The silver lining is that the industry has made significant moves in the past two to three years to help it navigate the volatility that still lies ahead. Meanwhile, millennial consumers emerged as the core engagement-ring customers, and their embrace of technology effected a dramatic shift in retailers’ marketing and selling methods. Polished prices slumped in that environment, with the RapNet Diamond Index (RAPI™) for 1-carat diamonds declining 17.7% from January 1, 2010, to press time on December 25, 2019. Just as jewelry retailers were becoming more prudent about buying polished for inventory, three new mines came onstream in 2017, raising supply to pre-2008 levels and overstocking the midstream. The result was that manufacturers had to start self-financing more of their rough purchases, which they continued to make even as mining companies maintained high price levels relative to what cutters were getting for polished. The 2008 financial downturn led to greater compliance requirements from financial institutions, which in turn led to reduced bank credit. The midstream has struggled with low manufacturing profitability, tight liquidity, reduced bank credit, changing consumer habits and retail strategies, and a lack of balance between supply and demand. Overall, global diamond jewelry sales grew 16% from an estimated $65.3 billion in 2010 to $76 billion in 2018, according to De Beers.ĭespite the rise in diamond jewelry demand, the decade has been characterized more by turbulence in the trade. Shine was also correct in her assessment of the US, which continues to be the mainstay market for the diamond industry. These events have affected diamond demand, particularly for 0.30- to 0.50-carat goods, which are strong items in China. And more recently, the US-China trade war has made both consumers and the industry more cautious. There was also the anti-corruption campaign that President Xi Jinping waged at the start of his premiership, which curbed luxury purchases. Post-2011, growth slowed jewelers recognized that their expansion had been too aggressive, leaving them with too much inventory. In 2010 to mid-2011, for instance, jewelers like Hong Kong-based Chow Tai Fook and Luk Fook accelerated their expansion into mainland China, prompting an aggressive and arguably speculative surge in polished prices.ĭuring other periods, however, China’s influence on the trade has been more volatile. At times, that has been to the trade’s advantage. The last 10 years have seen the Chinese consumer emerge as an influential force in the diamond industry. This is what Varda Shine, then-head of De Beers’ supply arm, the Diamond Trading Company (DTC), predicted in a 2010 interview with Rough & Polished. It wasn’t that long ago that De Beers declared the 2010s “The Diamond Decade.” Growth in China and India was projected to drive demand, while the US would take small steps out of recession.
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