Regal Imports News for May 2021
Demand and prices for rough diamonds continue to rise. However, virus restrictions are hampering rough polishing. The increase in rough sales is a response to a definitive increase in demand for polished diamonds. Interest in diamonds is being driven by a desire for luxury that doesn't threaten personal health.
The second quarter is usually a slower period for the entire diamond supply chain but this year is different in many ways. It's a sellers' market. Rapaport reports that polished prices continue to rise. They have risen 13% in the last seven months.
Unlike previous years, when diamond polishers bought rough to keep their contractual obligations, the current buying upturn is honestly demand driven and supported by sizable polished price increases. Today, cut and polished diamonds, sent to the GIA for diamond reports, are caught up in a processing back log.
The GIA back log combined with Covid restrictions are adding an element of scarcity to new diamond production. Consumer demand is adding to a feeling of confidence throughout the entire diamond supply chain. This feeling is both warranted and a breath of fresh air.
Diamond miners have more than made up for lost rough sales in 2020. Both De Beers and Alrosa have sold through most of the diamond rough that they held back last year. Everything is looking good except for the dark cloud of Covid-19 that is currently suspended over India.
The population of India makes up almost 20% of the world's population and India manufactures over 90% of the world's supply of rough diamonds. India is currently breaking world records for Covid infections with 450,000 new infections daily. The projection is for 800,000 infections a day by mid-May. Their medical system is failing and unable to cope.
The effects of India's tragedy on the world of diamonds are immense and will lead to further polished diamond shortages and price increases. This pandemic is far from over and it continues to affect all industries worldwide.
Rapaport anticipates "a 30%-40% reduction in Indian production during the months prior to the holiday season". Currently, the Indian diamond industry has been classified, by state authorities, as an essential service.
In March of this year, Indian Prime Minister Narendra Modi declared that India had reached the end of its Covid crisis but by April the tide had changed with the emergence of a new and extremely contagious variant. The situation in India serves as a strong warning to the rest of the world not to underestimate the danger of this pandemic!
My Wish for my friends and associates in India is that they remain healthy and stay safe. I appeal to Canadians and to my colleagues throughout the world to stay positive, and not become overwhelmed or complacent, so that all of us are able to resume normal activities.... sooner rather than later.