“No market, no liquidity, no demand… no confidence.” That sounds like a description of the market for some kind of exotic debt instrument, but it actually applies to exotic stones, according to Freddy Hannard of the Antwerp World Diamond Centre. A major index of polished diamond prices by Polishedprices.com is down by more than 10% from its August record and looks poised for its first year of losses since 2003.
The market has been hit by a double whammy, says FAZ.net. Demand is waning rapidly, with sales expected to decline by 15% in North America (the US buys almost half of the world’s diamonds), 10% in Europe and 5% in Japan next year. And demand in China and Russia is also projected to ebb. The fact that banks have tightened credit to wholesalers (who borrow cash to buy rough diamonds) has also undermined demand. There is now a glut of rough diamonds.
Given all this, it’s no wonder exports of polished stones from the Antwerp centre fell by 13% in October, says FAZ.net. So anyone in the market for a diamond should hold off. According to Des Kilalea of RBC Capital Markets, prices for ordinary gems could now fall by 30%-40%. As Catherine Boyle says in The Times, “diamonds may be forever, but their high price is not”.