Diamond dealers and retail jewelers continued to raise concerns about the high cost of rough diamonds in 2013. Though rough prices actually declined over a two-year span from record highs in 2011, market analysts forecast that rough supplies will fall short of end-user demands in the coming years, sending rough prices back to new peaks. According to a report released by the Antwerp World Diamond Center and Bain & Co., global demand for diamonds will exceed the levels of rough diamond production, and an ever increasing demand in China, India and the United States will induce soaring prices for rough diamonds by 2018. A decrease in generic diamond production is expected to continue over a long term as the leading Ekati and Diavik mining operations in Canada are exhausting their open pit resources and converting to underground operations, which usually result in limited production. This production slump will be aggravated by a general lack of new mining operations and the long development period required before new mines are productive. Be that as it may, the Marange mine in Zimbabwe along with the Orapa and Jwaneng mines in Botswana are expected to generate annual yields of over ten million carats each for many years to come.
Another major concern in 2013 was the continued influx of undeclared synthetic diamonds, which is seen as a threat to the legitimate diamond trade. In response to a trade alert that large amounts of lab-grown diamonds were being mixed with natural diamond parcels, the World Federation of Diamond Bourses issued a stern warning against this fraudulent activity (see news story) and new testing equipment for identifying synthetic diamonds was displayed at a recent diamond exhibition in Hong Kong (see news story). The world’s leading diamond grading and certification institutes claim to operate the most updated equipment for telling apart synthetics from natural diamonds, and have also begun issuing certificates for lawfully disclosed lab-grown diamonds. Even so, some diamond traders are apprehensive that the affordable alternative offered by above-board lab-grown diamonds will impede the traditional trade in natural diamonds (see related article).
The manufacturing sector was marked by reduced bank loans for purchases of rough stones while the retail end of the diamond pipeline realized low profit margins. Polished diamond prices fluctuated throughout the year, flat-lined over the holiday season and ended with mixed results as overall price reductions of 4.5% for 1-carat diamonds and 4.0% for 3-carat stones were balanced by a 10.1% increase for 0.3-carat gems.
Colored diamonds were also a big story in 2013 as record auction sales such as the $35.5 million deal for “The Orange” gem at Christie’s Geneva Autumn Sale of Magnificent Jewels (see news story) and the $83 million dollar transaction for the “Pink Star” diamond at Sotheby’s Geneva Sale (see news story) revived consumer interest in colored gemstones. Some industry sources say these landmark deals will whet the appetites of diamond investors who are usually prone to invest in more “safe bet” white diamonds.
In spite of the obstacles of 2013 there is room for optimism as a rising demand for diamonds in the United States, China and India, ongoing high-yield mining operations in Zimbabwe and Botswana and a foreseeable revival of investment in colored gems bodes well for the diamond industry in 2014 and beyond.