Top finance professionals predict trends in the diamond industry

“Interest rates will rise, inflation has pitched up, oil is over 100$ and with Russia, Ukraine tension, inflation is bound to rise!” Davy Blommaert, Head of Diamonds, National Bank of Fujairah
Picture courtesy: De Beers
Picture courtesy: De Beers

At the Opening Session of the World Federation of Diamond Bourse (WFDB) 2022 Presidents’ Meeting, panelists of the Banking and Finance discussion predicted financial trends in the diamond industry.

Blommaert was clear about the trend when he said, “Interest rates will rise.” It could rise 2%, 3% or even a by a 5%, he was not sure of the figures. “Inflation has pitched up, oil is over 100$ and with the Russia, Ukraine tension, inflation is bound to rise and if it curbs inflation, it is not a bad thing at all!” Bijayananda Pattanayak, Head of Gem & Jewellery Sector, IndusInd Bank, stated that if the underlying business is good, it may not make a very big difference, but the cost of setting up a business will surely go up. “Finding the golden mean is a challenge,” he concluded.

Commenting on rough prices rising, he said that the premiums paid by Indian business houses are so high that the rising rough rates would make little difference to Indian businesses. Dror Zur Head of Diamond Finance, Mizrahi-Tefahot Bank commented that the prices would go up by 0.25 to 0.75%. Pierre de Bosscher, , Head of European Operations, Delgatto Finance, was clear that the Russia Ukraine problem had already escalated the gas and oil rates, therefore, “Inflation will be very high and rough will rise by almost 50%." Commenting upon the margins for lab grown diamonds, Pierre de Bosscher noted 2 things had affected the margins, the pandemic and suggested that people and diamond companies should go digital and turn to automation to preserve margins and that rough prices would surely affect the manufacturers. Dror Zur from Isreal, was positive that technology in diamonds was important for success.

Pattanayak further stated that he was bullish on the real future of the Indian diamond industry. “Over the last couple of years, the Indian consumer has moved on from gold to diamond wherein more diamond studded jewellery is being consumed. The second point he noted was that technology and digitalization will play a major role as the young new generation of jewellers were emerging. When asked about the two bourses geographically close to each other were a cause of tension, namely, the Surat Diamond Bourse (BDB) and Bharat Diamond Bourse (SDB) in Mumbai; Pattanayak said, “Both are distinct in their roles and not exactly a challenge. BDB and SDB should collaborate very soon,” he said with an air of expectancy, and added that geography didn’t make much of a difference. “Critical focus is on the new markets opening up in China and now even India.”

“I too am bullish on the industry,” stated Blommaert adding, “The scene has changed in the last few months. Diamonds are a luxury product and there has always been an over supply of it. The luxury product and market thrives only on scarcity which the diamond industry has not seen in the past 6-7 years. This current scarcity has increased the demand, there is a marginal over surplus, there is a marginal scarcity pushing the price and margin up. If we can keep the scarcity up, we can keep the margin up.”Thus stating he concluded by informing that “manufacturing in the African continent at Botswana, Namibia, Angola among other countries is where the future is headed  and only that is the way forward.”

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