Israel Diamond Exchange (IDE) President Yoram Dvash says there is a decline in demand and a rise in competition, and there has been a 40% drop in Israeli polished diamond exports since 2011, according to a report in Yedioth Ahronoth, Israel's biggest-selling daily newspaper. "The Israeli diamond industry has a glittering image, but in the IDE there are not a few diamantaires who are unable to make ends meet on a monthly basis," Dvash told the paper. Last year, Israel exported $5 billion of polished compared with $6.3 billion in 2014. In a regular year, there is an average of 3 bankruptcies at the exchange, but last year there were six, including that of former Israel Diamond Manufacturers Association Chairman Uri Schwartz.
Dvash comments: "In addition to the decline in demand due to the global economic slowdown, we are suffering from competition from Dubai and India. Finally, the United States, our most important market, has recovered but now there is a crisis in China. I have closed my offices in China and Hong Kong. The diamond sector is being kept afloat by the American bridal market as couples planning to marry are still buying diamond rings. In China, where demand has dropped heavily, even Louis Vuitton bags are competing with us as they are cheaper than diamonds, they are more easily visible and they are a status symbol."
Dvash added that part of the problem for diamond companies was the high marketing costs. "If, in the past, my marketing costs were gas for my car and parking fees, nowadays I need offices all over the world. Suddenly, you need to run a global operation with very high insurance costs and low profitability because there are competitors such as the Indians and others. In Belgium and India, their governments give a range of tax benefits to the diamond sector. The Israeli government needs to do likewise."
The newspaper says that the size of the crisis affecting the diamond sector is seen in the fact that De Beers several months ago sold $70 million of rough compared with its offer of $700 million which in the past would have been oversubscribed. However, there is good news for consumers, since the decline in the industry has led to a fall in prices. A one-diamond polished stone with high clarity was sold for a record $23,000 in 2011 but could be bought last year for $13,000, the paper reported.
Yedioth Ahronoth's business supplement said that an Economy Ministry ranking of polished exporters showed that only one firm, D.N. Diamonds, was able to increase its exports and will receive the ministry's outstanding exporter award for 2015. The report concludes by saying that Dvash today (Monday) opened the Winter edition of the International Diamond Week.