Y2021 results: Fluke or Trend?

It’s the number one question on the minds of every diamond trader in the last 3 months. Is today’s strong market the result of pent-up demand, and a spectacular jewelry rush in December where the end of the pandemic atmosphere and extra pocket money drove customers to indulge in diamond jewelry? Or is it a full-blown recovery where the market finds a new balance between supply and demand? At least for Antwerp, the results of 2021 and the first results of 2022 hint to where the diamond market is going. We asked a few questions to our new Head of Media Relations: Tom Neys.

Can you share some insight on Antwerp’s performance in 2021?

Not to sound victorious, but it’s clear that we digested the pandemic very well. You will remember that in 2020, the damage from the pandemic in Antwerp was already significantly less dramatic than in other trading centers. But also in 2021, Antwerp knows how to make good use of its leading position. With a volume of 204.6 million carats, we do 6% better than 2019 and 24% in comparison with 2020. 

The question is how that translates in rough and polished trade. It’s here where we see interesting developments. Antwerp’s leadership position as the number one hub for rough diamonds surfaces by the fact we surpass the 2019 results by 7% in volume and 26% in value. In comparison to 2020 that means 59% more return, finishing off with a surprising 21,56 billion dollars in rough trade. We started off 2022 in the same way. Import of rough goods rose by an astonishing 42%. The market is clearly not done with its post-pandemic growth.

In the polished trade we see a slower but clear recovery. 46% more carats of polished were traded in comparison to 2020, but it lags a bit behind if you compare with 2019. Nevertheless, in January we see that imports in comparison to last year in both rough and polished continue to exceed expectations by far. Totaling 569 million dollars, a rise of 51% in imports of polished goods, we started off the first month of 2022 with strong trade. Just like the rough trade, the polished market is looking for high-quality goods and looks for the expertise and knowledge that Antwerp can provide. Antwerp companies and the city are dedicated to investing in innovation and the future of the diamond trade and it’s starting to pay off.

How do you explain those results?

Consumer spending took a dramatic turn at the peak the pandemic. Luxury goods, restaurant visits, and holiday spending came to a standstill. As the end of the pandemic came in sight, regained freedom refueled spending and the end of the year is traditionally a good month for jewelry. In addition, weddings, still a crucial part of jewelry retail, took a deep dive. On average, about 2 million weddings are officiated every year in the US. That figure dropped to 1.2 million during the pandemic. The catching up on postponed weddings started in 2021 but are expected to ramp up to 2.5 million in 2022.

Don’t forget that in the US the government also issued a third round of stimulus checks, more than 1,9 trillion, in 2021. Consumers were ready to spend. You can see the same effect in the stock exchange where overnight more than 10 million new small investors opened an account in 2020. 

Many behavioral scientists predicted the comeback of the roaring twenties after the pandemic. It seems that this prediction materialized, the difference being that the millennial today did not splurge his or her newfound fortune but chose to invest it in stock markets, high valuables, used it to create their own financial independence. New wealth creation is underway, shaping a new generation and the way they want to live, work and spend money.

Will 2022 be more of the same or was December a post-pandemic bubble?

At the moment we see a lot of comforting signs. When you see that rough trade is exceeding the financial results of 2019 with more than 26% in 2021 and you have import figures in January that outperform by no less than 20,77%, you can safely say that we are not in a bubble. In the last 3 weeks of January, the diamond office saw more than 900 million dollars in diamonds pass through on a weekly basis. We haven’t seen such a streak in quite a few years.

In addition to that, instances like the first sales of Grib Diamonds where Antwerp outperforming Dubai with a 35% difference in sales prices, made clear that Antwerp is more than on track when it comes to its position in rough trade. 

But we live in uncertain times. In my opinion, the future of the trade will be determined more by outside factors than by the industry itself. I believe that today the market is in the healthiest position it has been in for many years. Producers, mid-stream traders, as well as retailers all find themselves in a good demand and supply balance. Stocks were depleted and every stakeholder in the supply chain is getting into a position where they can profit from the market evolution. But macro-economic unrest in the world, inflation, things like the energy crisis, or climate issues have the potential to disturb the market, ant those are all developments beyond our control.

How do you see the role of Antwerp developing in the diamond trade?

In a market where miners slowed down production and we see fewer carats coming to market, these results are significant. Not because of their growth but because we see a consolidation in the trade hubs. Don’t forget we just closed the door on the biggest economic shock since the twenties. Many markets are completely disrupted. Sector leaders became followers or got whipped out in a matter of months. The Antwerp diamond industry more than held its ground and, although obviously it requires hard work, reclaimed its leadership position with relative ease.

In a world where everybody is confronted with less production, it feels good that Antwerp’s fundamentals are rock solid, and that we see our part of the pie is growing. It’s a slow process, but it’s part of the approach we adopted several years back. Building shiny trade floors is easy. Building a sustainable market that can survive and grow in the long term, despite crises, is significantly harder. But with the rough trade crystallizing in Antwerp more than ever, you would be crazy not to trade in Antwerp. Which of course doesn’t mean that other trade hubs don’t have their value and role to play.

It’s a story old as time. The rabbit that runs to the finish line and that gets complacent gets beaten by the turtle that takes it slow but with a consistent pace. Not that I would compare Antwerp with a turtle (he says laughing hard), we are picking up speed. But consistency is important. It builds strong relationships with miners and governments. It creates confidence with retailers and the consumer and in the end, they will determine where they will go.

What’s the priority for Antwerp in the coming years?

We don’t allow ourselves to get distracted too much by the glitter and glamour and are focused on forging our own path to a new future in diamonds. It’s important to support innovation tracks within the trade itself. Antwerp companies are developing cutting-edge technology and are exploring the world of NFT’s and blockchain. SBD is launching a new platform to support diamonds manufactured in Antwerp. We are building new partnerships with organizations that believe in building a strong, sustainable value chain that involves and engages with all stakeholders, from miner to consumer.

Too many people see this as an “us versus them” story.  This can’t be farther from the truth. Only by working together, we can improve our industry as a whole. We have a shared responsibility to do better, to make a difference, and in the process create a space where the diamond business can thrive.