Maxim Shkadov: Right Rough Diamond Pricing & Assortment Are Vital For Survival

Finance and Trade
11/02/2016 10:55

International Diamond Manufacturers Association (IDMA) President Maxim Shkadov tells GemKonnect that rather than seeing 2015 as an 'annus horribilis' as recently declared in a commentary on its site, it was a actually "an anno veritatis, a Year of the Truth. Indeed, never before have the deficiencies of the diamond supply pipeline been laid bare so clearly, and yes, so painfully." Shkadov scathingly comments that " neither analysts, nor the overwhelming majority of management of the diamond producers had an inkling about what it takes to be a diamond manufacture."

There now seems to be across-the-board consensus that stability in the diamond manufacturing sector can only be achieved through increased profit margins, he writes and talks about an independent industry study commissioned by the IDMA to determine the level of margins in the diamond industry and the manufacturing centers in a range of popular rough diamond assortments. These are rough goods which typically result in +1 carat, G-J color, VVS-SI clarity polished rounds. The report finds that: "As suspected, the rough diamond assortments checked for this report have either proven to be borderline economical, on a gross margin basis, or uneconomical. Because many of the polished diamonds manufactured from the tested goods are later certified, especially those weighing one carat or more, we also examined the gross margin profitability after adding the cost of GIA certification. Under those circumstances, all of the tested polished diamonds were rated as uneconomical with one exception — the Commercial 2.5-4 carat box." IDMA will soon make the report available for the public at large, Shkadov writes, while also referring to the hope that the banks will soon "become confident enough to reinstate and strengthen financing structures of our sector" and calling for firms dealing in synthetic diamonds to properly disclose and report the identity of these stones."