Then purchases by sightholders will probably pick up, and the ball will get rolling onto other areas of the value chain.”īut when those factors do come into play, both see rough diamond prices rising as a result. “The effect of will be seen in late spring/summer 2016, when the midstream and downstream industries stock for the 2017 holiday season,” said Zimnisky, while Marcus commented, “I think that the current challenges will continue until summer 2016, or right after the second quarter.” Elaborating, Marcus said, “by then, it is highly likely that the inventory at polishers will be diminished as they sell off inventory for cash. That said, neither Zimnisky nor Marcus sees a market turnaround coming until at least the summer.
By doing so, it will help the overall value chain,” he asserted. “I think this shows … that miners are feeling the pain of the industry and are willing to help their partners. Similarly, Marcus noted that big miners like De Beers and ALROSA allowed their clients to refuse more and more diamonds at sights this year. “The miners have been proactively reacting to the weak environment by taking supply off the market and reducing prices,” he said. Zimnisky commented that while some - like Rapaport - might argue otherwise, he believes diamond miners have been reacting well to today’s lower rough diamond prices. It’s clear that the diamond market had both ups and downs in 2015, but if Zimnisky and Marcus are to be believed, 2016 should bring more of the former and less of the latter. Rarity and high demand by affluent people have caused prices to increase, similar to art.” Diamond outlook 2016: Higher prices, less supply “Some colors, such as pure blue and pink, have increased even more. Marcus also identified some positivity, stating that the year’s rough diamond price drop didn’t extend to fancy colored diamonds. “Overall in fancy colored diamonds prices went up by 5 to 6 percent on average,” he said. He pointed in particular to Lucara Diamond’s (TSX: LUC) recovery of a 1,111-carat diamond, commenting, “I’m glad it was Lucara and William Lamb, I think he’s one of the industry’s best representatives.” Petra Diamonds (LSE: PDL) and Rio Tinto (ASX: RIO,LSE:RIO,NYSE:RIO) also recovered “exceptional diamonds” in 2015, he said. On a brighter note, Zimnisky said that alongside low rough diamond prices, another key 2015 trend was the discovery of some major diamonds.
(Read Marcus’ in-depth article on the topic here). In his article, Rapaport calls for De Beers CEO Philippe Mellier to resign, and encourages concerned diamond market participants to reach out to Anglo American Chairman Mark Cutifani with their “concerns about profitability in the diamond trade.” However, some in the industry - Marcus is one - have turned Rapaport’s call to action on its head, challenging him to be the change he wishes to see in the industry. While that strategy allowed cutters to stay afloat, it ultimately lent support to “rough prices that were significantly higher than polished prices” - in other words, cutters were borrowing money to buy rough diamonds, but once they had polished the gems they were unable to sell them profitably.Īccording to Zimnisky, the end result of that strategy was “a global supply glut of low- to mid-quality polished, downward pressure on manufactured products and a midstream segment that is having difficulty servicing its debt.” In it, Rapaport outlines what sparked the current downtrend in the diamond price and lambastes those he sees as responsible for it - namely major diamond miners and banks.Įssentially, states Rapaport in the article, after the 2008 global financial crisis, banks began lending large amounts of money to diamond cutters so that they could buy rough diamonds. There’s been much commentary on this price slump from industry participants, but perhaps most notable is the article on the situation published in late November by Martin Rapaport, chairman of the Rapaport Group. While prices held steady for about the first half of the year, by July they were trending downward. Top Battery Metals Stocks on the TSX and TSXVĢ015 diamond themes: Low prices, big diamondsĪs mentioned, a key diamond market theme in 2015 was lower rough diamond prices.
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