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THE DIAMOND MARKET

 SIGNS INCREASE THAT DEMAND FOR DIAMONDS IS RETURNING, ALLAYING FEARS FOR A LOST HOLIDAY SEASON IN 2020

 

As the end of the year approaches, there are increasing signs of market recovery, partly allaying concerns that holiday season demand may not be as devastated by the COVID-19 crisis as many had feared.

According to reports in the Indian media, diamond traders in Surat are reporting prices of polished diamonds, and in particular those below one carat in size, rising by by 10 percent to 25 percent. This beingdriven not only by a more balanced pipelines, but also by better demand from the consumer markets.

“Demand for diamonds from our potential customers across India, United States, Hong Kong and Europe have risen again after the last few months that left a void. So this is a positive change for the diamond traders and we are looking forward to business growth during the upcoming festivities,” Hiten Desani, a diamond merchant from Surat told the ANI news agency.

At the start of the crisis the diamond industry in India had declared a moratorium on rough diamond imports, hoping to relieve the burden on the their already overstocked inventories.  About 70 per cent of manufacturing units are back at work, although manufacturing capacity remains below 60 percent, the agency reported. This means that traders are already unable to supply due to a shortage of goods in the market – hence the rise in prices.

“Diwali, Christmas and Valentine’s Day will be the big sale opportunity for the diamond industry,” Nitin Bothra, another Surat merchant told ANI. “We really need this positive flow after so many months of remaining shut. I’m happy.”

DE BEERS RELEASES MORE ROUGH INTO PIPELINE

The improved demand would certainly be a factor in De Beers to sell $467 million worth of rough diamonds in the eighth sales cycle for 2020, compared to $320 in the previous one. 

This brought total revenue from rough diamonds in the second half of 2020 to more than $900 million, which while on the upswing is considerably below where they ordinarily would have stood at this point in time.

“We continue to see a steady improvement in demand for rough diamonds in the eighth sales cycle of the year, with cutters and polishers increasing their purchases as retail orders come through ahead of the key holiday season,” said Bruce Cleaver, De Beers CEO, in a statement released by the company.

Speaking to the media, Edward Sterck an analyst who covers uranium, diamond and platinum group metal mining companies for BMO Capital Markets, said that,  while there evidence of improving demand for rough diamonds, a significant accumulation of upstream diamond inventories, which could suppress the recovery if liquidated too soon and too quickly.

 

De Beers to sell $467 million worth of rough diamonds in the eighth sales cycle for 2020, compared to $320 in the previous one.

“Maintaining good diamond prices through the recovery will depend upon the pace at which the inventory is unwound, with De Beers and Alrosa holding the keys to the bulk of this inventory,” Sterck he wrote in a note to investors.

In the United States, the carefully watched Conference Board Consumer Confidence Index increased in September, after declining in August. In China, retail sales were up 3.3 percent in September from a year earlier, after a more modest 0.5 percent increase in August.

CONSUMER CONFIDENCE REBOUNDS IN THE UNITED STATES

In the United States, the carefully watched Conference Board Consumer Confidence Index increased in September, after declining in August. The Index now stands at 101.8, up from 86.3 in August.

“Consumer confidence increased sharply in September, after back-to-back monthly declines, but remains below pre-pandemic levels,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “A more favorable view of current business and labor market conditions, coupled with renewed optimism about the short-term outlook, helped spur this month’s rebound in confidence. Consumers also expressed greater optimism about their short-term financial prospects, which may help keep spending from slowing further in the months ahead.”

American consumers’ appraisal of current conditions rebounded in September. The percentage of consumers claiming business conditions are “good” increased from 16.0 percent to 18.3 percent, while those claiming business conditions are “bad” decreased from 43.3 percent to 37.4 percent. Consumers’ assessment of the labor market also improved. 

The percentage of consumers saying jobs are “plentiful” increased from 21.4 percent to 22.9 percent, while those claiming jobs are “hard to get” decreased from 23.6 percent to 20.0 percent.

In China, retail sales were up 3.3 percent in September from a year earlier, after a more modest 0.5 percent increase in August. It represented the fastest growth trend since December 2019. This would make China the only major economy to report growth in 2020.

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