When someone stands up to give an address in Israel, one
thing you’re unlikely to get from the audience is silence. Israelis don’t
necessarily consider it rude to talk over a public speaker; keeping quiet just
isn’t what people here do. True to form, dealers chatted through all of the
opening speeches at the International Diamond Week in Israel in early February,
seemingly more interested in the contacts and potential clients circling the
room than in the lectures going on at the podium.
That level of distraction underlined something positive
about the market: There’s business to do. Optimism was high at the annual
three-day trading event, which takes place on the trading floor of the Israel
Diamond Exchange in Ramat Gan. Dealers were happy with results from the recent
US holiday season, and more upbeat about the Asian market. In addition,
shortages of certain polished categories were supporting prices, dealers noted.
“The market has been recovering, both at the end of [last]
year and now,” said Shaul Shiri, president of locally based manufacturer and
supplier G.S. Diamonds, which focuses on fancy shapes and mainly does business
in the US market. “Workers got their bonuses, the economy is good. There is an
improvement. I don’t know if it’s significant, but it’s an improvement.”
Credit where it’s due
The righteous few who listened to a speech by Eli Cohen,
Israel’s minister of economy and industry, at the curtain-raiser learned of
another reason to be positive: The government has decided to guarantee $286
million (NIS 1 billion) in bank loans to the trade, helping smaller and
medium-sized companies obtain credit. A special Ministry of Economy and
Industry committee recommended the move in response to a credit crisis in the
local trade, as banks’ perception of the industry as high risk was preventing
them from lending to it.
“Implementing the committee’s conclusions, alongside other
steps, is essential, considering the crisis the sector has been through,” Cohen
said. “Their purpose is to provide new tools to help deal with challenges in
the trade and to ease regulation, thereby growing both production and exports.”
Israel has a lot of ground to make up. The nation’s
polished-diamond exports slumped 27% between 2008 and 2016 due to the financial
crisis, a slowdown in the Chinese market and increased competition from India
and Belgium, the government committee reported.
The trade continued to slow in 2017, though the pace of
decline calmed slightly. Polished exports fell 4% to $4.48 billion in 2017 — a
better result than the 6% drop in 2016. Exports to the US slid 7% to $1.69
billion last year, suggesting Israel was losing further ground in the important
market to its competitors in Mumbai and Surat.
Positive thinking
The festive season gave some brighter signs: Israel’s
polished exports leaped 31% to $1.1 billion in the fourth quarter. That figure
reflects positive demand during the busy final months of the year, even though
dealers would have completed many of their US holiday orders during the third
quarter.
Assistance from the government may go some way toward
helping the recovery. So might the bourse’s attempts to modernize the Israeli
trade, which include an innovation center, a diamond cryptocurrency and an
e-commerce deal with Chinese online retailer Alibaba.
The diamond exchange and the Israeli government may not be
able to teach people to listen to speeches, but they’re apparently trying to
help dealers sell more diamonds. With the markets improving, the signs are
positive.
Article from the Rapaport Magazine - March 2018. To subscribe click here.