The diamond industry’s collapse last year left the biggest producers with billions of dollars of uncut gems stashed away in safes. Now, in a matter of months, they’ve suddenly found buyers.
It’s been a rapid turnaround as cutting centers in India and Antwerp rushed to replenish supplies they’d been unable to buy during the worst of the crisis. At the same time, demand has jumped amid surprisingly good festive sales, with consumers unable to book vacations spending more on luxuries such as gems.
The huge stockpile was built up when the diamond world came to a standstill during the height of the pandemic, stoking fears that gems amassed by the biggest miners could hurt the sector for years. But rampant demand from the middlemen who cut, polish and trade stones has all but wiped out the stash. Top producers De Beers and Alrosa PJSC have even raised prices.
De Beers has said it sold 13.5 million carats of diamonds in the first quarter, almost double the amount it mined in the period, signaling stock drawdowns. Russian miner Alrosa’s inventories tumbled about 60% in six months to 12.8 million carats by the end of March, the lowest in almost three years.
Yet the top miners have been able to raise prices this time round, after significantly, cutting production last year and buoyed by renewed demand from manufacturers and traders. De Beers has been hiking prices since the end of last year, back to pre-coronavirus levels. It sold more than $1.6 billion in rough gems in its first three sales of 2021, the most since 2018.
In India, the industry’s factory engine room remains vulnerable to a ferocious new coronavirus wave. Concerns are mounting that local production won’t be able to meet demand from key Chinese and US retailers, and some manufacturing has already been curtailed. That could not only create shortages, but may also cut rough-diamond demand.