The Diamond Conference held in Antwerp on May 23-24 discussed a broad range of problems facing the industry. Alex Shishlo, our correspondent in Belgium, caught up with some of its participants asking them to express their opinions on pricing and market movement.
Ari Epstein, CEO of the Antwerp World Diamond Centre
Mr. Epstein, during the conference it was said that the diamond market recovered. I would like you to share your view of the market perspective for this decade.
I would say that the answer is threefold. First of all, diamonds withstood the crisis extremely well and the reasons for that being that of course buying polished diamonds fist of all is not a decision that is taken lightly, it is a process involving people that fall in love, get married, and this is a process that takes a year or a year and a half, so it’s not an overnight decision and that is why diamonds retained their value throughout the financial crisis. Secondly, diamonds of course are still a very rare product. Certainly, gem quality diamonds that, for example, come from Russia, are of extremely good quality and these diamonds are extremely rare. And thirdly, what we see, and that is the most pertinent answer, is the fact that people want to diversify, people actually had the opportunity to have bonds and shares before the crisis, and what we see after the crisis is that people want something tangible, something they can hold in their hands. And what we see is that not only gold and silver sold extremely well during the last few years or at least since the crisis, but also people look at diamonds as at an investment. And a lot of investors have actually diversified and decided to buy diamonds to put them aside because in a thousand years’ time when everything will be gone or transformed to dust, diamonds will still be here.
From your point of view, what are the prospects for rough and polished prices?
We have seen polished prices two weeks ago again rise in value. Rough prices are also extremely high. In carats, production is down globally, and good quality diamonds are difficult to come by. And I think that, you know, this trend might have small correction in it, but this correction will certainly be very small. I suppose and I forecast that diamond prices will remain strong in the future because of the rarity of the product and because of the huge demand from South-East Asia, which is absolutely unbelievable.
What kind of influence do India and China produce on the market? Does it have an impact on prices?
Well, it is certainly the BRIC countries, maybe Brazil not that much, but Russia, India and China, which are extremely strong on demand and you’ve got a new high middle class coming up that wants to spend, that wants to buy diamonds, that wants to diversify, that wants to have something tangible. Why not buy the product that as a symbol of love you can ware it and you can have it as an investment at the same time. It doesn’t degrade with time and people understand, they certainly understand it in these markets, and that’s why there is a huge demand which of course pushes prices up.
Are you satisfied with what ALROSA is doing in the market in this respect?
Absolutely. ALROSA has been an extremely reliable partner in the past and they have a vision that they are today the biggest producer in the world in carats and also in value for diamonds and they have a vision of how to bring the company and industry to the next level and its through their leadership that today our industry is flourishing. I think that ALROSA has been doing a great job and I want to congratulate them on the strategic decisions which they have taken during the past few years which now it seems have helped the industry enormously and give the glitter and glamour that the product deserves. I think that they have really made the right decisions.
P.N. Prasad, the managing director of the State Bank of India's Antwerp branch
Could you tell me what are your expectations for rough and polished prices?
We have seen that rough prices have been slowing down in the last couple of months. We all expect that there will be some minor correction for rough prices in the short term and for polished prices definitely because there not much pipeline supply is likely to show up good things in the coming months. The gap is likely to narrow.
What is your vision for the diamond market perspective in this decade?
The diamond industry needs to look more for transparency and corporatization and more corporate-to-government practices. It’s not the size which is going to matter. Even niche players which are going to adapt to these requirements will definitely survive and they will be able to gain market finance at reasonable rates in the days to come. I think the industry will also see some kind of consolidation opening in the next decade.
Chaim Pluczenik, Chairman and CEO of Pluczenik Diamond Company
What is your prognosis for rough and polished prices?
As you can see polished prices are slowly coming back to their original levels due to more demand and certainly due to a stronger market in India and China and in some other markets which have strong demand for goods. Supply is shorter than demand. As for rough prices, there was of course some overspeculation which pushed prices a bit too fast - not too high, but too fast. It’s normal that prices will go up, for rough as well because of the lack of supply. There is not enough supply for the market. It has a bit stabilized during the last two weeks, and we think that we should anticipate a good season and that prices should remain on this level. I hope they will not go up too fast, because anything that goes up too fast may then drop.
What do you think are the prospects for the diamond market during this decade?
I think there is a huge inflation. There were a lot of billions of U.S. dollars spent in the States by the government and this of course [brought about] very, very strong inflation and in the very near future automatically all the natural products like oil, gold, platinum, diamonds will probably be in demand since people will have less trust in money since there is a lot of money available on the market.
What do you think is the influence of China and India on prices and the market as a whole?
India and China are a new market. China is probably at the initial stage. We can see that every month there is an increase in demand and more people want to buy stones of different colors and sizes. And this promises I would say a very good future for our industry.
Victor van der Kwast, CEO of the International Diamond and Jewelry Group at ABN AMRO Bank N.V.
What is your prognosis as far as prices for rough and polished diamonds are concerned?
My prognosis? You see, now prices have risen very sharply. We see now some resistance to higher prices. There is a limited supply and therefore prices will stay somewhere around these levels. If Zimbabwe and Russia will come with more goods to the market, then prices will take a small holding period or slight decline, but I think it all depends also on which kind of goods you are talking about – the smaller, what we call “Indian goods,” and there is a lot of activity in Indian goods, and there is a lot of activity in somewhat larger goods. So those will be stable or firm. Do I see a drop now? I say no. Do I see civilization? Yes, I do.
What is your opinion about the influence produced on the market by India and China today?
China and India are key at the moment to the success. In China the demand is very high. They are buying it not only for jewelry but also as an investment. And there is also a higher level of wealth being creating in the market. If you look at the amount of people that are now rich and getting richer, it is a huge market. And there are fifteen million marriages per year. So if you think about nowadays and the old days when they all wanted gold and they want gold and diamonds. So it’s immediately a normal question for diamonds and the second part of that is that the Chinese are moving immediately up in terms of their size and also in terms of money. In the beginning this market was immature and very small and of limited quality. They are also going for high quality or size. And they are expected to be a very good market. Then if you look at India, India needs, too, goods for manufacturing. There are a lot of factories and a lot of shops are restocking their inventories for sales. As always continued demand is there. People are getting richer there as well. Next to gold they are also now buying diamonds, but they are more price sensitive. China is still a maturing market whereas India is a mature market.
Alex Shishlo, Editor in Chief of the Rough&Polished European Bureau in Brussels
