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Antwerp
By Marc Goldstein
While Prime Minister Theresa May is preparing the U.K’s exit from the EU and Donald Trump is in the White House, the diamond industry is trying to gauge which direction the wind is going to blow. Axel Beck of Beck Diamonds commented, “The signs are positive. Our sales in January were definitely better than a year ago. Half way through the month, we already had sold more than during the whole first month of 2016. Another issue is that, even if there’s lesser inventory in the pipeline, which is a good thing, retailers will need to be able to buy some goods in order to display it in their shops. At some point, the lesser the inventory, the lesser the sales.”
Rajiv Kothari of Diamstones explained, “2017 is going to be definitely better than last year. Of course there are and will be problems, but over the past couple of years our industry has been facing different types of problems every couple of months and we reacted with stronger and stronger solutions. So we’ll do the same. We’ll adapt and we’ll be resilient. For example, people have been more effectively controlling their inventory levels and their business, in general, in 2015 and 2016. A direct consequence is that demand will not boom but is expected to grow steadily. The business today is much healthier. People don’t hold onto their stones for too long but move them. So there’s less speculation and payment delays have been reduced. I would say that the new trend in the trade is: faster decisions, quick money and quicker turnover. The operational control is noticeable throughout the whole pipeline. Even some producers show signs of a more balanced and sustainable behavior.” Are we beginning to see the light at the end of the tunnel? Optimism is there but victory isn’t next door yet, confirmed Kothari. He continued, “Unfortunately, more corrections will be needed. With the reduced margins in the business we can expect to see more consolidations. More flexibility will also be required and those who won’t be able to adapt fast enough will have to go. Today, the market for big stones, for example, is mostly done through the internet, at the trade level at least. There’s less and less room for those who don’t master that craft.”
It remains a mystery how our business will be influenced by the major political changes of the coming months. A manufacturer of 5-carat stones and up, who preferred to speak off the record, stressed, “In the bigger sizes, we’re currently in a situation where there are not so many goods available. Therefore, prices and sales are expected to improve in 2017 in that specific segment, toward a slightly higher balance. Nothing spectacular though. As far as the Presidential change in the U.S., we expect that Donald Trump’s policy could help a little, or not, but personally I don’t think his presence is going to really destabilize our trade.” Beck agreed, “ The impact of Trump on the economy and on our business is unknown yet, as is that of Brexit. But, in the latter case, the lack of stability of the Pound Sterling could give way to increased purchases of diamonds due to distrust toward banks or even a loss of confidence in the banks. It’s not by chance that exceptional stones have never been as expensive as nowadays.” “Trump will probably be good in the short term for the U.S. economy. On the other hand, if he opts for more protectionism, then this could turn detrimental for the diamond trade in general outside of the U.S.,” Kothari concluded. Overall, expectations are that since the U.K. economy remains quite strong, business should improve. China seems to be on its way back, with encouraging fourth-quarter 2016 indicators. For India, where gross domestic product (GDP) growth has been revised from 7.6 percent to 6.6 percent, there could be an issue for the local market, at least in the short- to medium-term.Article from the Rapaport Magazine - February 2017. To subscribe click here.
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