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SLOW RECOVERY, SUBTLE REALIGNMENTS
Amidst the beginnings of the recovery, one key aspect that is becoming clear is that the recession has speeded up a process of realignment, and that the contours of the diamond world that emerges will be somewhat different from the one that we knew till now.
By: Diamond World News Service
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Aug 25 2010 1:35PM
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Reference: 5247  

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There has been a pick-up in imports and exports across all the major centres during the first half of 2010. But the recovery from the dark days that began in the last quarter of 2008 is far from complete. Key markets are still reeling under the impact of the slump, and new emerging markets, though stronger, are small in absolute terms.
Amidst the beginnings of the recovery, one key aspect that is becoming clear is that the recession has speeded up a process of realignment, and that the contours of the diamond world that emerges will be somewhat different from the one that we knew till now.
Stephen Rego takes stock of the situation midway through what is going to be a critical year for the diamond industry, and maps some important realignments that seem to be taking place.

Small smiles can now be seen on the faces of diamantaires across the world.

The reason – there are signs of the beginning of a recovery, although a slow one. After enduring a dull and dismal 2009, a more positive story seems to be unfolding, going by the figures for the first half of 2010 released by different manufacturing and trading centres round the world. India’s polished exports were xxx% up by value compared to the first six months of 2009, while Israel saw a surge of 91.7 per cent and Belgium reported a rise of 32.2 per cent in their respective polished exports as well.

No doubt rising prices and currency fluctuations have played their part, and the figures may not be as bright when looked at in volume terms. Thus, while India exported xxx mn carats polished, up xxx per cent from 2009, Israel registered a 63 per cent increase to 1.6 mn carats and Belgium managed a 2.5 per cent rise from the same period of 2009 to 3.63 million carats. Though slower than the increase in value terms, this still represents a growth of sorts, however. Of course, a comparison with 2008 figures provides some additional insights that shall be discussed subsequently.

News on the mining front was also more positive than the previous year. Analysts estimate that at the end of the June sight, total DTC sales in the first six months of 2010 at US$ 2.5 billion, were about 80 per cent above the levels of 2009. Preliminary reports also indicate that Alrosa clocked US$ 1.9 billion worth of diamond sales for the first half of 2010, up almost 50 per cent over 2009. Rio Tinto’s diamond production in the first half of the year totaled 7.1 million carats, up 5 per cent from the first half of 2009.

So even though the major markets in the US, Europe and Japan are still looking weak, the process of restocking that has begun there coupled with stronger growth in India and China, has seen some momentum returning to the trade.

While addressing delegates at the World Diamond Congress in Moscow in mid-July, WFDB President Avi Paz summed up the situation thus, “Fortunately, in the past few months we are witnessing signs of recovery and return to gradual growth.”

Similar sentiments are voiced by people in different countries and various stages of the pipeline. "2010 continues to shape up well for Rio Tinto and we are driving our operations at close to capacity," says Tom Albanese, Chief Executive Officer. "Markets for most of our products are strong and the overall long-term demand outlook is positive."

Moti Ganz, Chairman of the Israel Diamond Institute Group of Companies (IDI), said that he was pleased with the recovery shown by the figures. “We are not surprised by the statistics, since the Israeli Diamond Industry is experiencing a pronounced upturn in activity. We are confident that the Israeli industry will continue to grow. We look forward to a return to our previous levels of activity,” he said.

Vasant Mehta, Chairman, GJEPC, believes that there is a slow revival of demand in the consuming countries. He says, “Overall situation in the in the world is that people are cautious but are coming back to the stores. The market however is still slow overall.”

Echoing this is Nishit Parikh, newly elected President of AWDC. Parkh believes, “Everything looks good, but the world market is still fragile. A new economic downturn somewhere could affect the diamond industry, alongside other industries. The Antwerp diamond companies are doing business again, and have proven to be stable and solid. Nevertheless, financial stability is of utmost importance, and the market must be very careful not to overheat.”

During his address to the World Diamond Congress, Ganz, who is also President IDMA, noted, “The industry is currently at a crossroads. But it has the power to make the post-crisis situation a defining moment in the diamond industry's history.”

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