Rough Diam Prices (Fri, 27 May) - Mentioned by Will Purcell Rough diamond prices inched 0.3 per cent higher this week, according to Paul Zimnisky's global rough diamond price index. Indeed, thanks to late-arriving data, the index has been creeping higher since it bottomed six weeks ago, although the gain since the early-April low is less than 1 per cent.
And so, rough prices sit 2.8 per cent below their all-time high of mid-February, when Vladimir Putin's tanks were poised to cross the Ukrainian border and all the West would do was say: "Tsk, tsk." Now, most Western countries are arming Ukraine to the teeth and imposing sanctions against Russia's economy, including its diamond sector. Nevertheless, rough prices have been trending lower despite dire predictions of dwindling supply.
One snag with the sanctions-beget-a-supply-crunch story is that Alrosa, Russia's state-controlled diamond miner, still has enough friends with cash, and others with loopholes, such that Russia has not yet had to buy Alrosa's diamonds for storage in the Gokhran, its Soviet-era repository for precious metals and gems. (Russia is pondering such purchases but has not had to do so yet, because of continuing demand for Alrosa's goods.)
Another snag in the supply crunch scenario is that even if sanctions do render Alrosa's 30-per-cent share of the market unavailable, there is another source of gem-quality diamonds waiting in the wings. Lefoko Moagi, Botswana's minerals and energy minister, is one of many voices fretting that any rough diamond supply gap will eagerly be closed by manufacturers of synthetic diamonds.
Sales of synthetic gems doubled last year and now account for about 7 per cent of revenue, up from just 3 per cent two years earlier. The significantly lower cost is one reason for the sudden increase in demand for synthetics, another reason is the looming supply crunch in natural stones as the Ukraine war comes on the heels of the pandemic. Analysts had expected that with companies such as De Beers already in the synthetic market, demand for man-made gems would grow significantly in the coming years. Indeed, continuing high prices and meagre supply will exacerbate the situation.