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THE DIAMOND MARKET

 

DE BEERS RELEASE INSIGHT REPORT LOOKING AT MARKET IN 2018, SAYS THAT GROWTH DRIVEN BY UNITED STATES AND CHINA

 

De Beers has just released its latest Insight report, in which it provides a comprehensive overview of the diamond and jewelry markets up through the end of 2018. In it, the company reports that consumer demand continued to grow, driven by sustained positive macro-economic fundamentals. 

Largely responsible for the growth were the U.S. and Chinese consumer markets, although the weakness in the U.S. dollar relative to currencies supported further growth in most other leading diamond-consuming countries.

Global consumer demand for diamond jewelry increased by 2 percent cent in 2018 to S$76 billion. In U.S. dollar terms, both China and the United States were the fastest growing regions, expanding by about 5 percent.

Demand for diamond jewelry in the United States increased $36 billion, providing the country with a 49 percent share of the global market, which was just one percentage point up on 2017. The growth was underpinned by solid macro-economic factors, the report stated.

In China, consumer demand for diamonds experienced more robust growth in 2018 compared with the previous year. However, most of the growth took place during the first half of the year. China’s share of the global market was 14 percent, up from 13 percent in 2017.

DEMAND FALLS IN INDIA AND GULF REGION

In India, consumer demand continued to decline in 2018, down 4 percent in local currency and 9 percent in U.S. dollar terms, a steeper fall than in the previous year due to a decline in the Indian rupee against the American dollar. Government tax policies and other adjustments reduced consumer confidence, De Beers stated in its report.

Demand from Japanese consumers increased by 1 percent in local currency and by 2 percent in U.S. dollar terms due to appreciation of the yen against the dollar. Results for Japan tend to be affected by currency exchange rate movements, while demand tends to be stable, the report noted.

Demand from consumers in the Gulf declined by 8 per cent in U.S. dollar terms, as the region continued to grapple with lower oil prices and geopolitical tensions.

Demand for diamond jewelry in the United States increased $36 billion in 2018, providing the country with a 49 percent share of the global market.

The “Matryoshka” diamond,  with a 0.6-carat outer stone encapsulating a  0.02 carat inner diamond.

Difficult economic conditions in the Eurozone from mid-2018 reduced demand, but currency appreciation against the US dollar partially countered this. Consumer demand for diamond jewelry in the rest of the world increased by 1 percent to $18 billion, as growth in some markets offset declines in others.

 

U.S.-CHINA TRADE WAR MAIN RISK TO THE MARKET

Looking ahead to 2019, De Beers said that the macro-economic fundamentals have remained supportive overall of diamond demand growth. With the U.S.-China trade war developments and currency fluctuations remaining the main risk.

In the United States, market expectations are expected to remain positive, with growth 

Steady, however, dissipating fiscal stimulus and rising recession fears could prove to be a drag on growth in 2020.

For the Chinese, assuming a de-escalation in the trade conflict with the United States, demand is poised to increase as the country’s growth transitions to being driven by consumption.

In India, after several years of demand declining, the re-election of Prime Minister Narendra Modi is expected to have a positive impact on the general business outlook, De Beers stated in its report.

Longer term, the growing middle class of China and India offer the most upside potential if demand for diamond products continue to grow.