China and India diamond demand to grow 20% annuall
9 Nov 2010
National Post
BY DEBARATI ROY
Bloomberg News
Chinese, Indians love their bling
Annual diamond sales to rise 20%, De Beers says
Diamond demand will rise 20% annually in India and China with half of global growth coming from the two nations in the next few years, De Beers said.
“China and India are the driving force, and China is the most visible incremental-demand driver,” Stephen Lussier, executive director at Johannesburg-based De Beers, said. “India has been the fastest growing jewelry market.”
Economic growth and rising disposable incomes have boosted demand for diamond jewelry in the two most-populous nations. India and China together may rival the United States as the world’s biggest gem buyers in the next decade, according to De Beers, which produces about 40% of the world’s diamonds.
China’s share of demand for diamonds in jewelry, measured in polished wholesale prices, will probably climb to 16% after 2015 from 8% this year, RBC Capital Markets said last year. India’s share may increase to 11% after 2015 from 7% this year, the report said.
Demand in the United States is expected to rise as much as 4% annually, Mr. Lussier said.
“Christmas wasn’t bad last year and we realize that there are buyers if it is made accessible at the right price,” he said.
De Beers’s sales of unpolished and uncut gems jumped 84% in the first half of this year, boosted by demand in India and China, it said in a July 23 statement. Output more than doubled to 15.4 million carats from the year earlier period when the company shut mines in Botswana and Namibia as gem consumption slumped amid a global recession.
“We are seeing some highend consumers return to the market partly because they have confidence and are seeing volatility in the market and a potential of inflation,” Mr. Lussier said.
Global industry output peaked at about 160 million carats in 2007 and may decline to about 120 million carats in the next 10 years or so as “no new material production is expected to come online in the near future,” De Beers said in April.
“There are supply issues as production is falling as most of the diamond mines are old,” Mr. Lussier said.
De Beers is spending about US$60-million a year to look for mines, he said. The company is searching Africa, Angola and Canada. “In Canada there is one opportunity that is at a late stage of feasibility studies up in the” Northwest Territories, he said. Prices will continue to rise as output falls and demand rises, he said.
“Our prices have risen 25% and are back at the pre-Lehman Brothers” levels, Mr. Lussier said, referring to the 2008 collapse of the U.S. investment bank that hastened the global economic crisis.