Diamond Market Set for Full Recovery by 2024

RAPAPORT... The diamond supply chain will return to pre-pandemic levels between 2022 and 2024, led by economic recoveries in China and the US, according to Bain & Company."For natural diamonds, we saw great interest and return-to-growth trajectory both in the US and China once lockdowns were lifted and stores started to open their doors," Bain partner Olya Linde told Rapaport News. "The growth was very robust, and honestly, we did not expect it to come back that fast."Demand for diamond jewelry in China is set to bounce back in early 2021, Bain said Monday in its annual report on the industry conducted in partnership with the Antwerp World Diamond Centre (AWDC). While the country's diamond-jewelry market suffered during the pandemic, it quickly recovered after lockdowns were lifted. The US will reach pre-virus levels between 2021 and 2022, ahead of most other countries, thanks to the multiple stimulus packages offered by the government, Bain predicted. Rebounds in India and emerging countries will not occur until 2023 to 2024.Meanwhile, rough-diamond supply will remain stable at around 100 million carats annually over the next 10 years. The excess inventory accrued during 2020 when sales were minimal, as well as the output from the reopening of suspended mines, will compensate for the closure of the Argyle deposit and the lack of new mines coming online, Bain explained. Over the next three to five years, production will likely grow by 0% to 2% annually, which will allow the supply chain to rebalance.Once excess diamond inventory is moved through the supply chain, long-term demand for diamond jewelry will exceed rough supply. Jewelry demand is set to grow at an average of 2% to 3% each year between 2023 and 2030, Bain noted.However, the current economic crisis is expected to be more severe than 2009's, and the uncertainty surrounding it will continue to affect the market. If the 5% to 8% improvement in rough-diamond prices and sales reported in January continues, a market recovery could come sooner than expected. Alternatively, if the virus reemerges, a double-dip recession could occur, Bain warned.Image: Polished diamonds and diamond jewelry. (Shutterstock)