ABN AMRO Bank has forecasted that polished diamond prices will increase next year, with improved economic conditions set to boost demand in the U.S. and Chinese markets.
According the Amsterdam-based company, U.S. jewellery consumption will grow amid a stronger labor market and rising housing prices. Additionally, President-Elect Donald Trump’s expected tax cuts will boost economic growth in the U.S., which the report says accounts for 30 per cent to 40 per cent of global diamond jewellery demand.
ABN AMRO also predicts that China will see economic growth of 6.5 per cent, largely due to a growing Chinese middle class. This, says the bank, will cause demand for diamond jewellery to rise, as well.
However, a report by British investment bank Panmure Gordon suggests that 2017’s rough prices may be forced down due to increased supply. This is due to new diamonds entering the market from Liqhobong, Renard and Gahcho Kué, three new Canadian mines. According to analyst Kieron Hodgson, this could put lower-value rough diamonds under pressure, as they are vulnerable to the impact of synthetic stones.
Despite this, the ABN report suggests that global rough production will be stable at about 126 million carats next year. In the long term, output is expected to decline by an average of 1 per cent per year due to lower ore grade, the exhaustion of existing deposits and a lack of new discoveries.