In his presentation on the state of the global diamond business as part of the US/International Diamond Week at the Israel Diamond Exchange (IDE) last week, the renowned international analyst gave statistics relating to the sector's financial state and pointed out the dangers that it faces.
International diamond analyst Chaim Even-Zohar gave a presentation on March 20 as part of the US/International Diamond Week. "Israel is the best and most stable place economically in the global diamond sector in view of the reluctance of the banks to extend credit to the local diamond industry. The Indian diamond industry is the biggest taker of credit in the world and that is why they have the largest growth," he said.
Photo: Ya'ankale
photo: ya'ankale
The lecture took place in the IDE's Cullinan restaurant in the presence of the presidency and management of the IDE and hundreds of Israeli diamantaires and foreign buyers.
"We have a great deal of information that enables us to forecast what is likely to happen in the future rather than guessing. Volatility and change will always be here and there is no way around them because that is how supply and demand operate," said Even-Zohar in his usual unique and interesting way about the recovery in the diamond sector in the last five years.
"There is a rise in global demand in the wholesale diamond sector and in the diamond manufacturing centers as well as a rise in demand for rough goods." But Even-Zohar said that he did not expect any significant rise in rough prices in 2013-2014 and they would continue to be volatile. Demand and supply in rough diamonds are more or less in balance and there is no expectation of a rise in prices in 2013," he said.
He said that diamond manufacturers are in an excellent position despite their economic performance. "Global sales of rough in 2012 were $15 billion, while sales of polished were $22 billion meaning the added value was just $7 billion. Despite the fact that manufacturers lost money in 2011 and 2012, their economic situation has never been better, he said.
"During the financial crisis, diamond manufacturers operated very responsibly which brought about a reduction in loans from the banks." He called on the banks to expand credit to the diamond sector since "that is the only way to survive and expand. The diamond sector cannot grow without credit."
He also spoke of the dangers to the industry from the entry of synthetic diamonds to the natural diamond market. "This year, $500 million worth of polished synthetic diamonds entered the diamond pipeline. You have not heard about this because nobody is telling you about it. The synthetic diamond manufacturers have substantially increased their production with the use of hundreds of diamond-growing machines.
"A 'perfect' system has been developed where diamonds are produced using the Chemical Vapor Deposition (CVD) and then the color improved using the High Pressure-High Temperature (HPHT) system. According to estimates, in Surat in India, 5-7 percent of diamonds produced that are less than one point in weight are synthetics."
Even-Zohar also spoke about the danger to the industry of recycled diamonds and stones being sold to the ever-expanding pawn business in the United States which he estimated to have an annual value of $1.2 billion. "There are enough diamonds held by households for the next 40-50 years if they were to all go back into the market. Those are the kinds of volumes we are talking about," he said.
He also spoke about the competition the diamond business faces from goods such as electronic devices. "In the past 12 years, there has been a 77 percent rise in sales of luxury goods. However, the diamond industry in the same period only expanded by just 22.5 percent. We are losing our share of consumer spending."
