The diamond trade continued to improve in September as markets reopened and the holiday season neared. Dealers focused on preparing inventory amid expectations of a solid retail showing despite the pandemic.
The release of pent-up demand led to a stronger August and September following months of shutdowns in trading and manufacturing hubs. Sentiment was positive despite the cancellation of the Jewellery & Gem World Hong Kong show; the fair usually stimulates sales during the month and sets the tone for the fourth quarter.
Shipments in and out of Belgium in early September were on par with the same period of 2019, underlining the improvement, according to the Antwerp World Diamond Centre (AWDC). “If we did have a Hong Kong fair, the figures would probably be even higher,” explained an AWDC spokesperson on September 22. “So there’s definitely movement in the market.”
Demand up
The anticipated holiday demand, combined with some shortages, supported the polished sector. The RapNet Diamond Index (RAPI™) for 1-carat diamonds rose 1.5% between September 1 and 21. RAPI for 0.30-carat stones increased 1%, with the index for 0.50-carat goods gaining 1.8%.
Prices of 3-carat polished grew 1.4% during the period, partly reflecting the reduced number of suppliers in the large-stone market. Manufacturer HB Antwerp agreed in July to buy all of Lucara Diamond Corp.’s production above 10.8 carats for the rest of 2020, and later acquired sightholder AMC Diamonds’ Belgium cutting factory.
“We don’t want to take the credit for it, but once there is less supply available and a smaller number of players acting, that will have a direct impact on the pricing,” Oded Mansori, HB’s CEO and managing partner, told Rapaport Magazine in an interview on September 9.
Preparations for the upcoming November Diwali festival in India lifted rough demand as manufacturers sought goods for polishing ahead of the annual pause in activity, which usually lasts for several weeks. This year, factories are likely to spend less time closed, as the coronavirus lockdown has left a backlog of orders for the US holiday season.
De Beers’ sales continued their momentum in September, with sightholders buying rough to fill shortages in the lead-up to Diwali. Rough-market sources expected the company to achieve monthly revenues similar to the $320 million it had garnered in August, when demand picked up after four months of inactivity.
Other miners also reported better demand at September tenders following six months of weak sales. Mountain Province brought in $8.9 million during the month, the first time it was able to hold a conventional diamond tender since February.
“The results of the sale were a positive sign as the markets for rough and polished diamonds start to return,” Mountain Province CEO Stuart Brown said in a September 21 statement.
Eyeing e-commerce
Increased Covid-19 restrictions, or threats of them, nonetheless affected the industry’s outlook. Infections surged in India, the world’s largest diamond-manufacturing center, while Israel entered a lockdown set to last for at least three weeks.
Much will come down to the success of the US holiday season. With manufacturers and dealers increasing their inventories, good festive sales will be important if the industry is to avoid an oversupply. As for retailers, those with strong omni-channel capabilities will likely see the best sales this year. In addition, independent jewelers look set for a better holiday than store chains do, as consumers are still reluctant to enter shopping malls.
The jewelry sector has traditionally struggled with online selling. If the industry can crack that issue this season, it could help ensure that the recent improvement in sentiment has not been in vain.
Article from the Rapaport Magazine - October 2020. To subscribe click here.