It's no secret that these are far from easy times for diamantaires in the Israeli diamond center. In fact, for many diamantaires, difficulties have been going for at least six months, and in some cases much longer.
A survey of companies from small to large in recent weeks reveals that the diamond sector in general continues to fight against the odds. But for smaller players, the situation in many cases is becoming close to impossible. One Israeli diamantaire spoke of the fact that he had no choice but to simply leave the diamond industry – at least temporarily and work in a field "where he could earn some money".
"I would say that for many smaller firms the situation is becoming extremely difficult," said the dealer. "I trade in rough and polished and there is simply a huge amount of goods for sale. We are all in the same position – whether large or small – regarding our desire to sell only for a good profit. The larger and more powerful firms can hang on for longer because they are under less financial pressure than me.
"I accept that. It is part of business. I wanted to remain a small player because I wanted to be independent. I worked for larger companies for many years. Now, I see that it is challenging to continue. I have polished stones in the $20,000 range in the safe that I could sell for several thousand dollars less than I am looking for. That is not a financial disaster but it makes it unworthwhile to continue operating. I am taking a time-out from the diamond trade to work in an area where I know I can make money. It's likely that I will return to the diamond trade. I have been in it for 15 years. I am a relative newcomer so it is easier for me, however family owned businesses where three generations of the family are involved cannot simply leave the trade."
Another member of the Israel Diamond Exchange (IDE) has another way of measuring the real activity happening in the bourse. "When times are good, there are relatively few people standing in the corridors, sitting in the cafes and wandering around the Trading Hall. The reason is, of course, that they are busy doing business in their offices.
"Take a look around the exchange on any day from 10am to 4pm, and you will see many people chatting and passing the time of day. Of course, some of this is business being conducted, but, for the most part, you see very many people who have relatively little to do because the number of transactions is much lower than a year or two ago.
"It's simply very difficult to move goods. There is too much inventory available. Never mind in Israel, go to India and in a week in Mumbai you will see more polished goods available for sale than you will see in six months in Israel. There are very large stocks waiting to be sold. There is also low liquidity – people simply don't have the money available. And even if they do, they are buying very small numbers of stones. Nobody is willing to take a chance. Confidence is not high – people are not sure if they will be paid."
A growing number of dealers is also supporting moves to request that the industry 'Bible' – the Rapaport Price List – also starts taking their views into account before changes are made to prices. "We are already at a stage where margins are as low as 2 percent and even less," said one trader. "When the list suddenly decides to cut prices of items by 3 percent, it leads to an almost impossible position. It's true that Rapaport says he is simply providing a general guide price, but the industry overwhelmingly operates according to his prices, so if he reduces a certain item then that is regarded as the new price for those stones.
"It's true that the list has brought clarity to the industry, but many of us feel that the role it plays is far too dominant. It seems reasonable that if you have a product that affects the global industry, then the views of diamantaires need to be taken into account. We are the ones whose livelihoods are affected. We see developments on the ground and the reality of the situation and the changes often do not accurately reflect what is happening in the exchanges," he added.
The news is far from totally negative for the Israeli diamond industry, however, despite the challenges it faces. In April, the IDE held the second edition of its International Rough Diamond Week, with major producers, including De Beers, Alrosa and Rio Tinto, taking part, while Fusion/Hennig Tenders staged a tender of rough diamonds from Angola. De Beers, for example brought 40 packages of varied stones, with some being loose and some in packages. It also showcased a high-quality 115.86-carat stone.
The exchange has resolved to make the event a regular one, said IDE President Shmuel Schnitzer, since the Israeli diamond sector needs $5 billion of rough supplies annually. "Although we have an impressive diamond industry here, if we cannot ensure a significant supply of rough we won't be able to develop it further. Therefore, we invited the leading rough suppliers, miners and companies that specialize in tenders and auctions, to come to Israel, to offer Israeli companies direct access to a huge selection of rough goods. This event enables us to bring first-hand rough to Israeli manufacturers."
IDE Vice President Arnon Juwal, who is the International Rough Diamond Week organizing committee chairman, said, "This event helps smaller manufacturers who do not have the financial means to travel abroad to buy rough here at home. By bringing goods to Israel, we save them precious time, as well as other expenses, such as flights and hotels. And we are giving all manufacturers, whatever their size, a boost by bringing the goods to the rough diamond trading hall of the bourse."
The Rough Diamond Week followed the International Diamond Week in February where an estimated $2 billion of polished goods were offered for sale. That event also saw the signing of a cooperation agreement between the IDE and Alrosa which will lead the Russian diamond miner to supply larger amounts of rough to Israel. In addition, the IDE will be holding its Summer edition of its International Diamond Week at the end of August and start of September. In addition to diamantaires from bourses in New York and Belgium, the IDE hopes that a large delegation from the Bharat Diamond Bourse will also take part.
"There is no doubt that we face challenges – as does the diamond sector globally," said Schnitzer. "But we take a positive approach and continue to create opportunities for our members in order to provide a boost to business."
By our Israel correspondent Abraham Dayan
