RAPAPORT… Rough-diamond sales will drop by 30% to 40% this year as Covid-19 restrictions have shut down the global supply chain, Moody’s Investors Service projected.
The market won’t recover until the second half when social-distancing rules become looser, the ratings agency said last week. As a result, global rough revenues will decline to between $7 billion and $8 billion for 2020 amid lower sales volumes and prices, compared with an estimated $12 billion in 2019, it added.
Manufacturers will import fewer rough diamonds and export less polished as consumer demand for diamond jewelry suffers, with the category’s reliance on brick-and-mortar retail compounding the situation, Moody’s said.
While China has reopened, shopping-mall traffic is at 60% to 70% of pre-coronavirus levels. In the US, it will take at least three to five months for footfall in malls and at jewelry retailers to return to normal, the group forecast.
“The measures governments around the world have taken to contain the coronavirus pandemic have disrupted all stages of the diamond value chain, from rough-diamond miners, through cutters and polishers to the jewelry end market,” Moody’s said. “We expect the market to start recovering from the second half of 2020 as travel bans and ‘stay-home’ orders are gradually…lifted.”
Once that recovery has gained pace, rough sales in 2021 will rise by 20% to 25% for a total of $10 billion, assuming there is no second virus wave leading to further lockdowns, it predicted.
Miners will reduce 2020 production in light of the lower demand and to minimize inventory buildup, it added. However, global output for 2020 will still exceed sales by about 10 million to 20 million carats, or 10% to 20% of total production, it added.
Image: Rough diamonds. (Ben Perry/Armoury Films/De Beers)
Rough Sales to Decline Up to 40% This Year
The Bottom Line
- Global rough-diamond revenues are projected to fall to $7 billion–$8 billion in 2020, down from $12 billion in 2019, driven by lower sales volumes and prices.
- Manufacturers will reduce imports and exports amid weak consumer demand and reduced foot traffic in key markets like China and the US.
- Rough-diamond production will be cut but still exceed sales by 10% to 20%, leading to inventory buildup; a 20% to 25% sales rebound is expected in 2021 if no further lockdowns occur.
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