The cautious optimism that returned to Antwerp's diamond industry after the first month of 2020 was short-lived, writes Diamond loupe.
The explosive spread of the coronavirus COVID-19 in February effectively closed eastern markets and caused great uncertainty in the global diamond trade. The Antwerp trade in rough diamonds still had a charge of high sales from producers, but alarming signs appeared in this segment, especially by the end of the month.
According to data released by the Antwerp World Diamond Center (AWDC), Antwerp trade was hit hardest in the diamond export category, whose value was halved compared to the previous year due to the postponement of the Hong Kong International Diamond, Gem and Pearl Exhibition (Hong Kong International Diamond, Gem & Pearl Show) and the Hong Kong International Jewelery Show.
These exhibitions represent key trade events at the beginning of the year. However, this year the goods remained in their vaults, as trade with Hong Kong, which is the second largest diamond market for Antwerp, fell by almost 94%. With the exception of Hong Kong fairs, Antwerp diamond exports fell only 7% from last month, from $ 605 million to $ 560 million. While the US and European markets were cautious, exports to Israel jumped sharply, increasing by more than 62 %, up to almost $ 86 million
Diamond imports experienced a moderate decline in February. 4% less carats of diamonds were sold, the price of which decreased by 11% as prices fell. Major diamond indexes confirmed a downward trend in prices, while PolishedPrices said its diamond index fell to a ten-year low at the end of the month.
Diamond trade in Antwerp in February accurately reflected trends that had formed by 2020. Last month, ALROSA had the largest sale of rough diamonds in more than a year, while the first De Beers diamond site in 2020 fell to $ 545 million, becoming the largest sale since April 2019. These initial sales increased Antwerp's imports of raw materials by 43% in January and 19% in February. Last month, more than 8 million carats were imported into Antwerp, the cost of which increased to $ 683 million - 10% more than in February 2019. In the first two months of 2020, the volume of imports of raw materials from Antwerp increased by 30%, but low average prices led to an increase in value by only 12%.
Meanwhile, following an increase in goods on the market due to January manufacturers' sales, Antwerp export of rough diamonds increased by 1.4 million carats compared to January, amounting to more than 9 million carats. But this is still 8% less than in the same month of 2019. The fall led to a 16% decrease in the value of this category of exported goods. In the first two months of this year, Antwerp exports of rough diamonds decreased by 7% to 16.7 million carats, and their value decreased by 12% to $ 1.4 billion.
Despite the relatively limited impact that was felt in February, traders and manufacturing companies are worried about the impact of the coronavirus in the coming months. They expect more delays in the purchase of rough diamonds from large companies and a slowdown in production in India, as consumer activity in China has declined, and this could also happen in other countries.
Some, however, expressed confidence that demand for polished diamonds in China will skyrocket when the outbreak of coronavirus subsides, as consumer jewelry demand remains strong despite challenging external circumstances, Diamond loupe notes.