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 we welcome a new year and extend our hopes that you, our readers, will enjoy good health and good fortune in 2020, we take a moment to look back at the issues and articles of the past year that most sparked your interest.
An annual tradition, industry veterans Chaim Even-Zohar and Pranay Narvekar present the 2018 iteration of The Tacy Diamond Pipeline, with an in-depth look at the impact that the rise and acceptance of laboratory-grown diamonds has had on the industry this past year.
Recognizing the crucial issue of confidence in the diamond industry and the changing expectations across the value chain, De Beers Group CEO Bruce Cleaver today announced the company has been investing in a blockchain platform to create, "the first traceability platform to span the entire diamond value chain". Consumer expectations regarding the level of confidence "that a diamond has been responsibly sourced, confidence in its value and confidence that it is the real thing", is obviously on the rise.
The Gem and Jewelry Export Promotion Council (GJEPC) will host the International Diamond Conference, "Mines to Market 2017", to be held on March 19 and 20, 2017 in Mumbai. It will gather leading miners, diamantaires, retailers, bankers and analysts from across the globe on a single platform to discuss issues faced by the global diamond industry, such as supply and demand, marketing and financing, and will cover all aspects of the diamond pipeline including mining, midstream, marketing & retail, international finance, valuation with KP and diamond certification.
From De Beers' press release: Speaking at a reception for customers of its Global Sightholder Sales business during the first Sight of 2017, Bruce Cleaver, De Beers Group CEO, today highlighted the importance of all parts of the diamond sector working together, following the unpredictable events of a volatile year in 2016.
Hong Kong Jewellery Magazine takes an in-depth look at the adjustments the diamond industry is, or should be, implementing in order to accommodate the changing economy and consumption habits in an environment where the diamond industry "at large is under the gloom of the stagnant economy that impedes buying sentiments in end consumers." With the assistance of three industry insiders - Erik Jens, head of the diamond and jewelry division at ABN AMRO Bank, Nissan Perla, founder of Olympic Diamond and the Diamond Registry, and Lawrence Ma, chairman of the Diamond Federation of Hong Kon
In his latest installment, diamond industry analyst Ehud Arye Laniado looks for a plausible answer to the following question: if consumer demand for polished diamonds is not rising, and inventory of said stones is not decreasing, what explains the currently strong - even "hot" - demand for rough diamonds? To give an example: "During De Beers’ Sight last week, the company raised prices by 2-4% on average, according to traders. Sightholders that chose to sell rough diamonds from the Sight reportedly sold them for higher premiums.
New De Beers Group CEO, Bruce Cleaver, has highlighted the importance of relationships with all the company’s partners, saying they are the “cornerstone of the business”, the company stated in a press release citing his blog for the company website. Mr Cleaver, who took up the role on 1 July, said: “De Beers holds a unique position with consumers, our rough diamond customers, governments, communities and retailers ...
ALROSA president Andrey Zharkov said that the Russian diamond giant will create an analytical center tasked with targeting diamond prices and monitoring market development environment, reports Rough-Polished.
Drawing a worrying analogy between the film The Big Short (2015) - which depicts how everyone took part in the ultimately disastrous play on U.S. subprime mortgages even though the fundamental truth was, or should have been, known to those familiar with the mortgage market - and the current trend in the diamond market, Ehud Arye Laniado issues a warning about ignoring the lessons learned as a result of the diamond downturn of 2015.
Diamond industry analyst Edahn Golan takes a cold hard look at the diamond industry in 2015, citing the well known issue of inventory buildup throughout the pipeline, but emphasizing the miners' slow response - and only then after their hands were forced by sightholder refusals and even contempt. He writes, "[De Beers] started taking steps and initiatives in earnest only in the second half of the year. We could argue that 2015 was the year of carrying 2014 mistakes. Producers ignored the high inventories and continued to pump rough into the market.
With the odd notable exception there are not many to whom I have spoken recently in the industry that have much confidence in the near future, and I would not want to be asked to define what I mean by ‘near future’. Yet for once I am probably not the gloomiest person around. Despite every attempt by the industry to scupper its own prosperity, people are still buying diamonds. In some markets many less are being purchased, but in those markets all luxury products are having a torrid time.
