For diamond dealers in India's Gujarat state, the turbulent and uncertain situation in Ukraine in recent days has left them impatient. Since the U.S. government has targeted Russia-based Alosa Mines, one of the world's largest international mining companies, in the past two days, surat, India, and its environs, the world's largest diamond cutting and processing center in and around Surat, India, has completely shut down.
Operated by Elosa Mining, the Millney Diamond Mine is valued at £13 billion
According to statistics, Elosa Mining's rough diamond mining volume accounts for 95% of Russia's production, accounting for 28% of the world's diamond mining, arguably the world's most important diamond-producing area so far, so even the core of the global diamond trade, located in the EUROPEAN Union headquarters in Belgium AWDC (Antwerp World Diamond Center) has issued a warning, saying that this sanction will have a more serious impact on the global diamond trade, data show that even in 2020, when the epidemic is raging, More than €1 billion of Russian diamonds are also traded via Antwerp.
Since March 2021, the diamond price index has risen by as much as 25%, and in January alone, the index has risen by 5.67%
In fact, since the previous year, rough diamond prices have begun to rise in a round of pushes.
Last year, renowned diamond supplier De Beers raised the supply price of rough diamonds six times in a row, and according to the IDEX International Diamond Trading Platform, the global polished diamond price index rose by 5.67% in January 2022, surpassing the 4.35% increase in December 2021 and the largest monthly increase since December 2011 – and this is before Russia was sanctioned internationally.
Against the backdrop of rising global rough diamond prices themselves, Elosa Mining expects that 30 million carats of diamond production per year will make the already high diamond prices even more crazy if they face market blockades.
Rough and polished diamond price performance since January 2020
Expert analysis pointed out that the rapid rise in diamond prices in the past two years is mainly due to the following reasons, the first is the impact of the epidemic caused a huge decline in diamond production, including Botswana, South Africa and Russia, the output of major diamond producing areas has dropped by about 20% according to statistics, and in the middle of the supply chain, India's diamond polishing and cutting industry, which is involved by nearly one million people, has also reduced production capacity due to the severe blow of the epidemic, and they have always been the main cutters of small particle diamonds (that is, we often call broken diamonds). For all these reasons, the supply of diamonds has dropped by 30%-40% compared to before the pandemic!
As rough diamonds outstrip demand and demand-side spending power picks up, major retailers' inventories are hollowed out – according to the Shanghai Diamond Exchange, the mainland imported $1.58 billion of polished diamonds in the first half of 2021, more than in 2020 and nearly 50% higher than before the epidemic in 2019. In 2021, the value of diamonds imported through the Shanghai Diamond Exchange was 33.327 billion yuan, an increase of 76.11% year-on-year, a record high. And in the United States, across the ocean, strong jewelry sales and demand for diamonds have also driven diamond prices up.
It is interesting to note that most of the diamonds produced by Elosa Mining are almost all digested by the US market, and according to Erosha's plan, the company originally intended to increase diamond production by 4.4 million to 4.5 million carats in 2022 to meet the growing demand of the US market.
"The Russo-Ukrainian war will completely change the industry." Nimes Pachighar, the owner of a diamond processing company in India, put it this way. In the future, they may be able to settle the issue of diamond transactions with Russia in India's own currency, not in dollars.
Dinesh Nawadia, former chairman of India's GJEPC (Gem and Jewelry Export Promotion Committee), said that the price of rough diamonds has risen by 55% to 60%, while the price of polished diamonds after cutting has only risen by 15% to 30%, which also means that when the inventory in the hands of major diamond retailers is sold, their purchase price will also be greatly increased, which is also an important reason why the sales of many jewelry stores have recently begun to publish "start to adjust prices" in the circle of friends.