Right now the diamond market is unstable, but it has a very positive growth outlook over the longer term, according to experts from the Bain consultancy releasing the Global Diamond Report on an annual basis.
In Bain’s view, the fundamentals suggest that we shall see a balanced market in the next 3 to 4 years. But then production will cease to meet growing demand – and then we shall see a marked increase in rough diamond prices.
According to Bain, demand for rough diamonds will go up by more than 70% over the next 10 years – until 2023. The report says that global demand for rough amounted to about $ 15 billion in 2012. However, it is able to grow to $ 23 billion a year by 2023 due to the emerging markets – India and China in the first place.
“Demand for rough diamonds will go up by more than 70% over the next 10 years – until 2023.”
In the evaluation of Bain, China and India are currently holding an aggregate share of 26% in the diamond consumption market. But by 2023, these fast-growing economies will consume over 40% of global rough, displacing the U.S. market from the leading position. The main growth will come from China, which is expected to command 29% of global diamond consumption by 2023 due to the rapid expansion of its middle class. The latter is expected to triple in 10 years.
The U.S. share in the consumption market will be reduced from the current 39% to 29% – due to the fact that today this market is virtually almost completely shaped and stabilized. Experts estimate that in 10 years a diamond engagement ring will be owned by 80% of married couples in the United States – no other country in the world has or is expected to have such a high rate. Nevertheless, demand for diamonds in the United States will still continue grow – albeit at a slower pace of about 2.4% per year.
According to Bain, diamond output in the next 10 years will not grow as fast as demand for diamonds. The Bain experts expect the peak of world diamond production in 2018, when it will reach 169 million carats fed by a number of new diamond mines launched. However, the peak will be short-lived: by the 2023, global diamond production will fall to 153 million carats. In value terms, production will rise to $ 18.4 billion in 2023 from $ 14.8 billion in 2012 – that is, by 24%.
Thus, worldwide diamond output will be able to meet demand for rough until 2016 due to new production capacities put into operation. But starting from 2017, the gap between supply and demand will rapidly increase, thereby pushing up prices for rough diamonds.