Diamond Leaders in Antwerp: "The Worst Is Over"

Speaker after speaker at the Antwerp World Diamond Center's Diamond Symposium echoed the same theme: "The worst is over."

The symposium, held Monday, November 16, in Antwerp's Provence Hall, attracted more than 300 people who all seemed to breathe a collective sigh of relief that the future looks brighter for the diamond industry. While some speakers acknowledged that the global economy may show a W-shaped recovery, with the possibility of a second dip sometime in 2010, no one predicted that the economy might reverse its current upward trajectory and plunge into a depression.

Highlights of the conference included the following:

* Demand at the consumer level seems to have stabilized, but the annual run rate is 10-15% below pre-recession levels.

*Diamond production, both at the mining level and the cutting/ polishing level, is greater than current demand at the retail and consumer level.

*The current spike in rough diamond prices is not sustainable, and will retract. Speculators were blamed for the price run-up.

*Recycling of diamonds could become a notable factor in the market, and could affect diamond prices in the future.

*Polished prices are likely to remain at current levels, until retail demand picks up.

*With high rough prices and flat polished prices, margins of polished producers and wholesalers will be squeezed further. There could be more bankruptcies at this level in the diamond pipeline.

*As the pipeline restocks, there will be some price and demand volatility, until demand at retail smoothes out.

*The industry's bankers seemed to indicate that they would continue to support the industry. The bankers were more pessimistic about the direction of the global economy than other speakers, but even they acknowledged that the worst appears to be behind us.

*The Russians [Alrosa] said they "are committed not to disrupt or destabilize the rough [diamond] market." This was welcome news, and was greeted by applause.