In an attempt to get a broader picture of the current diamond market before 2010 Rough&Polished turned to experts asking them to give their opinions about the latest developments in the industry.
Martin Rapaport, Chairman of the Rapaport Group and founder of the Rapaport Diamond Report:
What is the reason behind a higher demand for rough diamonds? Do you consider this trend to be long-term?
I think high rough prices are a fundamental and unsustainable stupidity of the diamond industry. I think the people who are controlling the diamond industry - ALROSA and De Beers - are making a mistake on holding too much goods off the market.
I think that it would be healthier for the market to have more diamonds to be sold so that prices will come to reasonable levels. Why are diamantaires paying too much for diamonds? Probably because there is an overage of capacity - there is too much manufacturing capacity.
The diamond rough people should sell their goods and not try to control [the market]. What we are seeing now is over-control of the market. Let the prices go natural. Having said that, everybody has the right to decide how much they want to sell. I think the fact that there is holding back of rough is unhealthy and they should be careful not to try to manage the market. I think higher prices are a clear sign of over-manipulation of the diamond industry by the mining companies.
When will the industry come out of the crisis?
I don't think they are going to come out of the crisis as much as they are going to confront a new reality. This is not a crisis. This is a new reality, it is a shift and I don't think that people really understand that.
How do you appreciate the behavior of ALROSA?
I think ALROSA took a smart decision. I don't know if I understand what ALROSA is doing right now. I think they are moving a lot of goods to Gokhran.
What could you say about the results of De Beers’ work with its sightholders?
De Beers is growing up - they are realizing they can no longer control the world. I don't know if they will change completely. And the question for De Beers is going to be ‘Can they control De Beers?’ If they need money to pay off their loans they are going to have to sell diamonds. Will the rough bubble burst? Probably. So right now it is a kind of artificial situation and I think De Beers is going to have to face reality.
De Beers and ALROSA are just playing yesterday’s game in a new world and I think that they will deserve to lose money. I would like to see rough prices come down significantly. I would like people to sell their rough. I think the prices are too high. I think people need to make profit. The higher they make rough prices, the less profit diamond manufacturers and traders make. I think it is also important for people to understand that the diamond business is about to sell diamonds and not to hold them. When people will understand that the manipulative approach cannot work for them then diamonds will see more success.
Alex Shishlo, Editor of the Rough&Polished European Bureau in Brussels
