After nine years heading the Antwerpsche Diamantkring, David Wahl continues to look for ways of improving conditions and opportunities for bourse members.
Founded in 1930, the Antwerpsche Diamantkring is the youngest of Antwerp’s four diamond exchanges and enjoys the distinction of being the only bourse worldwide that specialises in the rough diamond business, Antwerp Facets writes. Providing a trading place for what almost certainly is the largest concentration of rough diamond dealers in the world, the Kring, as it is popularly called, is the first port of call for many of the thousands of manufacturers who visit Antwerp on a regular basis.
For the past nine years its president has been David Wahl. With 44 years of experience in the diamond industry, he is still looking for ways of improving conditions and opportunities for bourse members.
Speaking to Antwerp Facets, Wahl considers the state of the current-day diamond market, and looks at the changes that have taken place since he took his first steps in the diamond business.
ANTWERP FACETS: You have served at president of the Kring for almost a decade, so it is a job that clearly inspires you. What is your main motivation for wanting to be a bourse president?
DAVID WAHL: My aim is always to help bourse members, particularly the small and medium-size companies who are the base of the pyramid upon which the industry rests. They play a critical role in our industry, which is not always realised and appreciated.
Larger companies know they need the smaller players to supply them with certain goods that they cannot source from elsewhere, and that they need urgently. The small and medium-size firms also buy goods that larger firms find that they do not need or cannot use in their production.
ANTWERP FACETS: What are the specific issues faced by small and medium-size companies?
DAVID WAHL: Among the problems they face are that, because they are small, they cannot secure large levels of credit, or the lower levels of interest that large companies enjoy. This makes operating in the modern diamond industry very difficult, because you must have credit.
The industry is becoming more and more competitive and margins are always being reduced. So the role the banks play, relatively speaking, is even more crucial in the lives of small and medium-size companies.
During the financial crisis that began in 2008, the small and medium-size companies played a crucial role. They did so by holding on to their inventories, which helped keep the market together. They are responsible and cautious in the way they do business, and that makes them good customers for the banks.
ANTWERP FACETS: Are there specific steps, in your opinion, which can be taken to aid the smaller and medium-size companies?
DAVID WAHL: There are several things that can be done, such as appealing to regional and national governments for assistance. Let us bear in mind that the smaller companies account for about three-quarters of the Antwerp diamond sector which gives work to about 30,000 people. In other words, they are a significant source of employment and help create a lot of economic activity.
Secondly, the banks could take greater steps to helping smaller firms. Despite the recovery that has happened, smaller companies still have ongoing financial needs to keep operating.
These are just two of the ways to aid this part of the industry, but there are others, such as trade shows offering better terms to attract smaller companies, and miners developing relationships with them to widen their client base.
ANTWERP FACETS: As head of the Antwerp rough diamond bourse, how would you characterise the state of the rough diamond markets?
DAVID WAHL: The truth is that diamond prices increased very quickly and to very high levels since the start of the year. There was a lot of speculation in the market, and that is not healthy. There is no reason that diamonds should rise in price even more than gold. As a result, we have been seeing a correction taking place since the summer months.
Clearly, this is a tough time for the rough market. Now that we are seeing sharp falls in rough prices, diamantaires who bought goods when the prices were high find themselves stuck in the middle.
Often they cannot afford to hold on to the diamonds, although if they do the prices may climb again, enabling them to sell the goods at a profit. If they polish them, they may receive lower prices because demand has fallen.
These are not easy times, but I do believe the situation will stabilise in the coming months.
ANTWERP FACETS: Related to rising diamond prices is the issue of tenders. Tenders have attracted growing levels of criticism in recent years, even as their popularity has increased. What is your view?
DAVID WAHL: Tenders are very damaging not only to the diamond industry, but to the producers as well. They cause diamond prices to rise, and smaller players do not have the ability to compete.
Tenders do not provide stability because whoever wins a tender this month does not know if he will be able to bid high enough for diamonds next month. They cause insecurity.
Tenders do not allow for the building of a relationship or trust between suppliers and customers which are important elements in our business.
When the situation becomes more difficult and prices decline, suppliers become more desperate to sell their goods since they need to generate money. But because they sell at tenders and do not have strong relationships with individual companies, they cannot sell their diamonds.
I believe tenders damage all members of the pipeline.
ANTWERP FACETS: Some people have suggested that in the modern era the role of the diamond bourses has diminished. What is your response as a bourse president?
DAVID WAHL: The diamond bourse remains the place where diamantaires have their offices, and where trading halls enable people to congregate, to meet, and to find and develop business opportunities. These things have not changed.
The judicial function performed by the bourses remains a critical element. The fact that an exchange member who breaks the rules cannot trade in another World Federation of Diamond Bourses member exchange elsewhere in the world is an extremely powerful deterrent. Bourses can also apply punishments against transgressors, and that is also a strong tool available to exchanges. Furthermore, Belgian courts take into account the decisions of the diamond bourses where there are arguments.
Diamond bourses also administer and oversee the functioning of Kimberley Process regulations in their particular organisation.
ANTWERP FACETS: How has the diamond world changed since you made your start?
DAVID WAHL: I joined the industry in 1967, and started out as a cleaver. The man who learned from my father taught me. From there, I went through the process of learning the different aspects of the trade. Cleaving has gone out of the business now. Everything is done by machines and lasers.
At that time, the manufacturing sector was much bigger. It is a shame that polishing moved away from here to such a large extent and that we have fewer workers. But that is the nature of the business today where each centre has its own strengths and advantages.
ANTWERP FACETS: Does Antwerp still retain its advantages, and what do you see them as being?
DAVID WAHL: Antwerp has been the world's leading diamond centre for more than 500 years. Over those centuries, we have seen many developments, but Antwerp has always stayed firm as a diamond centre. There is a stability here that you do not necessarily find elsewhere.
We are at the heart of Europe, but also located between the United States and Asia. Buyers can find just about any type and size of diamond in Antwerp. We have a very strong emphasis on carrying out business in a highly principled and professional way and quickly eject traders acting in a criminal manner.
In our business these are important advantages, and they remain solidly at the heart of our diamond centre.
