Antwerp Diamond Night

Guangzhou Diamond Exchange and the Antwerp World Diamond Centre will coorganize the Antwerp Diamond Day in Guangzhou, on the 28th of November 2018  Register now! Attend the educational seminars, an exclusive Meet & Greet and the Antwerp Diamond Night

Run of Mine Diamond Tender

From 19th-26th April, Guangzhou Diamond Exchange held a Run of Mine Diamond Tender in Guangzhou All parcels with a total weight of over 230,000 cts have been successfully transacted

Generic Public Course on Rough Diamonds

In March 2018, Guangzhou Diamond Exchange opened its first Generic Public Course on Rough Diamonds, including theoretical learning, trading experience sharing, factory visiting, as well as goods viewing, and the industry responded enthusiastically

Seminar on Diamond Supply and Demand

In March 2018, Stephane Fischler, President of World Diamond Council visited Guangzhou Diamond Exchange, and shared his view on China facing new opportunity and challenge on diamond supply

Happy Spring Festival

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Industry Insights: Don’t Give Up on the Diamond Industry Just Yet

publish:2019-02-11

 

Paul Zimnisky, an independent diamond industry analyst, explains in his latest analysis, "Don’t Give Up on the Diamond Industry Just Yet", the present and future of the diamond industry.

He points out that the sentiment surrounding the diamond industry is currently at historic low levels, given that a basket of diamond producer stocks (components include: ALROSA, Petra Diamonds, Gem Diamonds, Firestone Diamonds, Lucara Diamond, Stornoway Diamonds and Mountain Province Diamonds) was down 28.9% in 2018, following a decline of 17.3% in 2017. The “A Diamond is Forever” marketing campaign has been discontinued for over a decade now, and the glamorous cultural perception of diamonds has faded and has somewhat been replaced by an association with civil rights abuses and De Beers monopolistic pricing practices. Further, marriage rates are declining in the U.S., Japan and China, and the emerging wide-availability of lab-created diamonds are providing consumers with a lower-priced alternative to natural diamonds.
However, the diamond industry also has some positive performance. According to Paul Zimnisky, global diamond jewelry sales in nominal and real terms have been growing at a steady rate for the past 9 years. This is in part due to the continued financial liberation of middle-class consumers in developing economies, continued positive global GDP growth post-Global Financial Crisis and continued population growth, especially in the diamond industry’s most important end-consumer markets, the U.S., China and India. In addition, despite the fact that marriage rates are declining, diamond consumption by self-purchasing women is on the rise per-capita jewelry demand growth in the U.S has been non-negative since 2010. De Beers and ALROSA’s diamond sales rose 1.5% and 5.8% respectively y-o-y. Also, De Beers recently guided incremental production increases in 2020 and 2021, perhaps implying the company is comfortable with diamond demand expectations in the coming years.

Paul Zimnisky states several important factors affecting the diamond industry, including the “Impact of Marketing and Branding”, and the “Rarity, Value and Future Supply”.

On one hand, the future existence of a robust natural diamond industry lies within the industry itself and its ability to continue to convey the intangible value that natural diamonds can bring to consumers. Diamond purchase is based on how it makes someone feel. There is significant emotional appeal if diamond jewelry is conveyed properly. Diamond Producers Association (DPA) has reinitiated generic diamond marketing on behalf of the industry. However, the DPA’s annual budget at around $80 million is approximately only a third of what De Beers was spending on “A Diamond is Forever” in inflation adjusted terms. 

On the other hand, the “store of value” component is unique to a natural diamond, relative to a lab-created gem, especially in a culture like India. If the industry is in fact successful in maintaining or growing demand for natural diamonds in the longer term, the question of insufficient future supply is legitimate. Paul Zimnisky estimates that close to 20 existing diamond mines will reach exhaustion within the next decade. However, with sufficient demand, and diamond price rising, some known deposits that are simply not economic at current diamond prices will improve profitability, thus the long-term supply projections would most likely improve.

Overall, Paul Zimnisky believes that the diamond industry has a long, fascinating and impeccably resilient history, and the current industry environment may not be so bad.
 
Source: www.paulzimnisky.com

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