At the end of the expiring year Rough&Polished held a survey. Our experts were asked three questions:
How do you assess consumer demand in 2011?
What is your price forecast for rough and polished diamonds next year?
What may produce a significant impact on the market in 2011?
Below is what we were told:
Valery Morozov, Ruiz Diamonds
Unfortunately, we can only guess and hope for the best. We assume that demand for polished diamonds will grow smoothly in 2011 to catch up with the dynamics of rough prices. The greatest growth is likely to be in China and Asian countries (Persian Gulf). In America demand will depend on the pace of recovery in purchasing activity as a whole; regrettably, it's pretty low.
As for rough prices we do not see any great potential for their further rise; currently offered prices are already highly speculative and involve expectations for reduced global diamond output in the future. Further growth of rough prices is possible if it will be supported by rising demand for diamonds.
With regard to some specific factors, we can only assume that one of them may be Zimbabwe. They have accumulated there a large stock of rough and they have a great development potential. Of course, if they will receive a full-scale carte blanche for sale and will uncontrollably dump their rough diamonds on the market, it could become a destabilizing factor. But so far free sales are still far away and, hopefully, even if they start the sales policy will be reasonable.
Richard Wake-Walker, WWW Diamond Consultants
I believe demand will remain strong, but perhaps not as strong as in 2010. Demand will continue to be driven by lack of supply, as this year. As far as prices of rough are concerned, it would not seem possible that prices will continue to be as firm as at present. The disparity between rough and polished prices will have to narrow next year.
The Far East, especially India and China, are likely to increase their market share of diamond jewellery at the expense of the U.S. and Europe.
Clearly, the diamond business will be affected by any major economic events during next year.
Constantine Godun, Almazintech
Consumer demand in 2011 will experience a slight increase. General trends will be associated with reduced global diamond output as compared with the pre-crisis level and increased production of jewelry carrying synthetic diamonds.
Price outlook for rough and polished diamonds
Factors which may have a significant impact on the market:
- A second wave of the global financial crisis leading to a widespread drop in demand (the situation already seen in 2008-2009);
- New military conflicts (involving Korea, Iran, Pakistan, etc.) which may trigger a round of hyperinflation;
- Large-scale natural or industrial disasters at major diamond producing operations followed by shortages of rough on the market;
- Turning ALROSA a public corporation (if accompanied by news about possible trends to cut diamond output in Russia in the future process of large-scale transition to underground mining on the major diamond fields developed by ALROSA Group).
Yuri Shelementyev, Moscow State University Gemological Center:
If there is no second crisis wave, then in 2011 we will observe a slight increase in demand for jewelry due to the fact that the labor market is recovering and there appears a share in wages which you may spend on luxuries.
I do not see any reason for a rise in polished prices in the world. Most likely, inflation will be higher than price growth. Rough prices are rising because of strong competition between buyers of rough diamonds. And mining companies are only pleased to keep this competition going.
New factors are always possible, but so far there is no understanding what they might be. Perhaps, there is one factor. At the stage of the crisis, governments were allocating funds and after their distribution among companies and individuals some of their part is used to purchase goods from our segment. If this money runs out (if the U.S. will stop their printing press, or oil prices will go lower, or a new crisis wave will follow), this will inevitably lead to a drop in sales.
Vladimir Teslenko for Rough&Polished
