Diamond sales are slowly picking up again after the diamond industry took drastic measures to prevent a collapse in prices. The two biggest diamond miners, Alrosa PJSC in Russia and De Beers, halted sales for several months in an effort to support the market. India, the dominant cutting and trading center, also voluntarily banned imports. However, signs are now emerging that the diamond market is beginning to recover.
In November, Alrosa sold over $100 million worth of rough diamonds, while De Beers sold a similar amount in their last sale of the year in December. These sales indicate a gradual rebound in the industry, although they are still smaller compared to what is typically expected during this time of year.
The diamond industry has faced significant challenges due to the pandemic. Initially, there was a surge in demand as people turned to luxury purchases like diamond jewelry while confined to their homes. However, as economies reopened and the situation stabilized, demand cooled off, leaving the industry with excess stock that they had purchased at higher prices. The economic instability in the United States, the industry’s largest market, and a property crisis in China, a key growth market, further dampened demand. Additionally, lab-grown diamonds started gaining traction in some markets, posing a threat to natural diamonds.
To counter these challenges, the diamond industry had no option but to limit the supply of diamonds. While this strategy has resulted in some price gains for rough diamonds, there are concerns that the recovery could be hindered by the large stockpiles held by miners.
The recent sales by Alrosa and De Beers were primarily made to a few buyers in India. This is because many participants in the industry were hesitant to deal with Russian diamonds following the conflict between Russia and Ukraine. Before the war, Alrosa had around 50 customers each month. Although De Beers has resumed sales, buyers still have the option to reject goods they are contracted to buy. This aligns with De Beers’ historical practice of managing supply by stockpiling goods to prevent prices from falling.
The current rebound in the diamond market is mainly driven by buyers who need new supplies to keep their factories running, rather than strong demand for polished gems. The long-term recovery of the diamond market will heavily depend on the strength of jewelry sales during the holiday season, from Thanksgiving to the Chinese New Year. It remains to be seen how robust the demand for diamonds will be during this crucial period.
Useful Links:
– Diamond Industry Cuts Contracts as Supply Shortages Fear Price Collapse
– Alrosa Sales of Rough Diamonds Exceed $100 million
