Forward Glance

Diamonds are one of the most undervalued goods in
any industry. They are not appreciated yet, but this will be changing. Diamonds
have more value than what they are sold for. Prices will go up, and there will
be a bigger desire to own them — not just from baby boomers, but from
millennials, too. Diamonds are going to come back as a fashionable item. As a
result, manufacturers will be able to raise the prices, because the consumers
will see them as very desirable items.
The internet is not just a
forum, but part of the industry. If somebody’s not completely internet-savvy,
he’ll go out of business. The consumer wants to be connected. Millennials
breathe, live and shop through the internet. Diamonds will get more powerful
exposure.
The Indians will overcome the
crisis [caused by the goods and services tax (GST) and demonetization]
relatively fast, and the industry will get more lean. It won’t damage the
industry, which will go forward from this. It’s a powerful industry, with a
strong place in the luxury sector, so 2018 will be a powerful year.

I believe we
will see a further expansion of the budget of the DPA. This will allow it to
expand its operations, and that is something which is very much needed. I see
the major mining firms, which are the DPA members, agreeing to put more money
into the DPA’s globally expanding operations. I think other organizations will
also step up to the plate, as we saw this year with India’s GJEPC contributing
$1 million for generic diamond marketing. I think the changing dynamics of the
industry will see the trading and retail sectors coming together more as they
consolidate and provide a stable basis. I expect expanding margins for
manufacturers who have suffered from thin profits. In the finance sector, I
expect the diamond industry and the financial institutions to come closer
together, providing much-needed credit for the midstream sector of the
pipeline.

As three new
mines were brought on stream and ramped up to full production during 2017,
rough prices remained stable, indicating that the increased volume of rough
produced was easily absorbed into the market. Liquidity issues and financing in
the middle market remained a concern through 2017 and will in all likelihood
continue to do so through 2018, as we have seen in the past. The demand for
rough, however, remains high, as evidenced by the attendance at the Lucara
tenders and for other producers. The lack of movement in the polished-diamond
index, together with increasing polished inventory, will dampen any positive
movement in rough-diamond prices in 2018. We expect rough-diamond prices to
remain static through 2018, with demand being driven primarily by seasonal
demand.