4 predictions for the diamond market in 2023 and beyond

Michelle Graff

Experts and Editor-in-Chief Michelle Graff share views on natural diamond prices, lab-grown supply, and diamond jewelry sales in 2023.

Much to many people’s surprise, 2021 was a banner year for diamond jewelry sales and the party did not slow down as much as expected in 2022.

So, what will this year hold?

I consulted industry analyst Paul Zimnisky and De Beers’ 2022 Diamond Insight Report as well as reporting from around the trade to make predictions about diamond supply, demand and consumer behavior in 2023 and beyond.

1. Natural diamond price and supply

To understand the current state of natural diamond supply, one needs to rewind about a year, to the date of the Russian invasion of Ukraine, Feb. 24, 2022.

Immediately following the invasion, the United States began levying sanctions on Russia in an effort to restrict its resources. Alrosa, one of the two biggest diamond producers in the world, was included in these efforts, as the Russian government holds a 33 percent stake in the company.

Initially, the sanctions targeted U.S investment in Russian companies but the government ratcheted them up over the next couple months, with President Joe Biden signing an executive order March 11 banning the import of non-industrial Russian diamonds and Alrosa landing on the U.S. Treasury Department’s Specially Designated Nationals list a month later.

Despite the sanctions, manufacturers were still able to process Russian diamonds purchased before Feb. 24.

Industry analyst Paul Zimnisky said manufacturers had a 3- to 6-month supply on hand. That was enough to carry them through to August, which is when demand for diamond jewelry started to slow down, helping to alleviate any potential pressure on the supply chain.

Also aiding was De Beers Group, which increased production to 34.6 million carats, and its highest production volume since 2018 and pretty close to maximum capacity for the diamond miner.

Zimnisky said De Beers “clearly benefited” from the sanctions on Russian goods, a fact the company acknowledged in its own roundabout way in its Q4 and full-year production report, noting the appeal of its “proposition of provenance-assured diamonds” in 2022, i.e., diamonds that clearly weren’t mined in Russia.

The industry really hasn’t felt the expected shortage in goods that was speculated at this time last year,” he said.

However, in 2023, if demand increases and, as expected, the U.S. and Europe ban together to stop the flow of Russian diamonds into Western markets, it will put further pressure on supply.

Sara Yood, deputy general counsel of the Jewelers Vigilance Committee, said they expect to have additional guidance should the U.S. and E.U. agree on further restrictions.

In the meantime, Yood said the JVC recommends smaller players “get comfortable” asking their suppliers questions about how they are sourcing goods. She said businesses should be following due-diligence standards for sourcing for high-risk areas, like those laid out by the OECD.

It is certainly possible that some suppliers are still importing Russian goods due to the ‘substantial transformation’ [U.S.] Customs rulings, and therefore it is vital that smaller players in the market are very, very clear with their suppliers that they do not want to purchase these goods,” she said.

Zimnisky predicts the disruption in the supply of natural diamonds will be more significant in 2023, pushing up prices.

Higher natural prices theoretically will benefit lab-grown diamonds, though that segment of the market is expected to face its own challenges this year.

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Source National Jeweler