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Antwerp
By Marc Goldstein
As could be expected, the diamond industry is extremely vulnerable to the global economic environment. And bad news is coming from most of the countries that have been supporting the global diamond trade over the past couple of years: mainly, the BRIC countries — Brazil, Russia, India and China. The good news, however, if there is any, is that the issue is global and concerns all sectors of economic activity. “During the last quarter of 2015, we noticed a totally unexpected pick up in Italy. In particular, there’s a resurgence of activity among the northern Italian jewelry manufacturers, which is a good sign,” said Julien Drybooms of Drybooms & Zonen. “On the other hand, the news from China, where we were last week, confirmed that the market is quieter, most probably because a lot of money was lost in the stock exchange. Consequently, the Hong Kong show isn’t expected to do anything else but assess the weakening trend. As far as the European diamond business is concerned, Vicenzaoro and the Antwerp Diamond Trade Fair (ADTF) are slowly taking over from Basel, which has now definitely become a watch industry trade show. Even if news from Vicenzaoro seems to be okay, we are still waiting to see what the next ADTF will be in order to have a more accurate view of the old continent’s health,” Drybooms concluded.
Nirav Shah of Beauty Gems BVBA elaborated: “We definitely noticed that retailers have started restocking. However, they’re doing it very carefully, which translates into approximately 30 percent less orders placed compared to the same period in 2015. It’s the seventh time we’re participating in the ADTF. For us, if this show keeps being well managed, it’s about to become a major barometer of the health of the European market for the year to come. Hong Kong isn’t expected to be great, but it seems that we’re going to be able to rely on the U.S. to give us some stability. Indeed, American orders keep coming in at a steady pace.” According to Doshi Mitesh Ramesh of Prime International BVBA, “The market is going to be slow, but there is definitely business to do for those who do it strategically: buy at sensible prices, manage efficiently and sell at the right prices. By the way, it’s interesting to emphasize that while only recently 40 percent of the diamantaires were working according to a viable business model and the other 60 percent were running on overhang, today everybody is cautious and is sharply monitoring inventory levels. The demand for inventory replenishment is definitely there, and an apparently contradictory feature can be seen: Even though orders are down between 30 percent to 40 percent compared to 2015, the buyers who come are willing to pay the price to get the goods. However, let’s not lose sight that consumer demand isn’t that great and consequently, retailers aren’t going to jump to buy.”
However, regarding the rough, a worrisome pattern appears to be coming to light. As everybody knows, for the past few months, the major suppliers have been reducing the quantity of rough that is being forced into the pipeline. Prices went down as well, which is what the market absolutely needed to restore profit. However, a diamantaire who wished to remain anonymous said that sightholders are now pushing up the premiums on the secondary market. This, in turn, could likely change the endeavor, initiated by the producers, to help the market into a simple transfer of profit from the Diamond Trading Company (DTC) to its sightholders.
On the other end of the pipeline is the natural colored diamond market, which appears to have remained virtually untouched by the crisis, according to Natacha Langerman of Langerman Diamonds. “The most expensive stones, those that sell for record prices in auction houses, are pulling with them all diamonds in the same color range. Today, red diamonds of one carat wouldn’t sell for less than $2.5 million. Blue diamonds have become the greatest record breakers and are now unaffordable. Argyle Pink also count among the skyrocketing prices,” she elaborated. David Shara of Optimum Diamonds confirmed, “In a world where oil prices are going down and where stock exchanges are more volatile than ever, the rarest fancy color diamond prices keep increasing at a pace of sometimes 20 percent to 30 percent a year. Vivid blue, vivid green or fancy red never went down over the past 30 years. The secret behind this steady increase, which is comparable to that of paintings by the Great Masters, is that there are only a couple of stones in each color category around the world for 50 buyers with standing orders. It’s absolutely a sellers’ market.” Yellow diamonds in general, however, are reported to be less valuable, since they are essentially less rare than others. Globally, they follow the trend of the white diamonds, which is also why they have been losing value recently.Article from the Rapaport Magazine - February 2016. To subscribe click here.
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