Industry Overview. The Company’s place in the World Diamond Market
The global rough diamond market is a relatively small segment, the efficiency of which largely depends on macroeconomic factors.
In the first place, global trends are shaped by the scarcity of world diamond reserves, diamond production at many major diamond mines is falling as surface resources are depleted. An overall shortage of the supply of rough diamonds is accompanied by growing demand for them in China, India and some other countries. This factor has a dual effect: a negative one, on the growth of diamond mining, and a positive one that contributes to higher market prices, which is good for producers. The decline of the overall demand for luxury goods, including diamond jewellery, which results from the global economic crisis, has had a significant impact on the volatility of the diamond market. A slowdown of the overall demand for luxury goods, diamond jewellery in particular, which was caused by the global economic crisis, has had a significant negative impact on the volatility of the diamond market.
Thus, the main trends in the global diamond market remain high on the agenda:
- analysts predict a rise in rough diamond prices due to an industry-wide shortage of raw materials and still unsuccessful efforts to make major discoveries of diamond deposits, and growing demand in Asian markets;
- high volatility of prices still depends on the behaviour of the main buyers of diamond jewellery; therefore, it will be possible to achieve the stable growth rates that producers desire only after a return to the pre-crisis economic situation.
The leading suppliers of diamond products to the world markets are six companies that are involved in various processes of redistribution of capital assets.