Stepping cautiously into the 3rd year of the global pandemic, we saw 2022 debut some powerful challenges as anticipated. For the diamond sector in particular, an extreme shortage of rough and polished goods in the market became visible. Does this a create a crisis or an opportunity grab? It all boils down to how you choose to interpret these findings.
Feel the Burn
The trend in prices and availability brings to mind a long-forgotten word which the industry borrowed from Yiddish—bren (meaning to burn), seems to fit the current landscape perfectly. It’s a bren for diamond goods since there exists a great demand but a short supply.
Ripple Effect of Covid
It became clear that our industry is lacking manpower in India where 90% of diamonds are cut and polished. During Covid, 20 % of the workers left, while another 20 % of Indian cutters switched to cutting lab grown diamonds. All this transpired at a time when demand for diamonds rose some 30 %.
So far this year, prices in fancy color goods are up around 15 % which is not a big deal since the annual inflation rate tracks at 7.5%. Real estate prices in tandem with the stock market soared wildly this last year. And while the stock market experienced some correction in January, diamond prices have begun a powerful upward spiral.
The Problem with Price Lists
I have always had a great dislike for diamond price lists for both white and fancy color diamonds. Such lists try to convert diamonds into commodities which are sold on weight and by papers like soya beans, irrespective of their luster. Nevertheless, they reflect the strong trend. Truthfully diamonds have a soul. They radiate life and spirit on a different kind of scale according to their sparkle, material, cut and proportions. None of this critical information is reflected in the price lists. You don’t have to be a GIA GG to communicate with a diamond or with a gemstone. When one sees a stone, it speaks to us.
Global consultancy firm Bain &Co. forecast that demand will remain stable for diamonds from 2023 to 2030, with very few new mine projects coming online, helping the recovery. Growing high and middle classes in China and India will drive the global diamond industry. That being said, there won’t be enough goods around to fulfill the market.
Diamond production fell 20% in 2020, Bain & Co. reportedly estimated, and rough diamond sales, which had already dipped 18% year-over-year in 2019, plunged 33% in 2020. Now we find ourselves in an extreme shortage of goods – with a robust demand. In 2022, the desire to own a real diamond is strong and growing- yet the market doesn’t have enough goods in the pipeline.
Hope on the Horizon
There remained a call for high end goods and Antwerp answered that call by increasing cutting and polishing output to meet demand. In Europe, consumer confidence index rose by 25%, signaling shoppers intentions for making major purchases. Over-all, the impact of consumer’s migration to electronic shopping should continue to buoy the market irrespective of how we find ourselves navigating through another Covid variant in 2022.