Diamonds
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Diamond markets showing signs of life
By Michelle Graff
June 08, 2009
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| Debswana, the joint venture between De Beers and the Botswana government, reopened three of its four mines, including the Orapa Mine pictured here, in mid April following a 50-day hiatus in production. |
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New York--Since the start of the economic crisis that crippled the diamond trade, reading the IDEX Market Report--a weekly accounting of rough and polished trade in the world's major markets--has almost required a dose of Prozac.
Reports of slowdowns in global diamond trading piled up in October through January, as decreased demand forced mines to shut down, factories to darken and trading bourses to grow hushed.
The Jan. 15 IDEX Market Report, published on IDEXOnline.com, detailed a New York market that was "very quiet," while the market in Antwerp, Belgium, "showed very slow movement," Israel "remained in low gear" and, in India, "very slow movement was seen."
Around late February, just as winter started to give way to spring in the northern hemisphere, whispers of a recovery started.
At a meeting held in late March in Antwerp, members of the International Diamond Manufacturers Association (IDMA) reported seeing the first signs of recovery in the wholesale markets, and IDMA President Moti Ganz, an Israeli diamantaire, says the signs have continued.
"In Israel, we've seen a more positive atmosphere in the last month," he wrote in an April 22 e-mail response to National Jeweler. "Demand is picking up, manufacturers are buying rough and manufacturing certain goods. In some goods, there is even a shortage."
But, he notes, "turnover is still much lower than in previous years."
At Christie's April 22 jewels auction in New York, a 30.02-carat D-color internally flawless diamond fetched $4 million or $133,000 per carat, in line with the prices paid last year, before the crisis.
Also in late April, De Beers said it was restarting three of the four mines it operates in Botswana through Debswana, the joint venture between De Beers and the Botswana government. Some 5,800 people went back to work following a 50-day shutdown. The fourth mine, Damtshaa, will remain closed through the end of the year.
Production at De Beers' South African mines are at a reduced level, and De Beers spokeswoman Lynette Gould confirmed that Namdeb, De Beers' joint venture with the Namibian government, halted production at all six of its mines for three months starting on April 1.
Gould says De Beers plans to reduce group production by 40 percent in 2009; it is up to the managing directors of Namdeb and Debswana to decide how and when to implement a shutdown.
While reopening De Beers' Botswana mines was planned, Gould says De Beers has noted some market improvement.
"We have seen a slight pickup in demand from the sightholders, which we hope will continue in Q2," she says.
Industry analyst Ben Janowski, of Janos Consultants, agrees that there is movement in the pipeline, especially of mid-market goods, but notes that the industry isn't out of the woods and that problems persist.
Mining companies still have to find a place for all the goods they bring out of the ground, he says, while banks and manufacturers will hesitate to finance goods because they are not sure of what's going to sell.
Janowski predicts that low rough prices brought on by a lack of demand will ultimately benefit companies with cash, while leaving those that purchased higher-priced rough that isn't moving out in the cold.
"Some companies are going to get a lot stronger over time because they are going to be able to make those purchases, while others are going to be wiped out," Janowski says.
The diamantaire diaries
Excerpts from the weekly IDEX Market Report show the ups and downs of the diamond market.
Nov. 6: "The worldwide diamond market remains sluggish. In the U.S., orders dribble in as jewelers prepare for Holiday 2008."
Dec. 4: "There is a glimmer of light for U.S. traders as shoppers finally begin their holiday purchasing ... [But] not so in Antwerp, which has only a few specific orders ... The Israeli market is likewise at a near standstill, with practically no buyers at what is traditionally a busy period in Ramat Gan."
Jan. 15: "As the new year gets underway, trading conditions remain subdued across the globe ... In Belgium, traders 'joke' that business is so low that they could have continued to enjoy their winter break."
Feb. 26: "Steady, slight improvements in conditions in New York have culminated in fair improvement in trade compared to a few weeks ago."
March 26: "The BaselWorld show appears to have given the worldwide markets a gentle boost ... In Israel, a slight but steady pickup appears to be continuing. The Mumbai market appears to be thawing slightly."
April 2: "The New York market continues its slow pickup ... In Antwerp, there were some demands for rough ... traders regard it as a good sign ... Spirits are on the rise in Mumbai."
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Diamonds
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