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State Of The Diamond Industry: Mid-Year Report.
The World Diamond Congress meeting of top diamantaires and Industry Leaders came to a close last week in Tel Aviv, Israel with a consensus that the global diamond sector was expected to start recovering in the second half of the year after months of declining profit and flat consumer demand.
Officials at the World Diamond Congress in Tel Aviv said the industry was going through rapid changes that had jolted diamond producers and manufacturers after total diamond jewellery sales of about $65 billion last year.
"A lot of diamond manufacturers are working with no profitability," said Jeffrey Fischer, the president of the International Diamond Manufacturers' Association. "And this is an industry that always works on thin profit margins."
He noted that growth in sales and demand had soared in the past few years, leading to high profits and prices, but hit a peak at the start of 2006.
"Demand this year has not materialised to the extent that was anticipated," Fischer said, adding that sales had grown by about 6 percent last year.
But demand had been flat so far this year, particularly in the US, which accounted for more than half of global diamond sales. The supply of rough diamonds had remained high.
"Producers and diamond miners are still getting high prices, but that's not going through to polished dealers," said Ernest Blom, the president of the World Federation of Diamond Bourses.
Lev Leviev, the head of LLD Diamonds, the second-largest diamond group in the world behind De Beers, said the biggest problem in the industry was profitability.
"I don't know any diamond polishers making money today," he said. "Demand in the US is not what we expected."
Industry leaders say diamonds have encountered stiffer competition from other luxury items such as cars and holidays, while the growth of synthetic diamonds, a major worry for the industry, has increased.
"The second half of the year should be stronger," Fischer said, citing growth in key manufacturing areas such as India and China. "We are lagging right now while demand catches up with supply."
Officials expected a strong holiday shopping season starting in late November, a period when between 75 percent and 85 percent of all diamonds are sold.
Some factors cited for lagging U.S. diamond sales during the first half of 2006 were high gas prices, high interest rates set by The Federal Reserve, and climbing inflation.
