The crisis between the United States and China hits the diamond business
El comercio mundial de diamantes pasó años en la depresión, solo para ser paralizado por la pandemia justo cuando las cosas comenzaron a mejorar.Now, finally, the business is booming again.
The factories in the “Machine Room” of the Industry, the Indian city of Surat, are so desperate to boost the production that the most qualified cutters and polishes are being persecuted with offers of 50% salary increases and benefits such as food and housing free.Beers Mine.
The boom is being driven by the excellent Christmas jewelry sales, particularly in the vital markets of the United States and China.For years, diamonds faced the growing competence of travel as a luxury spending form.Now, with suspense holidays due to blockages and other restrictions, consumers are investing their income available on online purchases.
"People have not only learned to work remotely, but also to buy online, including diamonds," said Alrosa Sales Chief Evgeny Agureev, in an interview in an interview.“Before, money was spent on trips or dinners in expensive restaurants, but now part of this demand has been allocated to diamonds.Online sales almost doubled to approximately 20% of the total, "he added.
The increase in sales is feeding on the growing demand for polished diamonds, when stocks held by factories and merchants had been reduced after initial closures by COVID-19.
But for an industry familiar for a long time with AUGES and dramatic falls, it is not clear if the rebound will strengthen or if it represents only a temporary respite.Some industry participants are also worried that the market is being talked too much, with the risk of a fall later in the year.
The annual demand for diamond jewelry had stagnated at around US $ 80.000 million during the last five years and the intermediaries of the sector were fighting for earnings.As global vaccines and other luxury purchases are implemented again, there is a risk that the industry will face the same old challenges.
The contrasts
For now, money is entering Raudales.Signet Jewelers Ltd.reported a 7.8% increase in Christmas sales in North America, the largest industry market.It was a similar story in China, the second largest market, where Chow Tai Fook reported a 18% increase in quarterly sales.
India, where about 90% of diamonds are cut or polished, imported almost US $ 2.000 million in raw diamonds last month.
Beers and Alrosa have responded by raising prices, seeking to recover part of the land they lost last year when demand collapsed.
De Beers implemented an increase of around 5% in its first sale of the last year.The sale has not yet been finished, but the mining company was on its way to its largest auction of raw diamonds in three years, with about US $ 600 million, according to people familiar with the situation.
Even so, the first sales of the year are traditionally the busiest, when industry's intermediaries are hurried to react.If sales decrease later in the year, prices could be under pressure again.
The risks of a short -term reactivation are aggravated by the billions of dollars in rough diamonds that the two large mining companies have.Until now, the temptation to start downloading inventories have resisted.
"There is a dilemma for miners.If they choose not to sell, they lose the monetization of the shares, but if they sell too much they run the risk of saturating the market tooPric support ".
At the moment, the intermediaries that cut, polish and trade the diamonds of the world are earning money.In the so -called secondary market, where buyers sell to gem manufacturers that do not have direct access to De Beers or Alrosa, the boxes have been changing hands with premiums greater than 5% and some of two digits, even after the price.increase.That suggests that manufacturers believe they can obtain profits at current prices.
In general, the prices of raw diamonds have recovered to the levels prior to the pandemic, while polished prices are slightly higher.That is good news for family businesses, mostly small and private, that cut, polish and market the stones.
"While Midstream actions do not saturate, margins can be defended," said Aggarwal."All interested parties of the industry (miners, Midstream and retail) must work in a measured way to allow this to continue".
