GFC slowdown delays inevitable rough diamond shortfall

[Garry H (Cut Nut)]

http://www.antwerpfacetsonline.be/slowdown-seen-analysts-only-delaying-inevitable-rough-shortfall

The basis for the calculation is that few new significant mines have come on stream in recent years, meaning that when the economic slowdown comes to an end and sales return to their multi-year levels, supply will be approximately in line with demand levels. But add to the mix the growing demand from emerging markets such as China, India and the Gulf, and it becomes clear that demand quite possibly is not going to be sufficient to keep up with demand. That inevitably means that prices are set to rise substantially, but will it also present an opportunity for manufacturers of synthetic diamonds to enter the market on a big scale?


BTW you can see prices have become quite stable recently:
https://www.pricescope.com/diamond-pricing-history-chart.asp

 

[Paul-Antwerp]

Thank you for that article, Garry.

It basically confirms the often-repeated analysis of the last few years: in the medium-term, supply of rough diamonds is declining, while predictions are that demand for polished diamonds will increase.

Looking at current prices of rough diamonds, they are very high compared to the price-level of the resulting polished diamonds.

At the same time, let me stress that rising price-levels are not necessarily good for the industry. They are welcomed by players that are inefficient in selling their product, since the value of their stock rises while they are sitting on it. For efficient industry-participants, rising prices make it more difficult to keep on working at the same level, with a percentually declining margin compared to a higher investment.

Live long,

 

[Garry H (Cut Nut)]

Date: 1/7/2010 4:31:41 AM
Author: Paul-Antwerp
Thank you for that article, Garry.

It basically confirms the often-repeated analysis of the last few years: in the medium-term, supply of rough diamonds is declining, while predictions are that demand for polished diamonds will increase.

Looking at current prices of rough diamonds, they are very high compared to the price-level of the resulting polished diamonds.

At the same time, let me stress that rising price-levels are not necessarily good for the industry. They are welcomed by players that are inefficient in selling their product, since the value of their stock rises while they are sitting on it. For efficient industry-participants, rising prices make it more difficult to keep on working at the same level, with a percentually declining margin compared to a higher investment.

Live long,

Good point Paul

Imagine our predicament her in Oz - it is like every business persons worst nightmare!

 

[Garry H (Cut Nut)]

posted on wrong thread