Regal Imports News for September 2020
From Carats to Peanuts
In mid-August Reuters published an article called "From Carats to Peanuts: How a Pandemic Upended the Global Diamond Industry".
The article starts by stating that the coronavirus closed diamond mines all over the world and disrupted supply chains. It goes on to describe a general diamond market freeze; diamond miners delaying or cancelling rough diamond sales, India suspending buying and importing of diamond rough, factories closing and sales plummeting. It then speaks of a diamond cutter, who left his job to become a peanut farmer.
There is a problem with articles with sensational headlines like 'Carats to Peanuts'. The headline implies that diamonds are worth peanuts.
The diamond industry has weathered many storms in the past and is managing the current situation in a most professional manner. Diamond miners are holding back production and not enforcing sales contracts. They are releasing the pressure from the manufacturing sector. Cutters are acting disciplined by limiting their purchases while controlling expenses. The diamond industry knows that it can stay healthy by helping each other.
The prices of other commodities around the world are falling and yet, polished diamond prices are stable. There is a shortage of fresh and desirable diamonds. This shortage is keeping diamond prices firm.
World economies are dependent on controlling the coronavirus. The virus is unpredictable and so economies are unpredictable. Now is not the time to proclaim that the diamond industry has succeeded in protecting its stakeholders. All members of the diamond industry are being urged to stay the course. As with the health crisis, a bit of success can lead to an unwarranted feeling of confidence.
The diamond industry needs to be cautious, take it slow and continue to help each other. Miners need to allow cutters to further reduce their inventory and let the supply chain find a balance. Diamonds, if well controlled, will emerge from this crisis more streamlined and future ready.
The virus will change and mutate. Looking for a cure-all vaccine is important but not an out-and-out resolution to the problem. The virus will not adapt to market forces, the market must adapt to the virus. So far, the diamond industry is reacting well.
It is important for members of the diamond community to be aware that the diamond industry is responding well and that polished diamond prices are not falling. The public is always hungry to read about diamonds. The title, "From Carats to Peanuts: How a Pandemic Upended the Global Diamond Industry" is sensational and does not accurately reflect the current state of the diamond industry. Polished diamond prices are firm and it is important to defend the diamond industry against any representations that may be misinterpreted.