World loses passion for diamonds
01.02.2012 18:09
The prices on both rough and cut
diamonds have been unstable recently. The uneasy situation on the market
can be explained with dominating sentiments of major consumer of
diamond jewelry in Asia, Europe and the USA, RBC Capital Markets said.
Sales volumes were not bad at all last
year. Asia still takes leading positions in terms of the industry
growth. The USA, the world's largest market for the diamond industry,
showed unpromising results, albeit not in all parts of the country.
The world's largest diamond wholesale
center - Antwerp - is worried about the results achieved in the first
quarter of the current year. It will be possible to reach success only
when the US market retrieves the situation that it had before the
crisis. The leading diamond-mining companies - De Beers of Britain and
Alrosa of Russia - can improve the situation if they voluntarily
restrict the shipments of precious stones on the diamond market.
According to RBC Capital Markets, the
program to recreate the sub-industry of rough diamonds includes three
basic factors. First off, it goes about the movement of cash assets on
the volumes of annual sales of diamond products in large centers. The
sales income of De Beers and Alrosa are the second factor. The degree of
the debt capital of the bank industry in diamond-cutting centers,
particularly in India (due to the fall of the local currency) is the
third one.
Nevertheless, the majority of diamond
companies believe that the second half of the current year will be
marked with more favorable price policies. RBC analysts say that the
situation on the market will be favorable enough for both old-timers (Petra Diamonds, Harry Winston Diamond, Gem Diamonds) and newcomers (Stornoway Diamond).
Russian analysts are not so optimistic
in their forecasts. They believe that the reason of the international
economic crisis, which directly influences the diamond industry, lies in
the deindustrialization of the USA and its allies. The level of mass
consumption of goods and services remains too high, though. The States
is a country with five percent of the global population. At the same
time, this country consumes 50 percent of luxury goods. To crown it all,
the USA controls 50 percent of international defense budgets of the
world. That would be ok if it was not for one little detail. The US GDP
is a bubble.
America and many of its allies do not
live within their means. This situation lasts for several decades. The
total debt o the US government, corporations and households exceeded $50
trillion. The government tries to solve the problem with the help of
unbacked money. In the meantime, the number of industrial enterprises in
the USA dropped by 56,000 during the past decade. The country was
losing 15 factories every day.
For the time being, the USA needs to
have political uncertainty and debt problems in Europe. The worse it is
for Europe, the better it is for the USA. America needs to be careful,
though: the pressure on the Old World must not lead to its collapse.
No grand changes are expected in the
United States before the presidential election in the fall of 2012.
Brazil, Russia, India and China will be used as sales markets for
American and European products with an opportunity for credit and
speculative bubbles to grow. As a result, the world diamond market will
grow by five percent a year.
Vladimir Teslenko
