measures at different times, actual versus talked about trade within the pipeline, mines that may actually not return to production that will reduce supply and what consumption of the previous polished inventories has taken place at retail level needs to be better understood in the coming weeks/ month.

“Without that, it is not possible to form a new or updated view on normalised supply/demand/ prices (especially across the quality ranges).”

Wetherall said there are certainly some good reports coming through with measures easing, but there are too a lot of unknowns, such as the what impact the mooted voluntary ban on rough imports into India will have on commercial rough goods (lion’s share of the market) that need to go to India to be polished?

“It is too early for me to give any sage opinion,” he said.

Commenting on Petra Diamonds’ projections on volumes of future rough sales, the company spokesperson Marianna Bowes said given the measures that have been put in place in both South Africa and Tanzania, they suspended their production guidance for FY 2020, hence they were unable to provide guidance on future rough sales.

She said during this constrained sales period, the company saw severely depressed and opportunistic bidding for its goods, particularly in the larger size and higher quality, greater value categories.

As a result, Petra chose to sell a portion of its South African goods, representing about 75% by volume and about 50% by value.

These goods saw price decreases of about 24% on a like-for-like basis in comparison to pricing achieved at the February 2020 sales cycle.

The remaining goods were exported to Antwerp and would be offered for sale when market conditions allow.

Petra was also due to hold two further sales in May and June, but the outlook for both sales was highly uncertain and will depend on travel and export conditions at the time, as well as activity levels in the key diamond buying centres, being India, Israel, China and the US.

ALROSA recently offered 800 rough diamonds at its biggest ever digital tender, which started on May 15 and closing on May 29.

“We continue to evaluate various measures to support our clients in these challenging times with travelling restrictions due to the Covid-19 pandemic still in place,” said deputy chief executive Evgeny Agureev.

“Our offer gives customers interested in purchasing and ready to work remotely under current circumstances the opportunity to review and buy rough."

Lucara reported earlier this month that the government of Botswana had temporarily granted the company permission to conduct sales in Antwerp, Belgium.

The second quarter tender which was originally scheduled to close mid-May in Gaborone would be rescheduled for Antwerp, as soon as market conditions permit.

BlueRock Diamonds also entered into an agreement with Bonas-Couzyn N.V, part of the Bonas Group to market the Kareevlei diamonds through its Antwerp facility.   

The company had been reviewing its sales strategy prior to the COVID-19 pandemic to gain access to the Antwerp diamond market, which attracts significantly more buyers than the South African diamond market.  

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished