Analysis: Consumption of Diamonds Could Boom in 2nd Half of 2021
In a recent article published on the website of India’s Gem & Jewellery Export Promotion Council (GJEPC), diamond analyst Paul Zimnisky analyses the current diamond and jewellery market, and makes some optimistic predictions for the second half of 2021. Zimnisky details two main reasons for his high expectations for the rest of the year: low inventories and a “post-vaccinated economy charged with pent-up wedding demand.”
According to Zimnisky, upstream supply by the industry’s two largest producers – namely De Beers and Alrosa – “is forecast to remain at multi-year lows.”
For example, he estimates De Beers’ current inventory level at around 12 million carats – compared with 19 million in 2020, 16 million in 2019 and 21 million in 2015. As for Alrosa, an analysis of its inventory shows a similar trend.
As for demand, good holiday seasons – namely last Christmas season and the Lunar New Year – were better than anticipated and healthy, laying “the foundation for diamond demand that has continued into mid-year 2021”. Signet raised its sales guidance by 2.4% for the fiscal year ending January 2022, while LVMH marked that Tiffany sales in early-2021 “probably rose 8-9% compared to two years ago.” In China, jeweller Luk Fook said it “looks forward to much improved sales performance in the near future…(as) the macro-economy and retail sentiment, especially in the Mainland market, will be further recovered.”
As for engagement and wedding related jewellery and diamond jewellery accessories , Zimnisky notes that wedding industry service provider, The Knot, said that it expects 2021 to be “one of the busiest years for weddings in decades.” Weddings, and “bridal” jewellery in general, “accounts for an estimated 1/3 to 40% of global consumer diamond demand,” Zimnisky adds.
Zimnisky concludes: “In an upside case scenario, demand for diamonds in the second half of 2021 could outpace the first half, driven by a post-vaccinated global economy charged with pent-up wedding demand. The combination could mean a generational consumer boom for diamonds.”
Read the full article here