Diamond glut won’t be forever

Diamond stocks have been piling up after suppliers refused to cut prices. But demand could soon pick up.

What to do with piles of diamonds, asks Thomas Biesheuvel on Bloomberg. Diamond giants De Beers and Alrosa have “barely sold any rough diamonds since February” after refusing to cut prices in response to the pandemic. So gemstones have been piling up. Industry specialist Gemdax thinks that the industry’s top five producers are sitting on $3.5bn of excess inventory. By January 2021 that could hit $4.5bn, “about one-third of annual rough-diamond production”.

The preference for stockpiles over price cuts is a familiar tactic in the luxury goods industry. Historically, the likes of Burberry have gone so far as to burn “excess inventory” rather than offer discounts, lest they sully their reputations for luxury, writes Greg Petro on Forbes. Consultants Bain & Co. forecast a 20%-35% global contraction in demand for personal luxury goods this year. 

For diamonds, a product that “relies on sight and touch”, the challenge of lockdown has been acute, says the Financial Times. The entire supply chain is being squeezed, from Indian diamond cutters disrupted by shutdowns to jewellery retailer Signet, which will close 380 stores in the US and UK. On a brighter note, there has reportedly been strong demand for diamonds from China since reopening, thanks to the bridal business. “People have rediscovered what’s important to them and [are] committing to their partners,” says Stephen Lussier of De Beers.

Recommended

CCI: this indicator can help you decide when to buy and sell silver
Sponsored

CCI: this indicator can help you decide when to buy and sell silver

CCI - the “commodity channel index” – is a technical indicator that can help traders spot entry and exit points. Dominic Frisby runs it over the silve…
24 Aug 2020
Platinum: the precious metal that looks set to play catch-up with silver and gold
Silver and other precious metals

Platinum: the precious metal that looks set to play catch-up with silver and gold

Gold and silver continue to soar, but there's still time to get in. And there's another precious metal that looks set to go on a bull run too, says Jo…
7 Aug 2020
Silver price begins to catch up with gold
Silver and other precious metals

Silver price begins to catch up with gold

After climbing 36% in the last month alone, the silver price has hit a seven-year high.
30 Jul 2020
Silver’s had a cracking run – what happens now?
Silver and other precious metals

Silver’s had a cracking run – what happens now?

Silver has risen almost 100% since its recent lows. And there's potential for much more. But it is the most fickle and frustrating of metals – it coul…
22 Jul 2020

Most Popular

Here’s why you really should own at least some bitcoin
Bitcoin

Here’s why you really should own at least some bitcoin

While bitcoin is having a quiet year – at least in relative terms – its potential to become the default cash system for the internet is undiminished, …
16 Sep 2020
Will a second wave of Covid lead to another stockmarket crash?
Stockmarkets

Will a second wave of Covid lead to another stockmarket crash?

Can we expect to see another lockdown like in March, and what will that mean for your money? John Stepek explains.
18 Sep 2020
Central banks want politicians to take charge – but what will they do?
US Economy

Central banks want politicians to take charge – but what will they do?

The US Federal Reserve has come to the end of the road in terms of what it can do to accelerate any recovery, says John Stepek. It's over to the polit…
17 Sep 2020