The diamond market was strong in May as the industry continued experiencing shortages of polished alongside steady retail demand. Manufacturing slowed because of India’s Covid-19 outbreak, with factories in Surat reducing their production levels, especially in sizes under 1 carat.
The midstream found itself in an unusually strong inventory position, in contrast to the oversupply crises that had plagued it in recent years. Mining companies sold large volumes of rough to cutters seeking to fill gaps in their stockpiles. Orders from retailers increased as China continued to recover and the US economy reopened.
Polished prices firmed, with the RapNet Diamond Index (RAPI™) for 1-carat diamonds increasing 0.6% between May 1 and 20. The index for 0.30-carat stones gained 0.5%, while prices for 0.50-carat goods climbed 0.8%. RAPI for the 3-carat category advanced 0.7%.
Morale up
Business shifted from Mumbai to Antwerp, stepping up trading in the Belgian city. Activity in Israel stumbled amid rocket attacks from Gaza, many of which targeted the central part of the country containing the bourse. Hong Kong’s dealer market had a sluggish patch, as the Chinese retail sector was seasonally slow.
Still, sentiment among dealers and manufacturers — especially the larger ones — was at a level unimaginable during the depths of last year’s lockdowns. Even in India, polished exports soared to $2.25 billion during April, well above the $34.5 million the country had recorded 12 months earlier, and up 37% from the same period of 2019.
The rough market wobbled slightly as a result of the India situation, but was robust overall. With dealers mindful of possible shortages, rough sold fast and at high premiums, sources said.
Alrosa’s rough prices have returned to September 2019 levels, following increases of 1.5% to 3% at each of its first-quarter contract sales this year, reported chief financial officer Alexey Philippovskiy in a May investor call. Philippovskiy had expected prices to reach a plateau in April or May this year as consumers returned to spending money on travel and experiences. But now he foresaw further improvement as momentum in the market continued.
“Even the modest recovery in travel that is already taking place has not impacted the buying sentiment of the midstream,” he said. “We know there are lots of orders coming from the retail into the midstream, and the midstream is very anxious to buy rough. At some point, the market will find its balance, but I believe there is still room to go before this happens.”
US recovery falters
American consumer confidence spiked in April amid positive employment figures, government stimulus checks and the country’s coronavirus vaccine rollout, according to business-data provider The Conference Board.
At the same time, there were signs that suggested the recovery was running out of steam. US retail sales in April were down from the previous month as the impact of the stimulus faded, according to data from the national Census Bureau. Consumer sales in mainland China increased 18% year on year for April, but still lagged behind analysts’ expectations.
“Although the pace of vaccination has gathered momentum, volatility and low visibility are likely to prevail until there is herd immunity,” said Johann Rupert, chairman of Richemont, which owns Cartier and Van Cleef & Arpels. He made the comments in a quarterly earnings statement, adding, “There are still concerning Covid-19 developments in parts of the world that could slow down a global recovery, even though underlying demand seems strong.”
The industry’s attention will now turn to how India deals with its Covid-19 difficulties, as well as whether trade shows will go ahead later this year. JCK Las Vegas is due to take place from August 27 to 30 after the pandemic forced the cancellation of last year’s fair. So far, however, the industry has been managing well without the usual calendar of exhibitions.
Article from the Rapaport Magazine - June 2021. To subscribe click here.