Analyst Paul Zimnisky analyses fundamental supply/demand developments in 2015 and surmises that the diamond industry will see a balancing out of goods to market and demand by the middle of next year, as inventories drop while manufacturers have cut back on production. He notes that while a moderate net decrease in Chinese demand for diamond jewelry is expected this year, "it is important to remember that demand is still relatively stable ...
It seemed that the good times would never end, as Chinese diamond jewelry demand increased 16% a year from 2009 to 2014 and prices for rough stones gained more than 20% for three straight years from 2009 to 2011, writes Thomas Biesheuvel at Bloomberg. Chow Tai Fook and other Chinese retailers rode the wave and opened thousands of new stores, and they needed to stock them with gems. But the economy of China - the world's second largest diamond jewelry market after the U.S.
Mel Moss, industry activist and President of Regal Imports Ltd., discusses the "perfect storm" of miners cluttering the pipeline with unprofitable downstream endeavors, consumers losing interest and negligible profits for all: "Diamond miners are trying to make a profit, but under current conditions, their profit does not allow any profit for their customers. Diamond cutters are faced with a consumer that is not interested in paying more for diamonds, if they are interested in buying diamonds at all.
Industry analyst Ehud Arye Laniado offers a compelling argument for strict regulation, certification and re-naming of lab-grown diamonds. It may seem odd to protect the natural diamond pipeline when man-made stones are environmentally cleaner, raise none of the socio-political issues of operating mines in developing countries and will make “diamonds” affordable to a larger public, but Laniado argues that it is a necessary step to protect the value of natural diamonds.
At the World Federation of Diamond Bourses (WFDB) and International Diamond Manufacturers Association (IDMA) Presidents meeting in Tel Aviv earlier today, Philippe Mellier, CEO of De Beers Group, said that sustainable returns across the diamond pipeline are key to investment for further growth. “Diamantaires need to make sustainable returns so they can invest in things such as new technology, marketing activities and business efficiency.
“IDMA's members are struggling for survival ... the future of global diamond manufacturing is in the balance. The manufacturers are those who carry the largest and most significant burden of the diamond pipeline [...] no matter where diamonds are cut, we are experiencing unendurable pressure from all the market's segments and players”.
- International Diamond Manufacturers Association (IDMA) President Maxim Shkadov, press release from the Presidents' Meeting
Industry analyst Ehud Ayre Laniado takes a look at the rise of vertical integration in the diamond industry, with upstream companies (like De Beers) moving downstream and downstream companies (like Tiffany) moving upstream. The challenging question is how midstream companies can play a key role in vertical integration – with options including strategic alliances and integration with players in other parts of the value chain – and how to determine whether integration is appropriate.
By Chaim Even-Zohar. Reprinted from Diamond Intelligence Briefs by special arrangement.
The entire diamond pipeline – from rough to retail – ultimately constitutes one single supply chain. Any chain is only as strong as its weakest link.
CIBJO President Gaetano Cavalieri has released a report covering the organization’s activities and issues on a variety of issues.
The dream of southern African countries finally beneficiating their own minerals, and having their diamonds cut locally as opposed to in foreign countries such as Belgium, Israel and India, is coming ever closer to reality. The SADC Summit of Heads of State and Government in Harare approved the Regional Strategy and Roadmap for Industrialisation, whereby regional governments have agreed to find concrete ways to diversify trade, beneficiate their own minerals and create regional value chains.
"The excess fragmentation we are facing in parts of the diamond sector must be addressed to allow the diamond industry as a whole to operate more effectively and to provide the new generations of professionals with more sustainable opportunities to flourish in our sector. We can draw lessons from more consolidated industries."
“To earn a margin today you have to create added value or get closer to the end user. Before, a diamond changed hands five or six times before it reached its final seller. Today it does so maybe twice. Business for the middleman broker is diminishing.”
Leibish Polnauer, of Leibish and Co