Platinum’s rare nature gives it additional value and appeal

Huw Daniel is the CEO of Platinum Guild International, overseeing market development activities in China, Japan, India and the USA, on behalf of the platinum producers of South Africa. Before taking up this role in 2015, Huw ran PGI USA for 12 years...

13 september 2021

Marco Carniello: We want to continue to be the engine boosting the jewellery industry

Italian Exhibition Group (IEG) is a leader in Italy in the organisation of trade fairs and one of the main operators in the trade fair and conference sector at European level, with structures in Rimini and Vicenza, as well as further sites in...

06 september 2021

There is a significant need for smart and technological financial solutions in the diamond industry

MDPS, the Israeli start-up Fintech company from the Mazalit Group is gearing up to enter the diamond industry soon. Zeev Maimon, the CEO of MDPS is also the Founder / CEO of MAZALIT, a B2B payment platform designed and dedicated to the global diamond...

30 august 2021

The future for synthetics lies in that it has become possible to grow a stone you want and make what you want out of it

Alex Popov, President of the Moscow Diamond Exchange and head of the Âme jewelry brand, which uses lab-grown diamonds to produce jewelry, sat for an interview with Rough&Polished sharing his views on the coexistence of natural and man-made diamonds in...

23 august 2021

De Beers’ GemFair ropes in more than 160 Sierra Leone artisanal miners

De Beers inaugurated its GemFair pilot programme in Sierra Leone’s Kono District with 14-member mine sites in 2018 to create a secure route to market for ethically sourced artisanal and small-scale diamonds. GemFair programme manager Ruby Stocklin-Weinberg...

16 august 2021

A Tale of Two Quarters

07 july 2009

At the halfway point of 2009, the diamond industry can reflect on two very different quarters. While the first three months were marred by declines, the latter quarter saw stabilization and improvement, RAPAPORT reported. Consequently, market confidence, which fell to an all-time low in January and February, picked up in subsequent months.
These distinct trends were reflected in average price movements of polished diamonds on RapNet during the two periods. In the first quarter, average price declines ranged from 3 percent to 9 percent, while from April through June, the changes hovered between flat and 1 percent.
Similar developments were evident in the rough market, though far more exaggerated. Mining companies either stopped producing diamonds — De Beers first-quarter production fell 91 percent compared to a year earlier — or stockpiled by selling to government agencies, as in the cases of Russia’s ALROSA and Angola’s ENDIAMA. The second quarter saw De Beers mines ramping up production and ALROSA indicating it would soon start selling to the market again.
Hardest hit, however, were manufacturers in India, Israel and Belgium, who faced zero demand from their wholesale and retail counterparts in January, resulting in factory closures and massive job cuts. Still reeling from depressed conditions, diamantaires clung to any sign of market improvement as the year progressed. As their depleted inventory ran out, they started cutting and polishing again in the second quarter, albeit at modest levels, causing their confidence to grow.
Evidence of a sluggish polished market could be seen in export data from the major diamond centers through May, the most recently available data at press time. Belgium’s polished exports fell 36 percent in the first quarter, from a year earlier, and by 43 percent and 40 percent in the months that followed. Similarly, India’s polished exports declined 33 percent in the first three months, by 54 percent in April and 31 percent in May, while Israel’s dropped 57 percent in the first quarter, and by 28 and 55 percent in the subsequent two months. Polished imports to the U.S. decreased 52 percent in the first quarter and by 47 percent in April.
Similar trends were seen in the retail market. While the major jewelry retailers reported some improvements in May, their first quarter performances were far from encouraging, with 20 percent sales declines being the norm.
Indications that the polished market was stabilizing filtered from the March Hong Kong show and from the shortages emerging in the market. In the run up to the June JCK Las Vegas show, the U.S. bridal market kept demand at a somewhat sustainable level and businesses adjusted their inventories accordingly. Nevertheless, expectations for Vegas were low and the level of orders reflected the recessionary environment. There was a clear shift toward lower price points and the show proved difficult for high-end manufacturers. Branded bridal goods proved robust and wholesalers of rounds and princess cuts in 0.50- to 1.50-carat,F to I,SI clarity of fine to ideal makes, who gave higher-than-average discounts, did relatively well.
While the market for polished diamonds has stabilized, the improvements in rough have been significant. Reports from the Diamond Trading Company (DTC) sight in June showed high demand for the De Beers product. The sight estimated at $425million compared to $250million in May and around $100 million in January. In addition, prices at the June BHP Billiton tender rose 10 percent to 15 percent from a month earlier, with comparable increases at the Petra Diamonds tenders. Similar price increases were reported in March through May.
These movements have created worrying disparities between the rough and polished markets, culminating in June, when improvements in demand and prices for rough far exceeded that of polished.
The question is why? What is pushing the rough market higher while demand for polished and at retail remains stagnant? Why has demand for De Beers rough more than quadrupled since January, while polished has merely stabilized? De Beers Managing Director Gareth Penny explained that movements in the market — including through June—were necessary to bring rough and polished into alignment. Penny added that the poor performance at retail in the first quarter was exaggerated and down a more modest 5 percent to 10 percent as a whole from last year, and that he expects a better Christmas this year than last. Explaining the surge in demand in June, DTC spokesperson Louise Prior said that the market was being driven by a pull-through of polished in the pipeline where retailers are replacing depleted stock, and by less rough being available on the market.
The latter is certainly true. After next-to-no mining and the unprecedented lull in manufacturing in the first quarter, the shortage of rough is significant enough to stimulate demand in the short term, even without higher polished demand. However, this is not sustainable and the lack of accompanying growth in the retail and polished markets, and in consumer confidence, should be viewed with concern. Penny was correct when he said that, “in the end, it is consumer confidence that will pull us out of this crisis.”However, the market should be cautious of inflated reports about stronger demand at the end of the pipeline.
Indeed, if consumer confidence continues to rise and second-quarter sales at Tiffany, Zale, Blue Nile and the like improve to single-digit declines, further DTC sights of $400 million and above may be justified. If not, the current rush-for-rough will ultimately burn out. Demand for rough will fall, and so will prices—possibly further than before. In such a scenario, the diamond industry could see continued market confidence in the third quarter turn into a dismal Christmas period, telling yet another tale of two vastly different quarters.