In a recent piece titled “Quarterly Recap of Rough Diamond Prices Since the Global Financial Crisis”, diamond analyst Paul Zimnisky analyses the prices of rough diamonds since 2007.
According to the piece, the global financial crisis, which unfolded in 2007, did not impact rough diamond prices. These achieved record high prices in the summer of 2008. In the fall of 2008, the diamond industry at last saw the effects, and rough prices “bottomed out in the beginning of 2009”. The industry slowly rebounded and two years later, in the summer of 2011, rough prices reached “new all-time highs”. These highs, however, have not been repeated since.
Zimnisky characterizes the state of the diamond industry over the last decade as suffering from “historically high volatility”. Several trends emerged: a surge in demand for diamonds in China; “overt speculation by industry players that left the industry oversupplied when the growth tempered”; consequently, banks reining in liquidity, “some leaving the business altogether”.
Upstream, the industry then responded by “curtailing supply, reducing prices, implementing a marketing campaign and increasing transparency attempting to restore profitability and confidence to its customers and their lenders”. This led to positive results, as “industry-wide inventories returned to more normal levels” and a more balanced level of demand and supplied was achieved. However, says Zimnisky, “just as the recovery was underway India demonetized its highest denomination bank notes, directly impacting the largest base of manufacturers in the industry”.
Today, a decade after the global financial crisis, the diamond industry “continues to navigate internal challenges”. These include “the advancement of lab-created alternatives [and] more challenging structural backdrop of generational shifts in consumer preferences”.
In a graph summarizing the Zimnisky Global Rough Diamond Price Index over the last 10 years, Zimnisky shows that prices reached a high in the second quarter of 2011. The low point happened in the first quarter of 2009. Overall, the index gained 33.7% from 2007 to 2017.
