Business as Usual?
September 17, 20
Are we in recovery? The diamond industry was on its knees in March and April. The world was reeling from coronavirus, governments were scrabbling around for ventilators to keep people alive. Lockdowns, travel restrictions and face masks were still a novelty.
Most of us hoped, wished or prayed that life would soon return to normal.
But it's now nine months since the first case of the disease was confirmed in China, and it's increasingly clear that life with COVID-19 is the new reality.
The number of deaths worldwide has not slowed - it's been fluctuating between 4,000 and 6,000 a day for the last few months.. In the UK, my home for many years, gatherings are now limited by the so-called "rule of six". In Israel, where I now live, a new nationwide lockdown comes into force tomorrow, ahead of the Jewish high holidays, forbidding movements more than 500 meters from home, except for essential journeys. Many countries are tightening their rules on social distancing rather than relaxing them, and they're re-introducing regional lockdowns.
Against this background of second waves, however, there seems to be an optimism of sorts in the world of diamonds. The word "recovery" is one everyone's lips, and sales figures certainly seem to point in that direction. But is it a sustainable, long-term recovery? We are defiant and determined but still a long way from "business as usual".
I'm looking at Covid deaths and infections in India, where virtually every diamond in the world is cut and polished. Over 5m cases nationally, 90,000 infections yesterday (near the top of a steep upwards curve) 1,000-plus deaths a day for the last month. Whichever way you play with the stats, there's no way that looks like a recovery.
And yet Surat, which was until recently a virus hotspot, is open for business. An estimated 70 per cent of factories are now back in operation, albeit at reduced capacity. In spite of the fact that there's no sign yet of a Covid recovery, headline figures show exports gradually recovering over the last three months, compared with 2019.
India's polished diamond exports 2020 (per cent change from same month in 2019)
June $0.89bn down 47%
July $0.92bn down 39%
Aug $1.22bn down 26%
Trading in Antwerp was positively buoyant in August, with rough and polished sales actually up on last year after spectacular dips. The figures are encouraging and sentiment is good, says the Antwerp World Diamond Centre, but it "remains cautious".
Belgium's polished diamond exports 2020 (per cent change from same month in 2019)
June $469m down 44%
July $580m down 35%
Aug $343m up 6.3%
Belgium's rough diamond exports 2020 (per cent change from same month in 2019)
June $237m down 70%
July $302m down 59%
Aug $399m up 24%
Further along the pipeline the US has also seen a dramatic reversal of fortune after a collapse in watch and jewelry sales worse than the Wall Street Crash. Up to date figures are not yet available to compare like for like with those above, but June saw positive growth and a 50 per cent collapse in April.
US watch and jewelry sales 2020 (per cent change from same month in 2019)
April $2.8bn down 50%
May $5.1bn down 27%
June $5.6bn up 2%
De Beers and Alrosa produce half the world's diamonds between them. Their Sights and tenders, more or less every month, are a good indicator as to the state of the industry. They both saw sales fall of a cliff when the pandemic hit, but have been tempting buyers back with flexible terms and, latterly, with discounted prices. That, combined with growing demand and a holiday season on the horizon, has seen both miners actually increase sales last month compared with 2019.
De Beers rough diamond sales 2020 (per cent change from same month in 2019)
June $35m down 91% (Sight 5)
July $116m down 54% (Sight 6)
Aug $320m up 11% (Sight 7)
Alrosa rough and polished diamond sales 2020 (per cent change from same month in 2019)
June $31m down 86%
July $36m down 79%
Aug $217m up 19%
I have an uneasy feeling that all is not quite as healthy as these numbers suggest. Put simply, what's changed? The world is still in turmoil. There's no cure and no vaccine. So how or why do they present such a positive picture? Maybe we've survived the initial shock of coronavirus and have adapted to the brave new world because we have no choice. Maybe the August bumps reflect a one-off month of pent-up demand that won't happen again, and the figures will settle down to a "normal for coronavirus". Or maybe there simply aren't enough diamonds in the pipeline to sustain even the soft demand from jewelers. The truth is that we can all speculate but only time will tell.
Have a fabulous weekend.