The results of April trading in the diamond market exceeded conservative expectations of experts once again. Demand for rough and polished diamonds remains stable enabling companies to post good sales. More and more market players admit that the situation has stabilized and they even take the liberty of venturing first cautiously optimistic forecasts. However, before one can confidently speak of any growth, the diamond market is to live through several months of seasonal hiatus.
According to market players, De Beers slightly increased prices for rough sold in April (by an average of 2%) due to revaluation of certain categories of goods. However, even this hike in prices did not prevent De Beers to hold in April the best sight so far this year (and in general over the past six months) and to sell $ 660 million worth of diamonds. In an official press release, the company attributes this top-notch result to “stability in polished diamond prices and sales of polished diamonds.” Although, the large size of the sight was perhaps also due to the fact that the company had not sold diamonds in the previous month and its customers preferred to stock up for the future not only in February, but also in April, willing to buy what was missing in their inventories with an eye on the current situation. Thus, De Beers’ sales totaled about $ 1.7 billion ($ 610 million in January and $ 545 million in February) from the start of this year.
Some market sources estimate that ALROSA’s rough sales reached at least $ 1.5 billion over 4 months in 2016. The company’s President Andrey Zharkov mentioned in a recent interview that ALROSA’s “sales in April were slightly weaker than in the previous months.” The company has officially reported sales of about $ 1.3 billion in the first quarter. Thus, the fourth trading session of the Russian company can be pre-estimated at $ 200-250 million.
ALROSA is holding its fifth, May trading session this week. Last month, ALROSA, like De Beers, adjusted its prices for different categories of goods - however, after this correction the company’s average prices have not grown, but decreased by about 1%. Pricing and trading volumes at the miner’s May session are expected to be similar to the results of April.
A similar slowdown can be expected from the upcoming sight of De Beers starting on 16 May. But, fortunately, this time the reason behind is not the crisis. After rapid growth in the beginning of the year, the world diamond market is entering a seasonal decline in business activity, which usually starts in May and lasts until August. In previous years, rough supplies during this period went down by an average of 20-30% compared to the beginning of the year.
Stable demand for polished diamonds in the coming months is likely to remain at the already attained level, but will not show rapid growth. High business activity in the diamond market in the beginning of the year was due to the prevailing shortage after the holiday season, especially in terms of 0.5 to 1 carat goods. Apparently, diamond manufacturers and jewelers have completed to replenish their inventories or are about to close this process. Polished prices remained virtually unchanged in March and began to decline in April: polished goods in the range of 0.5 to 1 carat fell in price by 0.3%, while stones weighing 0.3 carat depreciated by as much as 1.3%.
The completion of restocking is also confirmed by trade statistics released by Gem and Jewellery Export Promotion Council (GJEPC) of India. According to GJEPC, the country’s rough imports in January-March 2016 exceeded imports in this period one year ago by 30% in terms of volume and by 15% in terms of value. India’s polished exports, both in carats and USD, remained comparable to the last year's level - approximately 8.5 million carats worth more than $ 5 billion.
The Antwerp World Diamond Centre (AWDC) has not yet published diamond metrics for April, but demonstrates a similar picture judging by the results posted in the first three months of 2016. Belgium’s rough exports rose by 20%, while polished exports remained on the last year's level.
Since polished diamond production is not increasing proportionally to exports, it can be assumed that these “excessive amounts” of rough remain in the inventories held by diamantaires. If demand for polished goods will be maintained at current levels, these amounts will gradually move to the market over the period of the summer lull – together with those polished goods that have already been cut out of rough purchased in January and February and are now beginning to enter the market. A new phase of restocking may be expected in September, when business activity will increase, and diamond cutters and jewelers will begin to prepare for the holiday season. If this phase will be successful, the world diamond market will be able to move from the current stable state to long-awaited growth.
Elena Levina for Rough&Polished
