Like so many other industries in the modern world, those operating in the sale, cut, and trade of producing diamonds have seen significant losses since the start of the pandemic.
The demand for these luxury items understandably fell as people struggled with personal uncertainties, loss of stable jobs, and closing businesses. The financial and physical losses have been immense and sudden. Even the industry’s biggest players have watched their bottom line fall solidly into the red.
It wasn’t just the shrinking demand at play. Concern over spreading the potentially deadly illness forced mines to close in order to keep their workers safe. Once closed, it wasn’t particularly easy for many of those mines to start the wheels in motion once again. In fact, some remain closed as this article is written, and some may never reopen.
Reporting Red Flags
There is some question about true diamond production numbers, as figures don’t match precisely, indicating potential smuggling operation(s). This could skew the production numbers by as much as 500,000 carats.
The Silver Lining
Although the sale of raw and small stones fell notably throughout the pandemic, there was a silver lining for the industry. There were many looking for a safe investment option to protect their future profits, pushing the prices of high-end diamonds upward. Rough stone imports were reported to have fallen by as much as 20 percent in some regions. Exports of smaller polished stones fell by as much as 45 percent in other regions. Yet, the price of high-quality stones increased by more than 10 percent during that same period.
Aiding the Rebound
Hedging their own bets, many big players in the industry have shifted their focus. There is hope that slowed production will actually help prices rebound as the world returns to some semblance of normalcy. Some of the biggest players are reporting that they will produce 10-20 percent fewer diamonds this year. This reduced inventory may be enough to bring supply and demand back into balance.
Making the Best of a Bad Situation
At the same time, industry leaders are opening their reserves of high-end inventory, shifting some focus away from producing diamonds. Reports indicate a favorable upfront price per carat, but an agreement to share the profit margin from final sales. Sales forecasts show significant promise in this niche of the market. This could be a big and advantageous play for companies that would otherwise see some of their greatest losses in history.
Diamond Production: Looking Forward
As mines reopen, people return to work, and the world’s economies are boosted, there is promise of demand returning to near normal levels, and the reduced supply offsetting the temporary lull. As the market rebounds, it is very likely that those mines still in shutdown mode will reopen and diamond production will begin to climb, just as demand does.