Chaim Even-Zohar, a reputed diamond analyst, is optimistic that the industry will be in the upturn by as much as 30 percent this year but promptly added that for the long term the downstream activities will be skewed towards countries with deep pockets to sustain it.
Even- Zohar, who was in the southern African region this week until Friday, pointed out in the Belgian-based Diamond Intelligence Briefs ÔÇô a confidential service for executives in the diamond and diamond jewelryÔÇösaid the polishing industry is poised for a jump “of between 25- to- 30 percent more than in the past year”.
“However, there is a disconnect between the price of polished and rough diamonds and that will get people in the industry into trouble,” he said.
“2009 was extra-ordinary and truly atypical year. We expect the 2010 pipeline to look quite different. The most exciting news is that at the end of 2009, the retail level reached the stabilisattion phase in terms of demand and supply fundamentals as the downward slide in consumer demand came to a halt,” he said in his article.
Even-Zohar expressed confidence in 2010 market performance and was more bullish on 2011 which he said during that period he expects the industry to bounce back to solid profits.
“In 2010, we will see that polished demand from the centers will go up by some 30 percent to reach US 17 billion. The producer (rough) sales to industry will jump from US $ 7.1 billion level to US $ 12 billion,” he said adding that the figures will also be driven by DTC price increases that will be in double digits.
The international economic slowdown saw the value of rough diamonds sold worldwide last year being in a jaded mood from US $ 14.3 billion in 2008 to US $ 8..4 billion last year, while in carat terms, it fell from 165 million to 124 million as major producers like De Beers scaled-down production. De Beers is the world’s largest diamond producer controlling 40 percent of the market and being the price setter through DTC’s price book.
Although De Beers slashed production in all its operation BotswanaÔÇöthe company’s flagship operationsÔÇöproduced 17 .7 million carats in 2009 compared to 32.3 million carats in the previous year.
Other operations like South Africa, Namibia and Canada produced much less.
“The 2009 pipeline will go down in history as an aberration, or what we hope will turn out to be one time fluke,” he said, adding that “this aberration facilitated a healthy restructuring”.
However, he was quick to mention that for the long term the industry will need more cash injection for it to rebound to historic levels, which, unfortunately, is very scarce at the moment.
“For the industry to have a speedy recovery out of the crisis it needs cash. Unfortunately this credit is not available in Antwerp, Botswana and Israel.
“In this world (today) one thing that is scarcer than diamonds is credit. And manufacturers will move operations to where money is,” he added.