Diamond production set to rise but prices will fall

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According to a study by Paul Zimnisky, global rough diamond production is set to hit over 135 million carats in 2015, which is an increase of 3 per cent from the 131 million carats produced last year.

Meanwhile, the global price for 2015 is expected to drop by 2 per cent from 2014 down to $103 per carat.

Zimnisky writes that, “Last year prices were down an estimated three to five per cent as the closure of Antwerp Diamond Bank in October led to industry-wide liquidity concerns for rough diamond buyers. In addition, a slower-growing Chinese economy, deflationary pressures in Japan and the EU, and multiple geopolitical tensions, led to downward pressure on rough prices which is expected to carryover into H1 2015.”

The increase of the USD has both negative and positive impacts on the diamond industry.

“A strong U.S. dollar also played a role in recent diamond price weakness, given that diamonds are typically denominated in dollars. However, this foreign exchange effect can also have a positive impact on miners that account for operating expenses in dollars; for instance, wages paid in local currency are relatively “less expensive” when converted to dollars. A lower oil price should also have a favorable impact on miners as haul trucks, generators, and some grids are powered by diesel.” CJ

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