Diamonds forever - Russian View

Diamonds forever

Director General of the Antwerp World Diamond Center (AWDC), Ari Epstein summed up the 2017th diamond year and gave a forecast for the current year.

If the diamond trade in 2016 was characterized by a revival of the market, then 2017 led to the return of stability and predictability, especially in the trade in rough diamonds. This is an encouraging development for the industry as a whole. Problems remain, especially in the diamond sector. However, despite the fact that the total value of diamonds sold in 2016 slightly decreased from 48 billion to 46 billion dollars, we note a significant increase in the number of stones sold.

The fall in value was due to the growth in demand for smaller non-polished diamonds. This resulted in a lower average price per carat, resulting in a reduction in total cost. In any case, it is noted that the trade in diamonds is again stable.

2018 has been a stellar year so far. Analysts expect a rise in prices for rough and polished diamonds, in which the industry is interested. At the moment it is difficult to say where consumer demand will shift in terms of the desired types of goods, but the level of consumer demand now looks promising, especially in China. Globally, consumer demand for diamonds should grow in 2018 due to the stable consumer environment in the US, strong financial markets and a positive macroeconomic trend in general.

From a production point of view, global diamond production is estimated to decline by approximately 4%, to 146 million carats in 2018, as new large productions are not expected to appear in the new year, and ALROSA, the industry leader, is predicted to slightly reduce production. However, recent political changes in Angola and Zimbabwe have added optimism to the industry, as miners expect promising investment opportunities. Global deliveries of rough diamonds are expected to grow by an average of 0% — 1% annually in the period between 2017 and 2030.

Luaxe deposit in Angola is probably the largest and most promising new diamond project in the world, with approximately 350 million carats and a potential lifetime estimated at 30 years. Angolans are fortunate that a company like ALROSA is working on the development of this field. It is expected that production will be launched there after 2020.

The ALROSA Director General Sergey Ivanov told that the reserves of the company amount for one billion carats, which will last for 25–30 years of production, even if no new deposits are discovered. And they are sure that there are large deposits in Yakutia that are yet to be discovered.

As for the demand for diamonds, in 2016 this segment saw a slight decline in Europe due to a decrease in the influx of tourists, but it was expected that the European jewelry market will return to growth in 2017. This happened, but not on the same level as predicted. Britain's exit from the European Union and the weakening of the national currency prompted British consumers to be cautious in their purchases. Only time will show what it is going to be like. Nevertheless, demand for diamonds coincides with the direction of the market of luxury goods, which grew slightly in 2017. Sales of high-end jewelry are closely related to the intentions of wealthy tourists, and future sales will depend on the return of the region's attractiveness to them. The good news is that tourism to Europe grew from 7% to 8% last year. We hope this trend to continue. In short, according to forecasts based on market research, a moderate but steady increase in demand for diamonds in Europe is expected.

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