Even-Zohar & Narvekar's 2019 Pipeline: Prelude to the Storm

In an elaborate report, availabe in full via Idex Online here, industry veterans and experts Chaim Even-Zohar and Pranay Narvekar dissect the 2019 and 2020 pipeline with surgical precision. A few key take-aways from the report:

- As midstream traders demonstrated resistance to blindly purchase rough allocations from the major producers in 2019 and later on, in 2020, a 4-month rough import moratorium was instated in India, the authors believe 2019 - 2020 marked a historical break in the trend of a rough supply-controlled pipeline to a more market, demand driven model with healthy inventory levels.

- Even-Zohar and Narvekar consider 2019 a "gap year" with low rough sales, prices bottoming out, jewelry retail destocking and retail sales down 2.7%, indicating 2019 would be a pivotal point to healthy growth for the industry

- 2020 started out positively for both the rough and polished diamond segment, well underway to equal 2018 levels, until the entire world came to a standstill with the outbreak of the COVID-19 pandemic

- Apart from the obvious impact of restrictions and lockdowns on operations, the key element in how the pandemic affects the diamond business and a potential recovery will be demand, which will highly depend on how effective stimulus packages can boost GDP

- For 2020, the report forecast retail demand to drop -20%, leading to a 32% drop in polished sales and 35% drop in rough demand

- In terms of outlook, the authors point to the fact that until a vaccine is approved and distributed to a sufficiently large critical population, which may take us well into 2021, the variables supporting industry recovery remain fragile. A fall-out effect may be that non-performing elements in the pipeline will be forced out of business, "a reality of becoming market-driven", the authors add.

- The authors do believe 2021 has a much brighter potential for polished sales and rough demand to reach a healthy balance and come close to 2018 levels.

You can find the pipeline graph here.