The year 2020 had been filled with ups and downs – but mostly downs. The global health crisis COVID-19 has put a lot of employment rates to a massive decrease due to the strict physical or social distancing protocols. Not just employment rates, but also sales of all businesses worldwide. In line with this crisis, one of the most unexpected decreases in prices have been made in the year 2020 – and that is the price range of diamonds and engagement rings.
Decrease in diamond and jewelry prices and supply have been significantly emphasized by COVID-19 that forced various jewelry shops to a closure, making a decrease in share-prices of diamond mining companies. Some small diamond miners have stated to lose shares by 75% over the past year starting in January. This indeed meant such a huge downhill for the diamond industry all around the world.
What Diamonds and Jewelry Prices Look Like in ’20
Due to forced closure of many jewelry shops, this resulted in miners cancelling or delaying their sales. In addition, diamond shows have been put into a halt secondary to social distancing and travel restrictions. It was stated that few sales that were still pursued showed rough diamond prices down from 15% to 27%.
According to Gem & Jewellery Export Promotion Council shows, Indian imports of rough diamonds went from $1.5 Billion in February to a flat $1 Million in April (as per their data records). Similar scenario was displayed by Antwerp, a diamond hub, which estimates import drops to 20% in the first half of 2020, and the total percentage of the city’s polished diamond exports fell to 46%.
Adjustments to Survive
Like everybody else, 2020 had taught the world to be adaptive and the diamond industry was not an exception. RCG Diamond Consultants Managing Director Richard Chetwode expressed that some miners may opt to change the pricing tradition in the market by having a secured cut of onward polished diamond sales, and miners may eventually have direct transactions with luxury jewellery and diamond brands.
Some diamond companies like Lucapa Diamond Co from Australia have sealed a deal with diamantaires to sell some high graded diamonds from the Mothae Mine in Lesotho for $505 per carat with addition of a 50% share of the margin on the future polished diamond sale. Another company, Lucara Diamond Corp, also opened a deal with Antwerp manufacturer HB Group which mined diamonds from Botswana larger than 10.8 carats are sold for a portion of the estimated diamond polished price.
What Happens Next?
Until the last few quarters of 2020, miners were still in high hopes for production cuts to help recover diamond and jewelry prices. A lot of mines have also been forced to shut down due to the pandemic and some are yet to reopen. However, for the year 2021, it is quite too early to predict what can happen next for miners and jewelry shops – although some shops have been reopening after a year-long close, others are just starting to close due to inability to sustain the business or decrease the number of consumers in that area.
Conclusion Although it is heart-breaking to see one of the most prestigious industries of businesses in the world crash due to the global pandemic, it is not a good enough reason to quit. Now that intimate weddings and engagements have been picking up its pace and starting to warm up, the industry may be back in firm shape. With further innovations and compromises done over the past year, it is safe to hope that the year 2021 can open more opportunities again for the industry.