The curtailing of both upstream and midstream natural diamond production in recent months has begun to impact prices. Recent signs of diamond price stabilization, particularly from the end of August into September, may be the first indications of a recovery in the diamond market, says New York-based independent diamond and jewelry analyst Paul Zimnisky in an interview with Rough&Polished about the current state of the market.
However, Zimnisky emphasized that a meaningful recovery in demand is essential for a sustained market rebound. When asked about the importance of China in this recovery, he noted that China has been a significant player in the diamond market, growing to become the world’s second-largest diamond consumer over the past 25 years. Despite this, demand from China has dropped by as much as 50% this year, making its recovery crucial to the overall rebound of the diamond industry.
Regarding the timeline for recovery, Zimnisky predicted a gradual improvement, likely extending into next year, due to the need for the industry to work through existing excess stock. He stressed that while supply-side adjustments are vital, the key factor will be a recovery in demand, particularly from China.
On De Beers’ decision to skip its August rough diamond sale and combine it with the October trading session, Zimnisky explained that this is an encouraging sign. It shows De Beers is actively addressing market conditions, even as the company is up for sale. He also mentioned that Alrosa and other major industry players are adopting similar strategies to reduce supply and stabilize the market.
In discussing production cuts in India, Zimnisky expressed optimism, praising the midstream sector for proactively reducing supply. He stated that these actions are exactly what the industry needs at this time. He further noted that once polished prices begin to recover, manufacturing margins in India will improve, contributing to the broader recovery of the industry.
When asked about the impact of the G7’s ban on Russian diamonds, Zimnisky indicated that the sanctions have had a limited effect on the market thus far. While more technical tracking protocols may be implemented in the future, Zimnisky believes these will be introduced in a way that minimizes disruption to the industry.
In summary, Zimnisky expressed cautious optimism, noting that while there are early signs of recovery in the diamond market, sustained recovery will hinge on a resurgence in demand, particularly from China. Although supply adjustments are important, the ultimate solution will be the restoration of strong consumer demand.
Read the full interview at Rough&Polished
