Regal Imports News for November 2020
Good News! Diamond Prices are Rising
Many retailers believe that the Corona virus is pushing diamond prices down. However, diamond prices are rising. Although the diamond industry is seriously damaged by shutdowns, the need to survive has forced a new strategy of co-operation between miners, manufacturers and retailers.
Traditionally, miners decide who is privileged enough to get rough diamonds. They decide the quantity and the quality as well as the non-negotiable price. De Beers and Alrosa, the two largest suppliers of rough diamonds, have relaxed these traditional terms of sale.
Diamond polishers have shown their strength and pushed back against the control that miners have over their livelihood. India, which cuts and polishes close to 95% of the world's diamond rough, initiated a ban on rough imports during the months of June and July. This action brought miners, kicking and screaming, to the recognition that they must work more closely with their industry partners. Diamond polishers are no longer afraid that miners will punish them if they do not take their regular diamond allotment or do not see their asking prices.
The industry is in the process of creating a better means of getting their diamonds from mines to end users in a more fair and equitable manner. This restructuring is reducing the pressure on manufacturers and making it easier for them to reduce stock levels and bank debt. Today, the diamond supply chain is healthier than it was one year ago.
Consumers love diamonds and they want them. Demand for diamonds is underpinned by their intrinsic value. Demand for diamonds is first and foremost based upon consumers buying into their worth proposition.
The pandemic is forcing consumers into different buying patterns that will last as long as the pandemic has strength. They stay at home and lament their situation and, in the process, are discovering a greater appreciation for the essentials of life. Technology is not one of those essentials. If fact, during the shutdown, technology is being overused and is more of an everyday tool rather than something that might be considered emotional or meaningful. Travel and technology expenditures are being replaced with more emotional treasures.
The diamond industry is seeing benefits from restructuring and consumer sentiment. Reduced stock levels are creating shortages of popular sizes and qualities. Tight supply coupled with consumer demand results in price stabilization and, if sustained, in price increases. Diamond rough is currently selling at high single digit premiums in the secondary markets and the prices of well graded polished diamonds are increasing.
The world-wide pandemic has not been all bad news for the diamond industry. It is spiriting a greater degree of co-operation and initiating shortages and increasing demand. There are strong signs that there will be an end to the disruption caused by the Corona virus. All the positive progress that is currently occurring is a testimony to the principal that working together for the collective good instigates encouraging outcomes both in the microcosm of the diamond industry and the macrocosm of the world-wide pandemic.
Be kind and keep safe while I remind you of a simple principal of business. In the words of Alec Baldwin in the movie Glengarry Glen Ross . "A.B.C. - Always be Closing"!