The cautious optimism that had returned to the Antwerp diamond industry following the first month of 2020 was short-lived, as the explosive spread of the coronavirus COVID-19 in February effectively closed eastern markets and caused great uncertainty across the global diamond trade. Antwerp's rough-diamond trade still enjoyed the boost from the miners' strong January sales, but the warning signs appeared there as well - particularly toward the end of the month.
According to figures published by the Antwerp World Diamond Centre (AWDC), hardest hit in Antwerp was in the category polished-diamond exports, the year-over-year value of which was halved due to the postponement of the Hong Kong International Diamond, Gem & Pearl Show and the Hong Kong International Jewellery Show. The shows represent key selling events early in the year, but this year the goods stayed at home in their vaults, as trade with Hong Kong – Antwerp’s second largest market for polished goods – fell by nearly 94%. When we remove the impact of the Hong Kong trade fairs from the equation, however, we see that polished exports only fell by a modest 7% compared to last month, to $560 million from $605 million. While the U.S. and European markets remained cautious, exports to Israel took a leap forward, increasing by more than 62% to nearly $86 million.
Polished-diamond imports experienced a modest decline during the month, with 4% fewer carats being traded, the value of which declined by 11% as prices fell. The major diamond indexes have confirmed the trend of falling prices, with PolishedPrices saying its diamond index had slumped to a ten-year low at the close of the month.
Antwerp’s rough-diamond trade in February reflected accurately the trends shaping 2020 thus far. Alrosa last month had its largest sale of rough diamonds in well over a year, while De Beers’ first rough diamond sight of 2020 bounced back to $545 million, marking their largest sale since April last year. These initial sales led to a 43% increase in rough imports to Antwerp in January, carrying over to a 19% percent increase in February. Over 8 million carats were imported to Antwerp last month, the value of which rose to $683 million – a 10% increase over February 2019. During the first two months of 2020, Antwerp’s rough imports have risen 30% in volume, yet low average prices have only led to a 12% gain in value.
Meanwhile, following the increase of goods on the market due to the miners' January sales, rough-diamond exports from Antwerp in February increased by 1.4 million carats compared to January, totaling more than 9 million carats, yet this was still 8% less than in the same month a year ago. Declining prices pushed the value of those exports down 16%. During the first two months of the year, Antwerp’s exports of rough goods have fallen 7% to 16.7 million carats, while their value has declined 12% to $1.4 billion.
Despite the relatively limited impact felt in February, traders and manufacturing companies are anxious for what the fallout of the coronavirus will be in the coming months. They expect to see more deferrals of rough purchases from the majors and a slowdown in manufacturing in India as consumer sentiment has crashed in China and may follow elsewhere. Some, however, have expressed confidence that demand for polished goods in China will explode when the outbreak subsides, as the foundations of consumer jewelry demand remains strong despite challenging external circumstances.