If there is one lesson to be learned from the Hong Kong shows that took place during the first week of March, it is that the diamond industry is focused on the very short term and uncertain about market developments in two-to-three months, writes Avi Krawitz for Rapaport News. Traffic was better than expected and the exhibition was busier than last year’s show, and it appeared that dealers again had the confidence to close deals. A reduction in polished manufacturing has brought about certain shortages, leading to stability and even rising prices in some categories, but there are concerns that the $2 billion of rough sold by De Beers and Alrosa combined in the first two months of this year is more than the market can absorb.
Diamond dealers are looking for goods because they’ve reduced inventory and are low on sellable stock. And, they’re eager to do business again after such a long lull. "But dealers cannot sustain a market and, for that reason, the March Hong Kong show was not a game changer. The diamond market continues to view the Chinese consumer landscape and its own medium-to-long-term prospects with caution," Krawitz writes.
"Midstream manufacturers and dealers ought to exert some restraint if their current profitability is to be sustained. And while there is that awareness in the market, there is also concern that they’ll be left with too much supply in three months’ time. That may exert downward pressure on polished prices and their profitability. Arguably more worryingly, it would prolong their inability to plan beyond the short-term."