Modern Mining January 2023

DIAMONDS OUTLOOK

State Diamond Trader perspective on global Diamond Market Performance in 2022 By The State Diamond Traders’ Godfrey Mance: Client Relations Officer

T he global diamond market portrayed mixed sentiments throughout the year, with the first trimester upholding the trade positivity expe rienced in late 2020 and the entire 2021 calendar year. This trade peak was orchestrated by the inventory replenishment post, the easing of Covid 19 restriction levels in different diamond regions, and business returning to some sort of normality. It is a view of the industry that the pandemic created a vacuum which led

to the depletion of inventories that were stored in companies’ vaults for a long time and could not sell profitably previously. To some extent, the Covid 19

The African continent remains a critical player in the global diamond industry. and influenced the direction of the market even further. The uncertainty brought about by these geo political issues further fuelled sentiments since the supply of Russian rough diamonds was disturbed. The expectation was that availability of rough dia monds would be limited, and the price be affected. Indeed, the industry saw diamond prices increasing as anticipated. Finally, the postulated bubble burst, and the market experienced a reduction in the prices of polished diamonds, which were in excess supply following huge purchases at the beginning of the year. Unfortunately, rough diamond prices remained stable putting more pressure on manufacturers’ profitability. The trade began noting that the rough diamond producers were holding prices firm and not adjusting as per the recent market traits. The indus try commenced the final quarter of 2022 operating with great caution, avoiding inventory build-up and trading to fill specific orders from consumers. 2023 Outlook Postulation Current forecasts by the IMF show that the global economic growth rate will continue to slow from the 6 percent in 2021, to 3.2 percent and 2.7 percent in 2022 and 2023 respectively. The slowdown is driven, in the main, by high levels of inflation in food and fuels. This in turn has negatively impacted con sumer outlook. Given the progression of the industry since the outbreak of the Covid 19 pandemic and general economic climate fluctuations, it has been very difficult for analysts to predict the future direc tion of the market. Diamond market performance depends not only on the traditional events of the industry but turns out to be affected by environmental factors as well. The

pandemic benef i ted the industry, not overlooking its negativities resulting in the closure of entities and the loss of employment, among others. It was during that stage, after

years and years of anticipation, where polished demand and sup ply moved concurrently with the rough

South African manufacturers are working hard to ensure that the industry is marketed locally.

diamonds trade, allowing diamantaires to make decent profits. However, regardless of these excit ing sentiments, the industry continued expressing concerns that, a price bubble had been created and that when it burst it would harm trade progression. While the industry was postulating a slowdown in the second quarter of the year, Russian and Ukrainian sanctions by the USA gained momentum

Expectations are that the holiday season will result in a good trade.

18  MODERN MINING  January 2023