A recent article titled “Diamond Market: Rush demand vs. inflationary pressure,” written by Igor Leikin for Rough & Polished, analyses recent trends in the global diamond industry, among them plummeting production, rising prices and increased demand. Here are some of the article’s more salient points.
Diamond production and sales
Leikin begins by discussing production in 2020, when diamond supply plummeted 23% year-on-year, only to increase 4% year-on-year to 112 million carats in 2021. While Alrosa plans to add an average of 1 million carats to reach total production of 35-36 million carats until 2025, other miners “are constrained in their ability to increase their production.” That means that diamond supply will remain stable and, according to CEO Sergey Ivanov, “due to the limited supply and the growing global jewelry consumption, rough diamond prices should rise in the coming years.”
Rough Prices
Both Alrosa and De Beers have increased their prices recently. Alrosa claims it is not creating an artificial shortage in the market, “just demand exceeds supply many times.” According to Leikin, quoting Renaissance Capital, global rough diamond sales grew 63% to reach $13 billion in 2021, “which demonstrated the best dynamics since 2010.” In addition, demand for diamond jewelry in 2021 increased 20% to $82 billion, exceeding the level of pre-pandemic 2019. The diamond price index rose by 12% as a response to this increase in demand.
The rise in prices will continue in 2022-2023, according to Renaissance Capital. In 2024-2025, “rough diamond prices may decline due to a potential increase in supply amid the steady demand in jewelry retail”; after that, there will be a moderate price growth of 3% per year.
Leikin then goes on to discuss and analyze the global growing demand for jewelry in 2021, as well as the possible impact of inflation on everything on everything in the industry – from mining costs to polished diamond prices to consumer demand.
Read the full article here.
