CORONAVIRUS CAUSES DIAMOND OVERSUPPLY

Dealers now look to get rid of stockpiles without affecting the recovery.

By Balthazar Malevolent

CORONAVIRUS CAUSES DIAMOND OVERSUPPLY

The Coronavirus (COVID-19) pandemic produced an oversupply of diamonds according to studies. While most of the world continues to struggle to return to normal, dealers now have to find out how to get rid of their billions worth of stockpiles without hurting the recovery.

De Beers diamonds.

As the diamond industry slowed to a crawl along with the rest of the world, jewelers and craftsmen were forced to shut down operations in order to comply with quarantine measures. De Beers, based in Botswana, also had to cancel its annual sale in March, conducting the annual event in May and generating just $35 million compared to last year's $416 million dollars. Forcing it to plan for another sale sometime next month that will provide an indication of what the industry will face in the months to come.

The five largest diamond producers currently hold supplies worth approximately $3.5 billion, with specialist consultancy firm Gemdax, noting that by the end of the year stockpiles will reach $4.5 billion in heights. Future plans are now being put in place to restrict the supply of rough diamonds, but it's unclear how to destock the market and protect value. Larger firms like De Beers have not adjusted prices yet, but smaller producers of diamonds have already reduced prices with some showing markdowns of 25 percent.

Interesting fact:

The Kimberley Process Certification Scheme (KPCS) is the process authorized by United Nations General Assembly Resolution 55/56 in 2003 to prevent "conflict diamonds" from entering the mainstream rough diamond market following recommendations in the Fowler Report. The process was established "to ensure that purchases of diamonds did not finance violence by rebel groups and their allies seeking to undermine legitimate governments."

Organizations such as Global Witness (pulled out of the scheme on 5 December 2011) and IMPACT (pulled out on 14 December 2017) have questioned the effectiveness of the process, claiming it has failed in its idea and does not provide assurances to markets that the diamonds are not conflicting diamonds.

Organizations like Human Rights Watch have also argued that the Kimberley Process is too narrow in scope and does not serve adequately to eliminate other human rights concerns from the diamond chain.

Hadar Nornberg, who has recently left Rick Owens house to start his own namesake jewelry line stated: "Rick taught me how to preserve the dignity of one's concept and philosophy and how to not lose concentration."

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