Diamond trading was restricted in April due to the coronavirus pandemic and global lockdowns. Sentiment was weak, with dealers frustrated by the inability to resume business. The industry was focused on the Far East as China and Hong Kong started to open, while the outlook for the US remained uncertain.
The RapNet Diamond Index (RAPI™) for 1-carat diamonds was basically flat for the month due to the low volume of trade. The index was down 8.5% since the beginning of the year.
The diamond industry is trying to limit supply to support the market, with Indian manufacturers considering a one-month voluntary suspension of rough imports beginning May 15. Miners have paused operations or reduced production. Some mines have been placed on care and maintenance and are unlikely to resume operations at current low prices. Mid-tier miners are under pressure and unlikely to generate the cash required for their debt payments.
Global rough production in 2020 is projected to decline 16% to 119 million carats by volume and 29% to $8.5 billion by value, the lowest level since the 2009 recession, according to estimates published in the April Rapaport Research Report.
There is more than enough rough and polished in the pipeline to satisfy demand as trading centers start to reopen. Belgium and Israel have eased lockdown restrictions, while India has allowed select manufacturing in Surat and special shipments to Hong Kong.
The return to “business as usual” will be gradual. It will take some time before demand returns to levels prevalent before the pandemic. The industry has an opportunity to refresh its messaging as consumer values shift toward strengthening meaningful connections and relationships. A significant investment in marketing is necessary for the industry to capitalise on this moment and ensure long-term growth. (Rapaport)