Antwerp Symposium: Recovery Ahead, Need to Avoid Rough Diamond Price Bubble

Rough diamond prices shot up 30%, creating fears of a price bubble, the diamond industry was told at the Antwerp symposium

The second Antwerp Diamond Symposium concluded Monday, following a discussion and a large number of presentations. A conclusion reached by the symposium was that recovery is underway, but it will be slow.

In 2010, the retail market will post a 0.4 percent rise, said moderator Chaim Even-Zohar and economist Pranay Narvekar. However, because of destocking in the pipeline in the past year, the modest increase in retail sales will result in a 25 percent increase in polished sales in cutting centers to $17.1 billion.

Despite the global economic crisis, the number of business failures that occurred over the period did not exceed the rate expected in a non-recession year, symposium participants were told by a couple of speakers, including IDEX Online analyst, Ken Gassman.

This was credited to a readiness on the part of diamantaires to inject personal equity into their companies. In addition, speakers said, the stability was the result of policies by the mining companies which cut production and suspended sales during the first part of the year, and the banks which maintained the general level of credit they extend to the diamond industry.

Alrosa Vice President Sergei Oulin declared that the Russian authorities do not intend to flood the market with rough diamonds for a quick profit, a statement that earned him applause by the audience.

General concern was expressed at the 30 percent increase in the price of rough diamonds over the past six months, while the average price of polished diamonds was unchanged. To maintain its recovery, symposium participants were warned, it is vital not to create another speculative price bubble.

Thomas Leysen, chairman of the Belgian Federation of Enterprises, provided the perspective of a business leader from outside the diamond sector.

“Antwerp has weathered the crisis well, in part through the diversification of markets," Leysen said. "The results will take time to come to fruition, but it is heartening to see that the process has started."

"The gravity of the issues facing us should not scare us," said Antwerp World Diamond Centre (AWDC) CEO Freddy J. Hanard, who hosted the symposium.

“If we act proactively we will succeed. We have the destiny of the industry in our hands. We will not solve all of the problems today, but we can get an insight into how we can go forward," Hanard said. "I do not doubt that the different messages carried out through this symposium, will be put into practice in coming months.”