Diamond prices slides in March as COVID-19 spreads

Mumbai: Diamond prices fell in March as the spreading coronavirus led to a dramatic decline in the global economy. Diamond markets are under pressure and facing a severe liquidity crisis as jewelry retail, diamond manufacturing, and trading shut down.

The RapNet Diamond Index (RAPI) for one-carat diamonds dropped 6.8 percent during the month and 8.7 percent in the first quarter.

Prices slumped amid slowing demand and increasing supply. Manufacturers bought large volumes of rough between December and February, anticipating strong inventory replacement after a good US holiday season.

De Beers' rough sales exceeded USD 1.3 billion in those three months preceding the pandemic, while Alrosa's reached USD 1.1 billion. De Beers canceled its March sight, and Alrosa allowed customers to defer their full allocations in early April.

Rough prices are expected to decline when sales resume. Prices at March rough auctions slid from 15 percent to 25 percent.

Meanwhile, production at the major mining companies has continued, adding to the inflated inventory they held at the beginning of the year.

Polished demand weakened as the coronavirus intensified. Polished exports from India fell 41 percent year on year in February. Shipments from Belgium dropped 38 percent and Israel's plummeted by 73 percent.

Inventory rose among diamond manufacturers and dealers, with new supply becoming available while demand stayed frozen.

It is unclear how long the pandemic will continue and the full extent to which it will impact the global economy. The industry must emphasize online trading and improve its e-commerce jewelry platforms in this environment. It must also prepare strong marketing campaigns for when demand recovers.

Following this period of quarantine and isolation, people will crave emotional connections more than ever, providing the industry an opportunity to strengthen the desirability and value of diamonds.