World Federation of Diamond Bourses (WFDB) president Ernie Blom believes the global diamond trade “can be positive” ahead of the upcoming holiday sales.
Blom said that initial indications from the September Hong Kong Gems and Jewellery Fair were that it had been “solid”. Meanwhile, price cuts by De Beers and Alrosa brought down rough diamonds to more “realistic” levels.
In addition, much-needed reductions in polished production had been carried out, particularly by the Indian manufacturing sector.
“I feel there is reason to be optimistic, even though conditions do, of course, remain challenging overall,” Blom said.
“The Hong Kong show, due to the global nature of its exhibitors, buyers and visitors serves as a useful barometer of industry sentiment so it is very promising that demand at the fair was stable.
“And on the rough supply side, we have seen the world’s two main producers – De Beers and Alrosa – take meaningful steps recently to reduce prices. Just last week, Alrosa said it would cut prices by up to 10% at its September sale.”
The Alrosa announcement followed De Beers’ decision to reduce prices by similar levels at its August Sight.
Producers are gradually accepting arguments that diamond manufacturers simply cannot be expected to pay such high prices for rough at a time of falling polished prices.
Blom added: “I believe we need to see a further reduction in rough prices, but these moves by De Beers and Alrosa are encouraging, and we expect to see the trend repeated at other diamond sales and tenders.”
It is thought that the decision by many diamantaires to hold off on manufacturing will help to establish a ‘floor’ under prices. Blom said the industry faced a situation where there were simply too many polished goods on offer.
He said now that some major players have cut production, there will be lower levels of polished inventories and possibly shortages in some items.